Adverse Possession

15 Replies

Hello BP,

I was reading over some info and came across this link regarding adverse possessionhttp://www.nolo.com/legal-encyclopedia/state-state...

Most states have a decade or more timeframe. However there are a few states that have 5 years with taxes paid receipt and its legal. Now, there are the additional requirements to legalize the take-over (hostile, notorious, actual and continuously exclusive) of ones property. Yet in todays world of determined scammers its doable. You might think if someone pays your tax bill for you you'd know...stranger things have happened. Will the county gladly accept payment from both the actual owner on deed and the squatter turned tenant? Will they at least notify the deed holder? Maybe. Again...stranger things have happened.

Anywho, this is not a scare but more of a be aware tactic for those of you who chose to have far out of state residual income properties. For most MFRs, a property manager is there on your behalf. Even a duplex or triplex usually has a tenant there who will definitely keep a watch on residency. Aside from the ocassional nosey neighbor, SFRs can be most vulnerable. Especially non-rowhouses. You definitely want someone on the ground that you trust to look out for your investment in the event you can't get there once a month. Feel free to add any comments,  suggestions or stories -- newbies and seasoned REIs.

Kudos,

Mary

If you maintain control over possession and pay the taxes from accounts that you ultimately control, it would be pretty hard for a would-be adverse possessor to prove up in a QTA. I'm assuming your concern is for your position as a property owner as to the potential for threat of loss?

Hi @Rick H.  

I know its not very likely for this to happen on a constant basis. Depending on how much of an absentee owner someone is can present the risk. Many homeowners have properties that they forget about (inheritance for example)  or / and don't have much interest in that's located in another region of the country. They don't think much of it. Figure their spouse or other relative took care of it.  This was just an fyi in those cases in certain states.

Kudos,

Mary 

Been in a few of these. It always pays to confirm who is in possession. I had two clients in my early years that each successfully ended owning an expensive house free and clear. California's short 5 year period is attractive to these people. When the actual owners finally showed up it was too late. I bought one once with a couple trying to pull that trick, thought they could play it out but they left in a hurry when my new tenants showed up to take possession, a well know group to law enforcement. The group was glad to return a favor, and I was glad to get uncontested possession so quickly. I understand they headed for L. A., the Bay Area wasn't to there liking anymore, I don't know why, they got to live in a nice home and good area cheaply and I understand made a few bucks renting out rooms. I guess they were upset they missed the big payday.

@Brian P.

Wow, so you got your tenants in there within the nick of time. I see about a dozen states have that 5 year (with taxes or deed) time period for adverse possession. It may seem far fetched to some but there are tons of offers from people on craigslist, for example that offer to put the deed in someone's name for a small fee and the county will gladly accept payment from any tom, jane or harry. Considering how many investors come across absentee owners in numerous housing market across the country and back; on an ugly house we think of it as nothing. Yet there are high end homes that can be at risk also having absentee owners. I recall a story about a homeless guy that was somewhat knowledgeable about Texas laws and found a house that all he had to do was live in for another 6 months and it would legally become his. The neighbors were livid. Which I'm sure that's how it ended up on the news. The house had to be worth at least $300K as-is. Thanks for sharing your story, Brian.

Kudos,

Mary  

@Rick H. does adverse possession work for investors that wish to gain control of a property but the owner is deceased? I've done some research and found that the court has reached out and there are no heirs or family that have come forward in over 4 years. Taxes are past due and should go to tax sale this spring. I think it's a gamble. If I were to cloud title legally do you think I could claim the property after the CA 5 year guideline is up? 

Originally posted by @Nikia Watts :

@Rick H. does adverse possession work for investors that wish to gain control of a property but the owner is deceased? I've done some research and found that the court has reached out and there are no heirs or family that have come forward in over 4 years. Taxes are past due and should go to tax sale this spring. I think it's a gamble. If I were to cloud title legally do you think I could claim the property after the CA 5 year guideline is up? 

 San Bernardino County may not accept the tax payment from someone who is not the deeded owner.  When I tried to pay a relative's taxes, they returned the check.

@Annie Bass ,  A clouded title is one that is not clear.  Typically, it means that a Title Company is reading the history of ownership and sees something in the chain of title transfers that is too uncertain for them to insure.  Another word might be a disputed title -more than one party claiming right or partial right to the property.   But who has rights to the property can be unclear to a title company or court, even if there is no one is actively disputing the point.

@Lynnette E. ,   It is true that some jurisdictions will not accept payment on past due property taxes from a non-owner.  This is particularly true after the County has filed its property class foreclosure suit.  However, if you own or can acquire a lien on the property that existed prior to the Property Tax Foreclosure filing, then the taxing jurisdiction must allow you to pay the past the past due taxes so that you can protect your lien.

Originally posted by @Davido Davido :

@Lynnette E.,   It is true that some jurisdictions will not accept payment on past due property taxes from a non-owner.  This is particularly true after the County has filed its property class foreclosure suit.  However, if you own or can acquire a lien on the property that existed prior to the Property Tax Foreclosure filing, then the taxing jurisdiction must allow you to pay the past the past due taxes so that you can protect your lien.

Yes, in San Bernardino County they require proof of you acting on behalf of the owner to accept it, or some other right to pay the taxes.  Its because of the issue of paying the taxes for 5 years is a way to claim ownership.  Some scammers will pay the day the bill is available before the owner receives it in the mail.  My real estate neighbor did that to a property and did ok until the 5th year...then the county changed and would not accept it from her.  The real owner was livid each year because the county won't accept the money prior to doing the bill, so he knew what was happening but it hard to stop when you do not know when the tax bills are done.

In my case I inherited the house (Transfer on death deed), my relative had passed away and taxes were due.  They were not overdue, but due soon.    I wanted to pay before there was a penalty.  But the death certificates are not too fast in coming in CA...

@Lynnette E. , thank you for that helpful additional information.  In addition to paying taxes on a property for 5 years, a person who wants to claim ownership would also need to use the property as their own, and completely exclude the legitimate owner(s) from any use of the property.  Such instances are rare.   A different reason that counties have made it difficult for 3rd parties to pay the past due property taxes of another person, is that Counties get to keep the unclaimed proceeds of real estate is sold at their property tax foreclosure auction (all $ in excess of the taxes and foreclosure costs).  Allowing third parties to pay past due taxes would cost the Counties a lot of money because many times unconnected third parties would pay the past due taxes and thus remove the property from being sold.  Counties discovered that their Notices of impending Property Tax Foreclosure were being used by investors to identify abandoned real estate.   

I have some experience in doing just that. https://www.biggerpockets.com/...

Originally posted by @Davido Davido :

@Lynnette E., thank you for that helpful additional information.  In addition to paying taxes on a property for 5 years, a person who wants to claim ownership would also need to use the property as their own, and completely exclude the legitimate owner(s) from any use of the property.  Such instances are rare.   A different reason that counties have made it difficult for 3rd parties to pay the past due property taxes of another person, is that Counties get to keep the unclaimed proceeds of real estate is sold at their property tax foreclosure auction (all $ in excess of the taxes and foreclosure costs).  Allowing third parties to pay past due taxes would cost the Counties a lot of money because many times unconnected third parties would pay the past due taxes and thus remove the property from being sold.  Counties discovered that their Notices of impending Property Tax Foreclosure were being used by investors to identify abandoned real estate.   

I have some experience in doing just that. https://www.biggerpockets.com/...

 My realtor neighbor did use the property, and pretty much solely.  It was a vacant lot in a forest.  But the track was residential lots, not large.  The real owner wanted to build a retirement cabin on it when he retired as a school teacher.  The realtor neighbor also breed mean dogs and used it as the dog's toilet.  Never cleaning it up.  It was a wooded lot.  Still not cleared of trees.  But no one else ventured into it, even the kids, because of the dog poo.

Hello @Annie Bass, 

You asked, 

"When you pay the past due taxes and show you’ve occupy the home how soon can you place a lien on the property?"

It is not as simple as paying past due property taxes on real estate and then filing a lien.  In order to have a valid lien for property taxes that you pay on real estate that you do not own, you will also need either an legally recognized equitable interest in the property or a title interest in it.  I am familiar only with the laws of my State, WA. https://www.biggerpockets.com/...  However, if you are using a property that Texas law would recognize as "Abandoned" by its owner,  then it is possible/likely that you could claim a legally recognized "Possessory Interest" just by being the first person to occupy the abandoned property.  Do be aware that abandoned has a specific meaning in law, -it requires an express or inferred "intent" by the owner to give up ALL their right to the property.  Legal abandonment is different than a property merely being in a such a state of decay that it looks abandoned.

Occupancy of an abandoned property is a type of Equitable interest in the property.   Possession is an equitable interest which the courts in most States will recognize as entitling you to recover property taxes that you pay.   If you have a legally recognized  right to possession then paying property taxes is necessary to preserve your right to possess that property.  I am not familiar with Texas law, but in my state, WA, even a squatter who has lived in a property for 30 days or more, has a legally recognized possessory interest in a property. Live a month on a property, even without the owner's permission, and most states suddenly recognizes you as a "Tenant".

A title interest can be any % of ownership in the property and can be obtained by almost any type of deed (Quit Claim, Warranty, Grant Deed, Bargain & Sale Deed) https://legaltalktexas.hammerl... For example, real estate is often abandoned by relatives when an owner dies.   However, if you can locate any relative of a deceased property owner, so long as the relative is in the line of inheritance described by your State's Law of Intestate Succession, https://statutes.capitol.texas... or https://www.stewart.com/conten...  , then you can acquire their interest via a Quit Claim or other deed and pay the property taxes as a partial owner of the property.  Your payment of property taxes, along with the reasonable and necessary costs of maintaining the property can be recovered from the other owner's -if they ever show up, and if you keep good records.

An equitable interest can be any pre-existing lien on the property. You can buy or bargain for an assignment of lien from anyone who already has a lien or mortgage on the property. They you would have their right to be paid the amount owed, and you can protect your right to be paid by that amount, by paying the property taxes as needed to keep the real estate out of property tax foreclosure.   You would then add the amount of taxes paid + interest to the lien you've acquired.   Just remember that if you do not have clear title to a property, then there is often an advantage to buying an assignment of an existing lien, instead of simply paying off the lien. Owning any percentage of a lien gives you a "legally cognizable interest" in the property.

Everything I've said above is general information.  It may not specifically apply to your situation under the laws of the State of Texas.

 



Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

We hate spam just as much as you