Adverse Possession in Property Ownership Disputes

Can you imagine the horror of waking up one morning after you had what you considered to be the enormous good fortune of acquiring a residential property (by reason of a foreclosure sale) for 10 percent of its perceived market value, only to learn that someone else is claiming to have better title to the property than you? Your immediate reaction to this claim is that it is impossible inasmuch as the foreclosure action and the concomitant judgment of foreclosure and sale cut off and barred the ownership rights of all previous owners and claims of prior lienors. However, you now find yourself embroiled in costly, lengthy, and contentious litigation with a party who is relying on the rights established under a theory of “adverse possession.”

Perhaps you are in the process of selling your home, you’ve signed a contract of sale, a title report has been prepared, and you learn for the first time that the fence separating your property and that of your neighbor of 25 years encroaches onto your property by five feet. The title report indicates that you are out of possession with respect to the five-foot strip and that, as a result, you are in violation of applicable zoning regulations. The title to your property is in serious jeopardy, and so is the sale of your home. How did this happen, and what do you do now?

You’re the owner of a 30-story office building that is adjacent to a vacant commercial building lot. The owner of the vacant lot now wants to construct a multiuse building on that lot. While in the process of preparing the plans that are needed for the construction of the building, the owner of the adjacent property learns that your building encroaches onto his lot by up to fifteen inches and that, as a result, his plan for the construction of the building is seriously compromised. The owner demands that you remove the part of your building that encroaches onto his lot at a cost of $3 million. What do you do?

The foregoing represents only a very small sampling of issues that can affect the ownership rights to real property. While each of these situations and others similar to them do not, at first blush, appear to have anything in common conceptually with the others, the ownership rights of the respective parties can be determined in each case on the basis of a common theory: adverse possession.

The Requirements

While the requirements for the application of the doctrine of adverse possession can vary somewhat from state to state, certain common core elements must exist in order for a claim to succeed. These requirements usually provide that the possession of a party must be:

• actual
• exclusive
• continuous for a specified period of time
• hostile, and
• open and notorious.

In addition, most states have also enacted requirements by statute that must be complied with before title by adverse possession may be established. (It should be noted that New Hampshire has no applicable statutory enactments.) Such requirements include that the premises must be enclosed by a substantial enclosure (see California CCP § 325(a)(1), N.Y. RPAPL Article 5), or that the premises must be improved or cultivated in the ordinary way (see California CCP Sect. 325(a)(2); N.Y. RPAPL Article 5), or, as in the States of Washington and California [see California CCP Sect. 325(b)], that the adverse possessor must have made payment of the real estate taxes associated with the property being claimed.

A Sword or a Shield

Based on the purpose for which a claim of adverse possession is being invoked, it can be a curse or a blessing. It can be a blessing to the party seeking to receive some benefit as a result of the claim of adverse possession. It can result in a financial disaster to the party who is adversely affected by the claim of adverse possession.

Envision yourself as the owner of residential property that is burdened by zoning regulations dictating the minimum size of the buildable lot or the minimum setback requirements measured from the street, the side yard boundary line, the backyard boundary line, or some other landmark with reference to the structure on the property. Further envision yourself making a decision to sell your residence, and in the course of the transaction you learn that your neighbor’s swimming pool, which has been in place for 18 years, encroaches onto your property by 30 inches and that your neighbor is claiming that the pool is on his property and that the strip of land on which the fence surrounding the pool is situated is owned by him. The realization of the triple whammy resulting from the encroachment begins to take hold of your mind as you recognize that (1) you have a setback requirement violation with respect to your property line and your home, (2) your home is now in violation of the applicable zoning law “minimum lot size requirement” because the encroachment renders your building lot smaller than the half-acre dimension called for by the applicable law, and (3) your contract of sale does not effectively address this situation. Understanding that you might not be able to convey to your buyer the title you promised under the contract of sale and that, as a result, you might be in a position where you are facing substantial damages from a breach of contract claim, you approach your neighbor with a copy of your deed and a survey in hand, and request that he move his pool.

It is at this point that you are introduced to those two horrifying words: adverse possession, with an accompanying dagger thrust at you by your neighbor who claims that even if your ownership documents prove to be correct, his exclusive and continuous possession of the property in question for all those years render him the owner of the land. With that potentially disastrous claim being presented to you, the overwhelming question is, what do you do now? Hint: Determine whether your neighbor will be able to establish his claim of adverse possession or possibly negotiate an acceptable settlement agreement that would allow for the pool and fence to be relocated. Do you attempt to obtain a variance from the local zoning board, or do you threaten your neighbor with litigation? This dilemma could possibly have been avoided had there been due diligence in prior years so as to avoid allowing your neighbor to establish a claim of adverse possession. Perhaps an easement or a license could have been granted to the neighbor before he had the opportunity to meet and satisfy the requirements for adverse possession.

Now consider another scenario: Since 2005 you have been occupying a residential home owned by a friend to whom you have transferred ownership; the home is encumbered by a mortgage loan that was granted to your friend when the title was conveyed to him. You have resided in the home without interruption up to the present date. You are registered as a voter at the residence, your driver’s license identifies the home as your place of residence, your medical records identify the home as your residence, your bills and other mail are all sent to the home address, you have even paid real estate taxes on the premises and have made substantial improvements to the home.

Unfortunately, the mortgage loan on the premises is not being paid. In an effort to get you to pay the mortgage loan (a legal obligation of your friend), your friend commences an eviction proceeding against you. That proceeding is settled with your friend agreeing to convey ownership of the home back to you when you are able to secure a mortgage loan of your own. That doesn’t happen, and a second eviction proceeding is commenced against you. Due to the inability to establish a landlord-tenant relationship between you and your friend, the proceeding is withdrawn. Thereafter, in 2016, the bank holding the mortgage on the home commences a foreclosure proceeding against your friend, which, after a great deal of legal posturing, results in the granting of a judgment of foreclosure against your friend. (You were not named as a party in the foreclosure proceeding.) A referee’s deed is conveyed to the bank, which now claims it is the legal owner of the home.

After additional lengthy legal maneuvering seeking to remove your friend from possession of the home (in which he didn’t reside), the bank finally commences an eviction proceeding against you in an effort to remove you from the home. You respond by averring that there is no legal relationship between you and the bank that confers jurisdiction on the court so as to entertain the proceeding. Further, in an aggressive move, you commence an action against the bank, claiming that you are the owner of the home. The basis of your claim is adverse possession. You are now smiling, and the bank is throwing up its arms in frustration because the court refuses to remove you from possession of the home. Your proceeding in which you seek to have the court declare you to be the owner of the home is still continuing before the court. It is now 2022, and you are still in possession and occupancy of the home. What does the bank do now, especially in view of the fact that you occupy the home cost-free and the bank is obligated to pay the real estate taxes imposed on the premises as well as to maintain the property and insure it? Does anyone hear the sounds of a settlement of the dispute in the air? Does the bank continue to expend large amounts of money to insist it is the legal owner? Do you continue to claim adverse possession and continue to swing your sword, which shields you from the efforts and wrath of the bank? What do the parties do?

Or consider another scenario: A purchaser buys an unimproved ten-acre parcel of land in 2001 in a vacation community and receives a warranty deed identifying him as the owner of the parcel. In 2015 the purchaser builds a residence on the parcel, and he and his family use the residence as a family retreat on a regular basis. In 2017, the purchaser decides to expand the residence by seeking to construct a second floor on it and, in the process, files the necessary application for a building permit and then a certificate of occupancy. During the course of processing the application for the building permit, it is determined that a previous deed granted in 1978 was fraudulently conveyed, and the owner of record in 1978 is now seeking to have the court issue a determination that the deed issued in 1978 is invalid and that all deeds thereafter are likewise invalid. The purchaser opposes the prior owner’s application, claiming that even if his deed is determined to be invalid, he still possesses title to the parcel on the basis of adverse possession. The prior owner argues that the purchaser’s claim is non-meritorious on the basis that he has failed to meet the requirements (especially the time requirement) needed to acquire ownership by adverse possession. One can only speculate as to what the court will hold, but, in any event, the parties must face the prospect of lengthy, complex, and expensive litigation. The specter of adverse possession now appears to rear its head as both a sword and a shield.

Protecting Ownership Rights

Although numerous perplexing and thought-provoking illustrations can be presented, the examples above demonstrate the dilemma and dangers that can exist when parties fail to recognize conditions that place their rights at risk. The foregoing examples also illustrate the dramatic and sometimes dire consequences of failing to take appropriate and time-sensitive precautionary and/or preventive measures that would have the effect of protecting one’s ownership rights. Ownership rights can be saved and protected by utilizing various means, some complex and some simple, including:

• granting an easement,
• granting a license,
• providing consent to temporarily encroach onto the property,
• entering into a boundary line agreement,
• observing the actions and conduct of others,
• obtaining an updated survey periodically, and
• removing any structure that may contribute to a party establishing and satisfying the requirements for adverse possession.

Regarding the last item above (removing a structure that may be encroaching on the affected property), one must use caution to ensure that the property rights of the other party are not violated. Say, for example, that a unique and very expensive tree is growing on the boundary line of two properties and encroaching onto one of the properties in such a way as to adversely affect the aesthetics and/or value of the property affected by the encroachment. The owner of the affected property may seek to have the tree removed in toto while the owner of the other property takes the position that it should remain. Notwithstanding the objection of the other owner, the owner affected by the encroachment has the tree removed. A lawsuit is subsequently initiated by the other owner seeking damages in the amount of $250,000. Who is successful in the lawsuit? Would the result of the lawsuit be different if only that part of the tree that was encroaching onto the property had been removed? Does the use of caution and restraint come to mind before taking any action?

Conclusion

The foregoing demonstrates how a single legal theory can be diametrically used in multiple ways by parties with opposing interests to effectuate a desired result that materially impacts the rights of another. Parties may sometimes have nefarious motivations for engaging in conduct that might ultimately benefit them. Unintentional conduct on the part of a party also may result in the creation of a dispute that affects the ownership rights of certain realty. Regardless of the underlying reason for the dispute, the same final result will undoubtedly arise: One party will be found on the wrong end of the sword, and the other party will be protected by the shield that will preserve or create the ownership rights to the property.

The moral of the story and the lesson to be learned is that due diligence, careful observation, astute attention to detail, persistent preventive conduct, and a commonsense approach to the preservation of one’s property rights are essential when considering the application of the doctrine of adverse possession. One should be mindful of one’s surroundings and be prepared to engage in appropriate action when the circumstances require. Finding oneself on the wrong end of the sword is not a desirable posture and can be readily avoided.