May 8, 2013

Adverse Possession

Rarely in life can you take someone else's property without legal consequence. Adverse possession is an exception to this rule.

While recently listening to the radio in the Bay Area, a local news station mentioned the story of a West Oakland man attempting this. This individual was attempting to gain legal ownership of an ostenisbly abandoned home in West Oakland through adverse possession. The article was misleading in its description of adverse possession as it said:

"Adverse possession is an old law, with roots in California dating back to the Gold Rush, where someone can obtain title to a property without paying for it."

This is a misleading statement. There is no such thing as a free lunch in life.

As described below, the requirements of adverse possession require monetary expense on behalf of the adverse possessor, namely payment of property taxes. If the individual wishes to acquire title to this West Oakland home, they will only do so by paying the property taxes for it for 5 years. Hence, it is a stretch to assert that the individual can obtain title without paying for it.     

The following five elements of adverse possession are:

"(1) Possession must be by actual occupation under such circumstances as to constitute reasonable notice to the owner. 
(2) It must be hostile to the owner's title. 
(3) The holder must claim the property as his own, under either color of title or claim of right. 
(4) Possession must be continuous and uninterrupted for five years.
(5) The holder must pay all the taxes levied and assessed upon the property during the period."

Dimmick v. Dimmick (1962) 58 C2d 417.

In context of wills and trusts, adverse possession can possibly be an issue if real estate is involved.

For instance, assume Danny Decedent owned a farm in Alturas, CA, a remote region in northeast California. Danny was estranged from his entire family who lived mainly in San Francisco. Danny passed away in a tragic hot air balloon accident in 2003. Danny died intestate and did not write a trust. 

Danny's neighbor, Sam Squatter, who was aware of adverse possession, began to occupy the farm immediately thereafter in 2003. Sam knew there was no mortgage on the property, after reviewing real property records, so he thought it was worth the gamble. Whereas if the farm was mortgaged, the bank could possibly accelerate the loan upon Danny's death. Yet since there was no mortgage and loan acceleration was not an issue, Sam thought it was worth a shot. Sam completed the steps necessary to assert an adverse possession claim and then instituted a quiet title action. 

Danny's heirs eventually realized that Danny passed away after doing a Google search. When they realized that Danny passed away and owned real estate, they rushed to claim his estate through intestate succession. However, at that point, it was too late as Sam's quiet title action had concluded and he was awarded ownership of the property.