Possession is nine tenths of the law isn’t it?
This popular legal phrase is an expression meaning that ‘ownership is easier to maintain if a person has possession of something and difficult to enforce if a person does not’. In practice, however, is acquiring property with so-called ‘squatters’ rights’ as easy as it sounds?
What’s yours is mine!
If someone occupies a piece of land which belongs to someone else, for a period normally exceeding 12 years and has enjoyed exclusive use of it and maintained it as their own without consent or objection, then it may be possible to make an application for the land to legally become theirs.
However, before you rush to secure that piece of land which you’ve had your eye on for some time with the intention to set the clock ticking to ownership of it, it is worth noting the differences between ‘registered’ and ‘unregistered’ land, what ‘possession’ actually means and the requirements for making a valid claim.
Whose Land Is It?
Whenever land is bought and sold it must now be registered at the Land Registry.
Prior to the Land Registration Act 2002, a squatter could acquire the right to be registered as proprietor of a registered estate if they had been in adverse possession of the land for a minimum period of 12 years.
However, the Land Registration Act 2002 has created a new regime that makes it more likely that a registered proprietor will be able to prevent completion of an application for adverse possession of their land. Thus, someone who has occupied land for 12 years can no longer, as of an automatic right, override the registered proprietor’s title. (Incidentally, the requisite period of occupation rises to 30 years in cases where land is owned by the Crown or an ecclesiastical corporation sole or held on trust for another with a disability).
Instead, after 10 years’ adverse possession the squatter will be entitled to apply to be registered as proprietor in place of the registered owner, but the registered owner will be notified and given the opportunity to oppose the application.
This is a significant shift in the process that existed prior to 2002. However, there may be the possibility for a squatter to make a successful claim pursuant to the transitional arrangements in cases where the squatter presided at the property for the requisite period prior to 2002.
So, is possession nine tenths of the law? Perhaps the meaning has been watered down somewhat and, certainly, cannot be relied upon in isolation of a registered owners’ rights and the doctrine of indefeasibility of title.
With unregistered land, there may be no paper trail showing the existence of an owner of the property. In such cases, the property falls to the Crown and the land becomes, what is termed, bona vacantia. Alternatively, the legal owner having no central record of their interest at the Land Registry, may instead be able to provide proof of ownership by reference to a paper trail referred to as ‘deeds’ and may, from that paper trail, successfully oppose a squatter’s application for adverse possession.
However, the Limitation Act 1980 provides that, subject to certain exceptions, if someone is in possession of land for 12 years or more, then such occupation may extinguish paper trail proprietorship rights. In such cases, the person in possession (the squatter) acquires possessory rights.
What Exactly Does ‘Possession’ Mean?
The Land Registry has a slightly different definition to ‘possession’ than what you or I may have. To successfully apply for adverse possession, the squatter must pass a two-fold test requiring them to show:
a) factual possession – this requires the squatter to show continuous and uninterrupted exclusive physical control of the land for the requisite period. The squatter must be dealing with the land as an occupying owner would be expected to deal with it and that no one else does or assists with. Examples of showing factual possession may include paving a forecourt, or maintenance and erection of boundary features (such as fences, or walls); and
b) intention to possess – this requires the squatter to show intention to possess the land to the exclusion ‘of the world at large’ during the requisite period. It should be noted that simply parking a car on the land or using the land as an accessway to another piece of land, is not enough to demonstrate intention to possess (nor factual possession). The High Court has commented on this, holding that something extra is required, such as erection of signage, or erection of boundary features to enclose the land.
Possessory Title vs Absolute Title
Provided the squatter satisfies all conditions, they can apply for possession at the Land Registry using form FR1 (for first registration).
A statutory declaration or statement of truth (form ST1) must accompany the FR1, which must detail the circumstances of occupation, together with evidence (photographs, witness reports, results of searches of the index map etc).
The Land Registry will likely schedule a visit from a surveyor from Ordnance Survey to inspect the property. They may also contact third parties who may have an interest in the property before arriving at their decision.
If the application is successful, the squatter will be given possessory title to the property. Absolute title is the best class of title. However, after a further 12 years, it may be possible to upgrade possessory to absolute title.
A note of caution.
First registration vs Title indemnity insurance
Potential lenders may be reluctant to lend against a property with possessory title based on adverse possession. It may also be more difficult to dispose of land which has been gained via adverse possession. The squatter may find themselves having to discount the purchase price and even offer indemnity insurance to off-set any risks to a buyer.
If you are a buyer or developer and have discovered there is an unregistered piece of land which forms part of the registered title you are purchasing you may wish to consider, with the assistance of the seller, submitting and completing the adverse possession application prior to completing on your purchase. This may avoid any issues with development and selling on thereafter. Some developers opt for the seller of land to provide indemnity insurance in respect of the unregistered parcel. However, there are stipulations and restrictions which could invalidate such insurances and which could later come back to bite should a lender refuse to finance the development or there are issues on a resale.
So, perhaps the phrase ‘Possession is Nine Tenths of the Law’ isn’t the whole truth and particularly so when one assesses the pitfalls of acquiring land with squatters’ rights.