Foreclosure market fueling modern-day “Land Squatters”

During the American “Wild West” days of the 19th century, much of our Western frontier was acquired by “squatters” – early settlers who would claim a patch of land and live there without official title.

Today, in our ongoing economic climate of foreclosures and abandoned homes, a surprising number of legal cases have popped up that involve modern-day squatters. Oddly enough, there is an obscure law on the books – known as “adverse possession” – that has allowed these so-called squatters to take possession of abandoned property and eventually obtain title once they have been there long enough.

Rustin Smith is a Gainesville native who formerly worked with the local District Attorney’s office. Today, his area of specialized practice with the Gainesville, Ga.-based law firm Stewart, Melvin & Frost consists of both litigation and transactional matters, with a focus on real estate litigation, contract disputes, personal injury, and creditor claims. Rustin offers some background on this quirky law.

Question: Does the law really allow modern-day squatters to take over possession of property that’s been lost to foreclosure and abandoned?

Rustin: As odd as it sounds, the answer is yes but it is very difficult and risky to do. The law is known as “Adverse Possession.”

Adverse Possession has its origins in the English common law system in the 1500s as a way of putting a statute of limitations on claims for title to property when the person had merely possessed it. In America in the 1800s, it became an important way to prevent a vacant property from becoming neglected, unsightly and run-down, which could detract and hurt the value of neighboring properties.

Adverse Possession is used in rural locations, even today, to clear up the boundaries of vast stretches of farmland or mountainous country that often do not have legal plats or surveys. The concept – sometimes referred to as “squatters’ rights” – is still around and continues to serve these functions in the law. In fact, all 50 states, including Georgia, still have laws that provide for adverse possession.

Question: How does “adverse possession” work?

Rustin: The way it works in most states is that an individual can attempt to take legal possession of an abandoned property and eventually obtain full title of ownership by staying on the property or using it for a long enough period of time.

For this practice to work, a few things have to happen. First, you have to be open and obvious that you intend to stake a claim to the property. One way to do this is by filing an affidavit in the county deed records, which are public records, describing the property and stating that the person claims title and is in possession.

Second, the possession must be adverse or “hostile” to the actual owner of the land. Now, in this legal instance, “hostile” does not mean holding a gun to someone’s head. It simply means that you are occupying the property in a way that is inconsistent with the actual owner’s rights.

If the land is vacant, you could build a structure, erect a fence, or cultivate the land. If the land is small and already has a house or structure, you could potentially stake a claim by using the structure as your own and excluding access to the true owner. Of course, at this stage, the title holder would have a claim for civil and criminal trespass and possibly criminal breaking and entering. So, it’s very risky business.

Next, the most difficult element to satisfy is that you have to occupy the land for a set period of time. The laws vary among states, but Georgia’s time period is seven years if you already have some written evidence of a conveyance into your name, otherwise it is twenty years if you have no such conveyance. If you file an affidavit in the deed records that simply states you possess the property, that is good enough to put others on notice of your claim under the twenty-year time period. But an affidavit will not allow you to use the seven-year period because it does not actually convey title into you from a former owner.You must have a written conveyance of title, such as a deed or judicial order, to use the seven-year period.

After the time period has expired, you can file an action in court and ask the judge to grant you title to the land because you have possessed for the sufficient period.

The bottom line is that you have to be open enough about what you’re doing to put others on notice of it and you must do it for a long time. In the meantime, however, you are considered a trespasser, which is a crime and can also subject you to civil damages.

Question: Is this one of those quirky laws that is on the books but never really happens in real life?

Rustin: No. It’s for real – and because the laws in some states are weaker than those in Georgia, we’re hearing about adverse possession more and more these days with the growing number of abandoned, foreclosed homes on the market.

There was a recent case this past summer in a small Texas community where a home was about to go into foreclosure and the owner abandoned it. After the home sat empty for a while and went ignored, a local man decided to take advantage of the situation and paid a $16 fee at the local courthouse to file an affidavit that he was in possession of the home. As you can imagine, his action stirred up a lot of opposition in the neighborhood – but he was within his legal rights so long as the owner is not pursuing him for trespass.

If the original homeowner can’t come up with the money to pay back the debt and doesn’t want to move back in until the bank forecloses, and if the bank decides not go through the effort of pursuing the case in court then, technically, the “home trespasser” can eventually become the “home owner” if he stays there long enough.

Another recent case happened in Atlanta where a woman took over a million-dollar foreclosed home, although she didn’t quite follow the rules and is under criminal investigation for fraud.

Question: This concept seems really unfair to allow somebody to take over someone’s home for nothing more than a filing fee in court?

It does appear that way, and you can see how the law could be abused. That is why many states are currently looking into passing laws to tighten requirements and curb abuses, particularly in the context of abandoned homes in foreclosure.

Question: Does the concept of “adverse possession” always involve taking over an abandoned home?

No. Actually, the more common example involves someone accidentally or unknowingly encroaching on your property – such as the construction of a fence or wall. Another example is a surveying error that goes undiscovered for several years and an adjacent neighbor relies on the survey to use your property because he thinks it belongs to him.

In cases like these, your neighbor can file an adverse possession action against you in court. If the suit is not opposed, or if your neighbor proves open, hostile, and continuous possession for the applicable time period, the neighbor may be granted title to the section of property where the fence or wall encroaches without having to tear it down or rebuild it.

Question: So, the law on “adverse possession” is actually not as bizarre as it might seem at first glance?

You might classify “adverse possession” under the category of “strange but true”, but there truly are some very rational and practical uses for it such as accidental property encroachments.

On the other side of the coin however, particularly in desperate economic times such as what we have been experiencing, you can definitely foresee the potential for abuse under the “adverse possession” law.