By K. Michelle Lind, AAR General Counsel
A buyer purchases a home “as is” and while remodeling, finds a half a million dollars hidden in a wall. Who owns the money—the buyer or the seller? The Arizona Court of the Appeals recently answered this question in Spann v. Jennings, 635 Ariz. Adv. Rep. 10 (May 31, 2012).
Robert Spann lived in his Paradise Valley home until he passed away in 2001. His daughter, Karen Spann Grande (“Seller”), became the personal representative of his estate. The seller knew from experience that he had hidden gold, cash, and other valuables in unusual places in other homes. Over the course of seven years, she found stocks and bonds, as well as hundreds of military-style green ammunition cans hidden throughout the house, some of which contained gold or cash.
In 2008, the home was sold “as is” to the buyers. The buyers hired a contractor to remodel the home. Shortly after the work began, an employee of the contractor discovered two ammunition cans full of cash in the kitchen wall, and two more cash-filled ammo cans inside the framing of an upstairs bathroom. The contractor did not disclose the found money to the buyers right away and hid the money. Eventually, the contractor told the buyers about the
discovery and the police ultimately took control of the $500,000.
The buyers sued the contractor for fraudulent misrepresentation, conversion, and a declaration that he had no right to the money, and the contractor filed a counterclaim for a declaration that he was entitled to the found funds. The seller also filed a petition in probate court on behalf of the estate to recover the money. The two cases were consolidated.
The trial court ruled that the money belonged to the seller and the buyer appealed, arguing that the money was abandoned when the home was sold “as is.”
The court of appeals stated that a finder’s rights depend on how a court classifies the found property. Found property can be classified as:
- Mislaid: the owner intentionally places it in a certain place and later forgets about it.
- Lost: the owner unintentionally parts with it through either carelessness or neglect.
- Abandoned: it is thrown away or voluntarily forsaken by its owner.
- Treasure trove: it is verifiably antiquated and concealed for so long that the owner is probably dead or unknown.
Generally, a finder of lost, abandoned, or treasure trove property acquires a right to possess the property against the entire world, except the rightful owner, regardless of where the property was found. However, a finder of mislaid property must turn the property over to the owner of the premises where the property was found, and the premises owner has a duty to safeguard the property for the true owner.
The court also noted an American Law Reports article “Title to Unknown Valuables Secreted in Articles Sold:”
Where both buyer and seller were ignorant of the existence or presence of the concealed valuable, and the contract was not broad enough to indicate an intent to convey all the contents, known or unknown, the courts have generally held that as between the owner and purchaser, title to the hidden article did not pass by the sale.
Ultimately, in this case, the court found that the money was mislaid and, therefore, as a matter of law, the money belonged to the seller. So the “finders” were not the “keepers.”
[Editor’s Note: K. Michelle Lind, Esq. is General Counsel/Assistant CEO to the Arizona Association of REALTORS®. Michelle oversees AAR’s Risk Management Committee, which includes professional standards administration for twenty of the state’s local REALTOR® associations, and the development of standard real estate forms. She is the author of Arizona Real Estate: A Professional’s Guide to Law & Practice and a regular contributor to Arizona REALTOR® Magazine and the Arizona Journal of Real Estate & Business.
Note: This article is of a general nature and may not be updated or revised for accuracy as statutory or case law changes following the date of first publication. Further, this article reflects only the opinion of the author. It is not intended as definitive legal advice, and you should not act upon it without seeking independent legal counsel.]