Owning a property doesn’t mean you automatically have rights to it. If someone can claim they’ve squatted on the property for many years and you did nothing about it, they may take possession of it with adverse possession laws.
So what is adverse possession, and how do you avoid it?
What Is Adverse Possession?
Adverse possession is a legal principle that automatically transfers property ownership from one person to another based on occupancy. It’s sometimes known as squatters rights, but doesn’t give someone the right to illegally take up occupancy in a home or on land.
It’s not commonly used for an entire property, like a home. Instead, it is most common between neighbors. For example, if a neighbor installs their fence a foot onto your property and uses it for their own use for many years, they can claim adverse possession of the land.
This usually doesn’t come to light until the original landowner tries to sell the property and the land survey uncovers the discrepancy. At this point, legal ownership of the land must be determined.
The Legal Framework of Adverse Possession
The legal definition of adverse possession varies by state, but the following requirements are consistent throughout the United States:
- Actual and continuous use: The person trying to stake a legal claim on the property must have a physical presence there for a set period. Some states may also require concrete proof of maintenance completed or taxes paid during possession.
- Exclusive use: The person claiming adverse possession must have exclusive use of the property and not share it with anyone, including the original owners.
- Hostile: This doesn’t mean the person staking a claim has to be mean. It simply means they trespassed on the property without the explicit consent of the actual owner.
- Open and notorious: Anyone looking at the property would be able to assume the trespasser owns the property. They can’t hide the use or fact that they assume they own it.
The most important factor in claiming adverse possession is the actual and continuous use of the property, and it is the hardest to satisfy.
Each state differs in the length required. Some states require use as long as five to seven years, but it can go up to 20 years. Many states also require proof, such as a tax bill, to prove possession of the property.
Elements of Adverse Possession
The elements of adverse possession each play a role in who is legally awarded the property.
Hostile claim
A hostile claim looks like someone taking over a property without asking. For example, if a neighbor planted a garden on a part of your land, assuming it was theirs, and continued to care for the garden for 10 years, that’s a hostile (but nonviolent) claim.
Actual possession
The trespasser must prove the actual use of the property. For example, installing a fence on a neighbor’s land but then not maintaining or using that part of the land doesn’t count.
There must be ample evidence of consistent use of the property, sometimes including tax bills or proof of manual labor to maintain it.
Open and notorious possession
The use of the property by the trespasser cannot be hidden. It must be used in plain sight and obvious even to strangers who own the land (even though they don’t). The actual owner doesn’t need to admit the land isn’t used or occupied by him to be an adverse possession.
Exclusive and continuous possession
The person claiming adverse possession must continuously use the property for the entire duration of the state’s statutes. Leaving the property or sharing use with the original owner negates the adverse possession.
The Process of Adverse Possession
To claim adverse possession, you must first understand the adverse possession laws in your state. The years required to use the property vary from three to 20 years. You must also provide the necessary documents, such as a deed or paid taxes.
Preventing Adverse Possession
Consider the following tips to prevent an adverse possession claim on your property:
- Set clear boundaries: Make sure the land’s boundaries are clearly marked using fencing or even no trespassing signs. If you don’t live on the land yourself, be sure to visit it often. Letting land sit used by someone else without interfering could allow adverse possession to occur.
- Create a written agreement: If you knowingly allow the use of the property, put the agreement in writing. This is especially important if it’s land you don’t live on. A written agreement can negate any adverse possession claims.
- Address issues immediately: Don’t let potential trespassing issues go undetected. By regularly visiting the property and addressing the issue with the trespasser or legal authorities, you reduce the risk of adverse possession occurring.
- Have surveys completed before purchase: Before purchasing any investment properties, have a survey completed and thoroughly evaluated to ensure no one has squatted on the property over the years.
Adverse Possession and Real Estate Investing
Investors should understand adverse possession to avoid unauthorized use of the property and losing a part of what they thought they owned. While some trespassing may be obvious, especially in urban areas, it’s less obvious and more detrimental in rural areas.
If you know of any use of your property, such as a neighbor’s farm animals grazing on your land, create a written agreement showing that you allow the use of the land to avoid the risk of adverse possession due to neglect on your part.
If you discover trespassing either before or while you own a property, try to work it out with your neighbor. A compromise may result in a change of the legal title, or the case could become a “quiet title” lawsuit, where the judge decides who owns the property.
The laws protect landowners from adverse possession, but you must do your due diligence to prevent it.
Final Thoughts
Adverse possession can negatively affect an investment property, especially if you don’t visit it often. Losing a part of your property can be detrimental to its value and use, especially when you try to sell it. Understanding what adverse possession is and how to avoid it is important to protect your investments.
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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.
