How is adverse possession relevant when buying a property?

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Today we discuss the law of adverse possession and how it is relevant when buying a property in the U.K. if boundaries are not clear.

What is adverse possession?
It means factual possession of land with an appropriate degree of physical control and the necessary intention to possess in one’s own name and on one’s own behalf, to exclude the world at large, including the owner and without the owner’s consent. 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 of 12 years but this was changed in 2002.


Changes brought about by the Land Registration Act 2002

1. Applies only to registered land.
2. It is more likely that a registered proprietor will be able to prevent an application for adverse possession of their land being completed.
3. It will no longer affect the registered proprietor’s title
4. The squatter can apply after 10 years’ adverse possession to be registered as proprietor in place of the registered proprietor of the land
5. Upon receipt of such an application the registered proprietor and other persons interested in the land will be notified and given the opportunity to oppose the application.
6. If the application is not opposed the squatter will be registered as proprietor in place of the registered proprietor of the land
7. If the application is opposed, it will be rejected unless either:
• It would be unconscionable because of an equity by estoppel for the registered proprietor to seek to dispossess the squatter and the squatter ought in the circumstances to be registered as proprietor wherein in some way the registered proprietor encouraged or allowed the squatter to believe that they owned the land in question and that the squatter acted to their detriment to the knowledge of the proprietor and hence it would be unconscionable for the proprietor to deny the squatter the rights which they believed they had.
For example where the squatter has built on the registered proprietor’s land in the mistaken belief that they were the owner of it and the proprietor has knowingly acquiesced in their mistake or where neighbours have entered into an informal sale agreement for valuable consideration by which one agrees to sell the land to the other or where the ‘buyer’ pays the price, takes possession of the land and treats it as their own.
• the squatter is for some other reason entitled to be registered as proprietor such as under a will or intestacy of the deceased proprietor or where the squatter contracted to buy the land and paid the purchase price, but the legal estate was never transferred to them
• the squatter has been in adverse possession of land adjacent to their own under the mistaken but reasonable belief that they are the owner of it, the exact line of the boundary with this adjacent land has not been determined and the estate to which the application relates was registered more than a year prior to the date of the application.
8. In the event that the application is rejected but the squatter remains in adverse possession for a further 2 years, they will then be able, subject to certain exceptions, to reapply to be registered as proprietor and this time will be so registered whether or not anyone opposes the application.
9. Application for Alteration- There is a third type of application that may sometimes be made by a squatter in respect of registered land if the first registration was a mistake. The squatter can apply for alteration (the registered title being closed) and for first registration of their own title. However the proprietor will not be entitled to indemnity in the event that the title is closed.
10. Making an application for registration on the basis of adverse possession must be made in form ADV1 accompanied by a statement of truth or statutory declaration in form ST1, list of documents the squatter will rely upon, plan and evidence in support of adverse possession meeting the requirement laid down in the Land Registration Rules 2003
11. The squatter may be contacted in case of a requirement of any additional evidence or to clarify an obvious clerical error.

What will you need to prove?
To claim adverse possession you must show that:
1. You had the necessary intention to possess the land without the owner’s consent.
2. The squatter or his predecessor’s through whom they claim has been in adverse possession for at least 10 years or at least 60 years for Crown foreshore ending on the date of the application
3. The squatter has been evicted by the registered proprietor, or a person claiming under the registered proprietor, not more than 6 months before the date of the application, that this eviction was not pursuant to a judgment for possession, and that on the day before the eviction they and any predecessors through whom they claim had been in adverse possession of the land for a period of 10 years ending on that date.
4. If the registered proprietor is an overseas company, the applicant or their conveyancer must confirm that they believe the company not to have been dissolved and give an explanation of the basis on which that confirmation is given.

HM Land Registry’s response and registration

Upon receipt of an application the HM Land Registry will arrange for a surveyor from Ordnance Survey to inspect in order to consider the application further and notice of such inspection will be provided to the squatter and the registered proprietor.

Each application shall be examined on its merits and normally at this stage only the squatter’s version of events shall be heard.
If, from the evidence it is likely that the squatter is entitled to apply to be registered, notice of the application shall be served to: the registered proprietor or the registered proprietor of any registered charge on that estate or the Treasury Solicitor or the relevant Duchy where the registered proprietor is, or may be, a company which is dissolved or to the registered proprietor where the estate is leasehold or any person who has been registered as a person to be notified under Schedule 6, paragraph 2 of the Land Registration Act 2002.

A person given such a notice may consent to the application or object and/or give a counter notice
Notice may also be given to successors in title to the registered proprietor, known or suspected from other available information or our local knowledge to have become entitled to the estate affected, such as a trustee in bankruptcy or a successor local authority. They can either consent or to object to the application. They cannot serve a counter notice.

If no counter notice is received the office will proceed to register the squatter as proprietor once the time limit has expired.
If an objection is received, whether in response to the registrar’s notice or otherwise, then the application cannot be determined until the objection is disposed of, unless the registrar is satisfied that the objection is groundless. The registrar will then ask both parties whether they wish to negotiate and whether they consider that it may be possible to reach an agreement. If all parties respond positively, the registrar will allow them time to settle the matter by agreement. However, if settlement is not possible then, the registrar must refer the matter to the tribunal.

The tribunal will then either set a date for hearing and determining the matter or direct one of the parties to start proceedings in court. Further details of the procedure to be followed and of the position as to costs will be supplied by it at that stage.

Upon receipt of a counter notice in form NAP, if the squatter has not stated in their form ADV1 that they are relying on one of the three conditions in paragraph 5, then their application will be rejected.

If the squatter is relying on one of the three conditions and counter notice is given, consideration will be given as to whether or not the statutory declaration or statement of truth sets out any facts supporting reliance on the condition and shows an arguable case for the condition being met. If we decide that it does not, the application may be rejected. If it does, the people who gave the counter notice will be contacted and the registrar will refer the matter to the tribunal for resolution.


Restrictions on making an application for registration based on adverse possession

The following circumstances prevent an application being made for registration based on adverse possession
• the registered proprietor is an enemy or detained in enemy territory, or has been an enemy or detained in enemy territory in the 12 months before the date of the application
• the registered proprietor is unable because of mental disability to make decisions about issues of the kind to which an application for adverse possession would give rise, or is unable to communicate such decisions because of mental disability or physical impairment
• the squatter is a defendant in proceedings which involve asserting a right to possession of the land, or judgment for possession has been given against them in the last 2 years
• the estate in land was held on trust at any time during the period of 10 years ending on the date of the application, unless the interest of each of the beneficiaries in the estate was an interest in possession
• An application cannot be made where, at any point during this period, the registered proprietor at the time (i) was dead and their estate was being administered, (ii) was bankrupt and their property was being administered by the trustee in bankruptcy or (iii) (being a company) was being wound up. In each of these cases the registered estate is subject to a form of trust. The title plans of all registered titles show only the general position of the boundaries, unless they are shown as having been determined as exact boundaries pursuant to section 60 of the Land Registration Act 2002. This means that it is possible for an area of land to be within a registered title, even though it falls outside the red edging on the title plan. Conversely, it is possible for an area of land not to be included within the registered title, even though it is within the red edging on the title plan. In other words, it is not possible for HM Land Registry to define the precise position of the boundary in question.
• If it turns out that the squatter, in fact, has documentary title to the land and what is really required is an alteration to the squatter’s and/or the squatter’s neighbour’s title plan to show the general boundary more accurately, then an application based on adverse possession is not appropriate.

Charges
The general rule is that a squatter is automatically entitled to be registered free of any registered charges. There is an exception to this general rule. Where the exception operates and the charge affects additional property, the squatter will be able to require the chargee to apportion the amount secured by the charge between the land in the squatter’s new registered title and the remainder of the property subject to the charge. The apportionment will be on the basis of the amount of debt secured by the charge at the time the squatter applies for apportionment and the respective values of the land that was adversely possessed and the rest of the property that is subject to the charge. The chargee must discharge the squatter’s estate on payment of the amount apportioned to that estate and their costs. The charger’s liability to the chargee will be reduced accordingly. The procedures can only be instigated once the squatter has been successfully registered. HM Land Registry plays no part in them. They require the squatter to give notice to the chargee requesting that the charge be apportioned. The squatter is required to provide valuations of the land comprising the new registered title and the other property subject to the charge.

Leasehold matters
1. Adverse possession of registered leasehold land
As soon as the squatter takes possession of land that is leased, time runs against the tenant. Time does not run against the landlord until the lease expires – unless the adverse possession started before the lease, in which case time will continue to run against the landlord during the term of the lease.
2. Encroachments onto registered land from leasehold land
In respect of leasehold land there is no adverse possession by a tenant unless it clearly appears that the tenant has made an encroachment for his own benefit.

The transitional provisions
There are important transitional provisions in the Land Registration Act 2002 covering cases where a squatter was in adverse possession of registered land for the requisite limitation period under the Limitation Act 1980 so as to have acquired the right to be registered as proprietor before 13 October 2003. This will usually have happened if the squatter was in adverse possession for at least 12 years before 13 October 2003, though sometimes a longer period will be necessary.
A squatter may be able to apply under either the transitional provisions or the new regime. If they make applications both under the new procedure and under the transitional provisions, we will ask for confirmation as to which application should proceed first.

This note is a general summary of the law and should not replace bespoke legal advice.
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