It’s not quite Halloween but zombie properties have been haunting the housing market for some time now. These are properties that have been left vacant as a result of the 2007-08 housing market collapse. These so called “zombie” properties went through foreclosures and have been left vacant. Banks have been trying to bid these houses off to buyers but the rate of purchase has been rather stagnant. These kinds of homes are located everywhere, from the Manhattan residential areas to Silicon Valley where real estate has become a new venture. Of course, the key economic principle of supply and demand plays a huge role here. The problem is that these homes are in terrible condition and cost of repair is so burdensome that it has kept interested buyers and investors away.
One legal issue that could potentially come up with these vacant properties is a rather old property concept known as adverse possession. Adverse possession is a method of acquiring title to real property by way of possession. More colloquially, it is known as squatter’s rights. The best way to explain this concept is by way of an example. Let’s say a person trespasses onto a piece of property and remains there for an indefinite period of time--the person uses the property as it were their own and no others claim a right to the property during that duration. Over the course of time, this land can legally become the property of that squatter.
The essential elements of adverse possession are: 1) person must have actual possession over the property 2) person must use the property adverse to what the true owners of the property want 3) use of the property has to be made in a way that the legal owner is aware of this and 4) continuous use of the property. Adverse possession is a form of trespass. The trespasser becomes rightful owner of the property if certain conditions are met.
Now, with regards to the zombie property, there have been numerous cases in the past few years where certain individuals have decided to take up residence on such property. Typically, such property belongs to the bank and so this becomes recognized as trespass. However, if the bank does not take measures to remove the squatter, then the squatter might be able to claim legal ownership of the property. Of course, as laid out above, the bank must have notice of such possession before the clock starts running. There is much case law addressing adverse possession and whether or not the squatter can legally be entitled to the property.
For the most part, courts have sided with the legal owner and will deem the action a trespass with civil action readily available to be made against the squatter. For many of these cases, the bank or other legal owner is completely unaware that the squatting is taking place. Big commercial banks like Wells Fargo have an extensive list of real property that is under their possession and it is only natural for some property to go unnoticed. There has to be notice of the squatter’s behavior and it is only when the legal owner disregards the squatter’s actions that the clock starts ticking. Adverse possession is a state law issue and the specifics vary from state to state. Ultimately, the benefit of the doubt will be given to the legal owner as it is their rightful property and only under extreme circumstances will the squatter be legally entitled to the property.
Other Methods of Obtaining Property
Another method of attempting to control a piece of property is another rather old doctrine—easements. Easements are somewhat different than adverse possession. Adverse possession is about possession, so there is actual legal possession over the property; with easements it is more about use rather than possession. There are many different kinds of easements, but essentially easements allows one to make use of property that does not legally belong to them and to indefinitely make use of the property if certain conditions are met. These terms are very similar to the ones outlined for adverse possession.
Prescriptive easements practically function the same way as an adverse possession action. Remember that easements are about use, not possession and hence possession is not always required before use is allowed. The bottom line is that there are various means for individuals to come into possession and control of certain pieces of property without having to take out a mortgage or dealing directly with the big banks or other lenders.
Authored by Sam Behbehani, LegalMatch Legal Writer