Despite the modern era of contracts to perfect ownership in property, “adverse possession” is still a firmly rooted, common law exception to acquiring property. Let’s say that you inherit a house from your uncle. Adjacent to his house is a partial lot. While you were growing up, he used this lot and everyone operated under the assumption that he owned the lot. After his estate is probated, you decide to move into the house and continue using the lot as an extension of your property. In fact, with the little extra inheritance money, you decide to put up a nice fence and a concrete patio area. Several years pass, when finally your neighbor stops by to tell you they had their property surveyed and learned they have legal ownership of the lot. But the question is, do they really? Because of your open use of the property, you may actually have trumped their contractual right to possession with your equitable right of possession. This equitable right is commonly referred to as “adverse possession.”
The term "adverse possession" is sometimes referred to as "squatter's rights". It allows title to real property to be acquired without compensation, by holding the property in a manner that conflicts with the true owner's rights for a specified time. As in the example above, you didn’t pay anything extra for the partial lot, but your use of the property excluded, or conflicted, with your neighbor’s use of the property for several years.
Adverse possession evolved as a cure to potential or actual defects in real estate titles by putting a statute of limitations on possible litigation over these types of title disputes. Without the doctrine of adverse possession a landowner could not be secure in the title to his/her land, because long-lost heirs of any former owner or lien holder could come forward with a legal claim on the property. Adverse possession places a statute of limitations on this kind of action, providing property owners more security in their ownership interest. Essentially, if a true owner does nothing to assert their ownership in a particular piece of property; they forfeit the right to do so later.
Adverse possession is based on the doctrine of "laches". This doctrine is defined as neglecting to do what should or could have been done to assert a claim or right for an unreasonable and unjustified time causing disadvantage to another. This means the law may not be unreasonably used to reward a person if that person fails to enforce his/her property rights at the proper time. As with the partial lot example above, your neighbor watched over the years as you improved the condition of the partial lot. Because they did nothing to correct your misunderstanding, they would be barred from profiting from your improvements on the lot. Thus, the failure of your neighbor to timely exercise and defend their property rights can result in a forfeiture of their interest.
Even thought various states will set out their own set of laws, at common law there are five basic requirements you must satisfy to make a claim of adverse possession:
1. Actual Possession- You must have actual, physical control over the property. This means you act as though you are the owner, and use the property in the manner in which an owner would have used it.
2. Open and Notorious - Your use and possession of the land must be so visible and apparent that it gives notice to the legal owner that someone may make claim to it. In other words, it must be of such character that it would give notice to a reasonable person. This requirement can be met by installing fencing, opening or closing gates to the property, posting signs, growing crops, erecting buildings, or housing animals. In the partial lot example, you openly used and developed the lot in such a way that your neighbor definitely noticed the aesthetic appeal. Secretly occupying another's land does not give the occupant any legal rights.
3. Exclusive Possession- You cannot occupy the land jointly with the titled owner or share possession in common with the public. This does not mean that others must be excluded from the land in order to claim "exclusive" use, but you must have been the only person to treat the land in the manner of an owner. Like with the partial lot example, even though you may have invited guests over for a party in your newly remodeled patio area, you were clearly the only person “acting” like an owner of the partial lot.
4. Hostile Possession - Your possession must be hostile to the title owner's interest in the property. The word “hostile” in an adverse possession claim does not mean showing ill will or that you are an enemy of the person holding the legal title. Rather, it means that you possess the property as an owner and hold it against all other claims to the land. Accordingly, you cannot claim "adverse possession" if you are engaged in the permissive use of somebody else's land. If your neighbor permitted you to use the partial lot for birthday parties or social gatherings, but still otherwise asserted their interest, your possession would be considered “permissive”, instead of “hostile.”
5. Continuous and Uninterrupted - All elements of adverse possession must be met at all times through a set period of time. This time limit differs from state-to-state but may be for as little as 5 years or as much as 20 or more years. Occasional activity combined with long gaps in that activity fails the test of continuous possession. While the time of possession must be continuous and uninterrupted, you may still be able to claim adverse possession through the principle of "tacking". Meaning, a former owner's 4 years of adverse possession can be "tacked" onto the present owner's 6 years of possession, for a cumulative 10 years of adverse possession. Using the same uncle/inheritance example, under the tacking principle, you would be allowed to add the time that your uncle used and possessed the partial lot onto your period of adverse possession to perfect an equitable interest in the partial lot.
Even though “adverse possession” is based on common law, most states have now enacted statutes governing adverse possession claims. As a result, one or more of the following conditions may also apply in order to your claim:
Most property, including vacation property under some circumstances, can be subject to a claim of adverse possession. However, it should be noted that public land is generally exempt from adverse possession. The rules for adverse possession vary from state to state. So before you give your neighbor a “patio” windfall, contact a property or real estate attorney in your state to see how the rules of adverse possession apply to your situation.