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Dispute Resolution, Property

Adverse Possession – The Sleeping Giant

Adverse Possession – The Sleeping Giant

You may recently have come across in the media the case of a developer called Bill Gertos, who successfully took possession and subsequent ownership of a property he entered, occupied, and ‘held out’ out to be his own. This is a timely reminder to landowners that even though you may be the registered proprietor and/or documentary owner of the land, you need to be careful that there is no-one else in possession of your land without your consent. If somebody else has possession and you are asleep at the wheel, then you could be exposed to a claim of adverse possession.

What is Adverse Possession? 

Adverse Possession, or Possessory Title as it is also called, is based on possession of land rather than on documents, as the name suggests. The possession of the land is adverse to the documentary owner’s rights and interests in the land.

Where did Adverse Possession originate?

Adverse possession is derived from relatively ancient English land laws applying from medieval times onwards, which were essentially based on protecting ownership and possession against all except a person who could prove earlier possession. A limitation period would also apply, after which any claims of earlier possession were defeated. The limitation period would act to extinguish any rights of previous landowners who had possessed the land for some period.

Current laws surrounding Adverse Possession 

As outlined in Section 45D of the Real Property Act 1900 (NSW), a person in possession of land has the right to apply to Land Registry Services to have the land registered in their name, regardless of whether they are the registered proprietor and/or documentary owner of the land, subject to certain conditions being met.

In order to extinguish and displace the registered proprietor and/or documentary owner’s title, the possession of the person must be “open, not secret; peaceful, not by force; and adverse, not by consent of the true owner” (See Mulcahy v Curramore Pty Ltd [1974] 2 NSWLR 464). There must also be an intention to possess the land to the exclusion of all others, including the registered proprietor and/or documentary owner. If all of these conditions are not met, then a claim for Adverse Possession will fail.

How long does a person need to be in possession before being able to make a claim for Adverse Possession?

In New South Wales, the time required for a person to be in possession of land prior to lodging a claim for adverse possession is 12 years. After 12 years has elapsed, and subject to the conditions outlined above being met, the registered proprietor’s and/or documentary owner’s rights to the land are extinguished in the eyes of the law. The possessor can then lodge a claim that they are entitled to the land by way of adverse possession.

Should the registered proprietor and/or documentary owner become aware of the possessor, they need to try to remove the possessor, or alternatively seek orders for their removal prior to the 12-year limitation period. Otherwise they may be exposed to an Adverse Possession claim.

Recent Supreme Court case on Adverse Possession – McFarland v Gertos [2018] NSWSC 1629

In 1998 an accountant and developer named Bill Gertos was visiting clients in Malleny Street, Ashbury, when he discovered a derelict house at 6 Malleny Street which was seemingly abandoned. Mr Gertos proceeded to renovate the house and rent it out for over 15 years. He spent approximately $140,000 on the house in renovations and paid all rates, water levies, land tax, and insurance for the property.

In 2017 Mr Gertos applied to Land Registry Services to claim adverse possession, as he had possessed the property for over 12 years and also satisfied the other legal criteria.

Before his claim was decided, relatives of the deceased owner commenced legal proceedings in the Supreme Court for an injunction to block Mr Gertos from becoming the registered proprietor. The relatives’ claim ultimately failed and Mr Gertos became the registered proprietor of the property, which was valued at approximately $1.7 million.

Conclusion

As these careless landowners discovered, Adverse Possession is an old legal doctrine that is still well and truly applicable to land ownership today. It may seem an unfair law, but it is important that people be mindful of it, from both a landowner and possessor’s perspective.

If you think you may be entitled to make an Adverse Possession claim or may be exposed to an Adverse Possession claim, then don’t hesitate to contact Priority Business Lawyers to assist.

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