Adverse Possession; Old Issue but Very Real Problem
Would you pay real estate taxes on land owned and used by your neighbor? Most companies would not do so intentionally, but may inadvertently be doing just that because a neighbor has gained the ownership of some of their land by adverse possession. This is a bigger issue for ag land owners, because of the amount of acreage they hold.
The laws of adverse possession are very old, and allow a party to gain ownership of land (the “Contested Land”), by using that Contested Land for a long time, typically 20 years, if that party (the “User”) has occupied the Contested Land in a manner that is “open, notorious and adverse.”
A case crossed my desk recently about the ownership of a sizable triangle of ag land, cut off from a main field by a railroad right of way. Our clients held a recorded deed for that triangle, had a title insurance policy for the deed, and had been paying real estate taxes on it, but a neighbor had been farming the Contested Land for many years, and keeping the profits. The parties settled the case but the User was able to show his “open, notorious and adverse” use of the land could have convinced a judge to award ownership of the land to the User.
There are also practical issues involved here. Because the Register of Deed’s Office would still show the deed owner as entitled to the Contested Land, the User would have to take action to have his name inserted into the chain of title. Often the neighbors come to an agreement, usually after the payment of money, resulting in the owner of record signing a deed to the User which cleans up record title. If the parties are not in agreement, the User must apply to a Court in a “quiet title” action, providing proof to the Court and then securing a Court Order that the User is now the full owner of the Contested Land. If the record Owner has mortgaged the Contested Land to its lender, using the description in its deed, the User might also have to secure a Partial Release of Mortgage for the Contested Land before title is clear. Recording a Deed or an Order, with a Transfer Tax Return, will cause the property tax records to be corrected as well. Easements can also be created by adverse possession, or by implication, when land is split creating a landlocked parcel.
If a neighbor is using your land, you can stop the adverse possession clock from running by entering into an easement agreement, which allows the neighbor to continue that use, without their gaining ownership of the land.