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What is Adverse Possession?

By Tanya Roth, Esq. | Last updated on

Foreclosures, mansion squatters, it seems we are all a-buzz these days with news about abandoned and foreclosed property. The question often asked is, if the house nearby has been foreclosed on, and the bank who owns it seems to have abandoned it, can't I use it? One person even suggested just fixing up an "abandoned" house and renting it out. Although it seems like a good use of an abandoned property, and would probably even help neighborhood home values to fix up a property in disrepair, it is not that simple.

In response to a question by an individual hoping to move in, fix up and make money on what seemed to be an abandoned property, recently gave some good advice. The first issue with attempting to "squat" and take over a derelict property is that someone, somewhere, still owns it. Although in the story covered by MSN, the putative squatter said the bank had no record on the property, it does not mean that the ownership has been relinquished.

If you attempt to take possession of a property that is legally owned by another, the issue will become whether the property becomes yours through "adverse possession." Adverse possession, sometimes called "squatters rights," is the legal way that one can become the owner of a property by possesing it for a period of years. This is nowhere near as easy as it sounds. The states' laws on adverse possession vary, but it is not simply a matter of moving in and hanging curtains.

The elements of adverse possession are complex, but in very basic terms, the possessor must openly and continuously be the sole occupant of the property for an extended period of time (states vary, often from 5-25 years). In some states, the possessor must pay property taxes. For instance, in California, a claimant must possess the property for a minimum of 5 years and pay taxes on it for the same amount of time.

To try to claim a house this way in an urban area would be very risky. Even if the squatters/possessors had been on the property for years and made improvements to the property, the true owner could re-claim the property at any time if any one of the several adverse possession elements were not met. Money spent on improvements and/or taxes would be lost.

As MSN writes, a far better way to take advantage of a distressed property is to research the true owner by tax or bank records and make a low offer. If the property is abandoned or derelict, a small amount of money may gain you valid rights of ownership that cannot be challenged. Then go ahead, fix it up and see if you can't make some money for yourself and maybe raise the local home values in the process.

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