Business, Legal & Accounting Glossary
Method of acquiring real property under certain conditions by possession for a statutory period. A means by which one can legally take another’s property without paying for it. The requirements for adversely possessing property vary between states, but usually include continuous and open use for a period of five or more years and paying taxes on the property in question.
n. a means to acquire title to land through obvious occupancy of the land, while claiming ownership for the period of years set by the law of the state where the property exists. This can arise when a rancher fences in a parcel contending he was to get title from some prior owner, and then grazes cattle on the property for many years without objection by the titleholder. Payment of real property taxes and making improvements (such as paving or fencing) for the statutory period (varies by state) are evidence of adverse possession but cannot be used by a land grabber with no claim to title other than possession.
In common law, adverse possession is the process by which title to another’s real property is acquired without compensation, by, as the name suggests, holding the property in a manner that conflicts with the true owner’s rights for a specified period of time.
The law of adverse possession is entirely statutory, arising out of a statutory limitation period or statute of limitations.
Adverse possession arises when a person is able to get an interest in land, perhaps even a Freehold estate, by occupying that land to the exclusion of the original owner. The historical basis of adverse possession is that there has always been a statutory limitation on the time within a person must bring a civil law court action. For unregistered land, the governing statute is currently the Limitation Act 1980; this imposes a 12-year maximum period within which a claimant must bring a court action for the recovery of unregistered land. This was essentially true for registered land as well until 2003, but now adverse possession of registered land is governed by the land registration act 2002. The ultimate limitation period, however, is still 12 years. It follows that if a person takes possession of land, even by committing a Trespass, then after 12 years the prior owner will not be able to recover the land in legal action. This `adverse possession’ can, in some circumstances, allow a person to become the effective owner of the land in question. It is commonly believed that although the prior owner cannot take legal action against the trespasser, he remains the `better’ owner, and if he can himself dispossess the trespasser he can recover his title. This is wrong, at least in relation to unregistered land. When the 12-year period expires, not only can the previous owner not recover the land in a court action, he cannot defend his ownership if he attempts to re-take possession without such action either. Thus the trespasser will eventually be able to apply for registration of the land in his own right. For registered land, the same ultimate outcome arises, but the mechanism is different.
There is, understandably, a great deal of litigation concerning adverse possession. There are a number of problematic areas. For example, clearly the original owner must be properly dispossessed, but if the land is unoccupied (perhaps it is vacant, awaiting development) then it is not clear what constitutes dispossession. Then there is the problem of deciding when the limitation period starts to run — is it when the trespasser takes possession, or when the original owner finds out, or when he should have found out had been managed the land properly?
This article describes the justification for adverse possession, and the mechanisms by which it can be established, and defended against. The law on adverse possession, as it affects registered land, has been radically changed by the land registration act 2002; so cases prior to 2003 need to be interpreted quite carefully — cases with similar facts may now have to be decided differently. Where land is unregistered, the pre-2003 case law will probably apply unchanged.
It strikes many people as unjust, that the law allows people to take ownership of a valuable and expensive commodity — land — by `squatting’. However, land is a limited resource, and the view taken by English law is that its owners must use it, or lose it. Adverse possession does not always, or even that often, arise because of the deliberate actions of squatters. In some cases, it even arises by mistake. For example, it is not unusual for the boundaries between properties to be unclear, and if a person has built an extension to his house that has one wall on a contested boundary, and his neighbour has not complained about it over a decade, it hardly seems fair to make him knock it down. While people do lose their property to squatters, the limitation period of 12 years should be long enough for the owner to take some kind of action against them. The law will take a dim view of a claim that property really does need to stand idle for 12 years. Moreover, if we did not allow adverse possessors eventually to register themselves as the owners of the and they occupy, this would seriously inconvenience the owners of unregistered land who, perhaps through no fault of their own, have mislaid their title deeds. Such people could never sell their property. People sometimes claim that adverse possession represents a `loophole’ in the law. It doesn’t — the legislature has gone to a lot of trouble to ensure that adverse possession can operate. It would have been a trivial matter for Parliament simply to repeal the relevant sections of the Limitation Act 1980 that apply to land claims, and not replace them with anything else. The fact that this has not happened, and instead there are some complicated legislative provisions aimed at ensuring that adverse possession can occur, should make it clear how important it is seen as being for the general good of society.
On the other hand, however, there are some cases where the dispossessed landowner has been largely blameless and is greatly inconvenienced by adverse possession. Particularly affected are local authorities, which can hardly be expected to police every piece of land they own, twenty-four hours a day. In addition, a person who allows another to live in his property without paying rent has traditionally been in a precarious position, as non-payment of rent can amount to adverse possession (see below). This is a very poor reward for such generosity.
In preparing the draft of the LRA2002, the law commission responded to criticism that it was too easy to obtain land by adverse possession. It was unwilling to increase the difficulty of obtaining adverse possession in 12 years for land that was genuinely vacant. At the same time, it recognized that it had to be made more difficult to take over land whose owners still had and interest in it, and planned to develop it in the future. The compromise that was reached was to keep the limitation period of 12 years but compel the squatter to serve notice on the registered owner, as we shall see. A registered owner who fails to respond to a properly-served notice that he is about to have his property taken away, can’t really complain when it happens.
To establish adverse possession, the squatter must show that
Dispossession need not be forcible — the land could be, and often is, unoccupied. Factual possession could be established by, for example, living in a house on the land, cultivating the land, or fencing it. The important point is that the squatter is dealing with the land as if he were the owner, and no-one else is doing so.
In addition to factual possession, the squatter must provide evidence that he had animus possidendi, an `intention to possess’. Although intention is a subjective matter, the court will expect to see evidence of conduct on the part of the squatter that demonstrates the requisite intention. He must show that he intended to take the land for himself, not to share it with the previous owner, or to use it with the previous owner’s consent. Animus possidendi might be inferred if a person takes possession of a house and changes the locks, or if a person moves a fence, or puts a lock on a gate.
However, intention to possess does not equate to `intention to achieve legal title’ or even `intention to possess indefinitely’. Adverse possession can be established even where the squatter knows that the land is going to be used, and plans only to occupy it until it is (BuckinghamshireCCVMoran1989). Similarly, if the squatter believes he has permission to occupy the land, but in fact has not, he still has an intention to possess (LodgeVWakefieldCC1995). The fact that the squatter would be willing to pay rent if asked for it is not fatal to his claim of adverse possession, either (PyeVGraham2002).
The squatter must also show that his possession was `adverse’, a term hard to define. In general, `adverse’ is taken to mean `without permission’. In general, a tenant cannot establish adverse possession against his landlord, as he lives in the property by express permission. However, if the tenant ceases to pay rent, his possession does become adverse, even if the landlord agrees to this. Cases, where the owner of land keeps it vacant for some future purpose, have always caused problems. For some time there was a judicial view that if the adverse possessor knew of the future intentions of the owner, and his use of the land was not inconsistent with those intentions, then he had implied licence to occupy the land. This is now expressly rejected by the Limitation Act, which provides that an implied licence cannot be inferred only because the adverse possessor’s actions do not conflict with the owner’s future plans. Moreover, as we know from Buckinghamshire v Moran, an intention to possess is not the same as an intention to possess indefinitely.
For both unregistered and registered land, the statutory time period is, in effect, 12 years. We will discuss later when this time period starts to run. For the occupier, he must show the requisite time of possession, but there are a number of factors that may assist him.
First, the time period can be begun by one person, and completed by another. This is a strange technicality, which will be discussed in more detail later.
Second, the time need not be continuous. In particular, if a squatter is forcibly evicted from the premises, without a court order, he is considered to remain in occupation. This position is unchanged by the 2002 Act.
Registration of adverse possession under the 2002 Act
If the land at issue is registered, the new provisions apply. After at least ten years in occupation, the squatter may apply to the registrar to be registered as proprietor. The registrar notifies the current registered proprietor, and certain other parties with an interest in the land (mortgage lenders, for example). These people then have two years to object to the registration. If any do object, then the Registrar appoints an adjudicator to settle the matter. The Act sets out three grounds on which the adjudicator should favour the squatter:
It is anticipated that adverse possession cases be settled by the adjudicator without the need for court action. This is why proprietary estoppel is listed as a reason to favour the squatter. If proprietary estoppel genuinely arises, then the squatter would be able to defend his claim in a court action anyway, but the use of the new procedure is thought to be cheaper for all parties. Circumstances in which the squatter might have a right of possession that is unregistered include, for example, cases where a person has been left a property in another person’s will, but the personal representative of the deceased refuse to make the transfer required.
You should notice that the minimum limitation period remains 12 years, provided that the squatter registers his interest immediately after 10 years’ occupation.
If the squatter registers his occupation and two years elapse with no objection from the registered owner, then the squatter is registered as proprietor without further formalities.
The fact that adverse possession is now much harder to establish against registered land is a good reason for people to register their land voluntarily. It is also a reason why the LRA2002 makes it possible for the Crown to register its land, as adverse possession is possible against the Crown in certain circumstances.
The usual defence raised against a claim of adverse possession is that the limitation period had not started to run at the time the squatter claimed, and this he has not been in occupation long enough to qualify. In general, under the Limitation Act (1980), limitation periods run from the time that the person seeking to take action found out that he had a cause of action, or ought reasonably to have been able to find out. For adverse possession, this means that time starts to run when the squatter takes possession. As a general principle of the Limitation Act (1980), if a cause of action is fraudulently concealed, time only starts to run when the fraud is, or reasonably could have been, discovered. In the case of adverse possession, it is difficult to conceal the fact of occupation of the land, and the dispossessed owner will have some difficulty relying on this provision. If the dispossessed owner is a minor, or mentally incapable, extensions of the limitation period are allowed. The rules are complex, so I won’t describe them here (see s.28 of the 1980 Act).
Where the dispossessed owner is in possession, the limitation period is 12 years; but what about a person who has a vested interest In Remainder? Should his rights be extinguished because the owner in occupation has been too careless to protect his own rights? The Limitation Act gives a further six-year period to persons entitled to a future interest, and time starts to run from the moment that the interest comes into possession. This has some bizarre effects. Suppose, for example, that person A leaves his house to his wife B for life, then to his son C. B abandons the house and emigrates to a far corner of the Earth, losing all interest in it. Squatter D then moves in. C cannot act against D, because he does not have an interest in possession. He can act only when B dies, which might be some time off. This means that squatter D could displace the original owner, then be displaced himself many years later when that owner dies.
The sale of an estate in land does not automatically destroy any adverse possession rights held by squatters, so a purchaser could find himself in the unfortunate position of buying property from a person who has lost his title. The purchaser, therefore, gains nothing of value and must seek redress against the vendor. Under the 1925 legislation, whatever rights the squatter had been overriding (see overriding interest) so they would take priority over the purchaser, whether or not the purchaser had notice of them. Under the 2002 Act, a squatter will in future only be able to enforce against a purchaser if the purchaser has notice of the squatter’s rights (this is one of the few places where `notice’ continues to be significant in registered conveyancing — see s 11(4)(c)). However, for the time being, squatter’s rights acquired before 2003 continue to override.
In English law, all title is relative. If you drop something in the street and I find it, I have some title to it. If I then drop it and someone else finds it, I can attempt to enforce my title against that person. And, of course, you can enforce your stronger title against me. The important point is that, just because you have a stronger title than me, this doesn’t mean that I don’t have a title to enforce against others.
In the case of adverse possession, the person in possession has the same sort of title as the person he displaces. If he displaces a freeholder owner, then the squatter has a freehold interest. He acquires that interest as soon as he takes possession — he doesn’t need to wait to be registered. It is not clear — at least not to me — how this doctrinal position fits with the general tenor of land registration legislation, which states that the only way to acquire a legal interest in land is to be registered with it. Be that as it may, it has always been accepted that the squatter obtains the same meta of title as the prior owner, immediately. Now, if this is the case, and it is, then the squatter has an immediate, real interest in the land. That interest is, in a very real sense, his property. This is not just academic waffle, it has an extremely important implication. If the squatter has property in the land, then he can assign it to someone else. In other words, person A can assign a freehold interest to person B, or pass it in his will. That interest can be defeated by the `real’ owner until the limitation period expires, but the effect of the doctrinal position is that adverse possession can be established by a chain of squatters; it is not necessary that the whole limitation period is served by one person. This position is preserved by the 2002 Act.
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This glossary post was last updated: 26th April, 2020 | 1 Views.