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Finders Keepers: The Law on Adverse Possession

An Article by Megan Eustace

Adverse possession, often nicknamed ‘squatter’s rights’ is an inherently problematic area of law spanning centuries. It is a means of attempting to acquire land through occupancy whilst at the same time claiming ownership of the land.

The doctrine of adverse possession flows from a concept in Roman law known as usucapio. The Napoleonic code spread the idea through Europe and the first UK statute referring to it is from 1623.

The current law of adverse possession involves two separate statutes and the common law.

The key case in adverse possession remains Pye v Graham [2002], which made it to the European Court of Human Rights.

  • Pye, being the landowner, entered into an agreement with Graham to allow the latter to use the land for agricultural purposes only.
  • When this agreement expired, Pye learnt that the land was worth millions and wanted to sell it to a developer, however Graham refused to leave and continued to occupy the land for a further 15 years without challenge from Pye.
  • There were strong facts in favour of Graham’s possession claim, he had full enjoyment of the land without payment for twelve years, however it was known that the land belonged to Pye.
  • The Courts struggled to reach a decision; the High Court awarded in favour of Graham, as Pye had failed to take possession of the land, but this was overturned by the Court of Appeal on the basis that the land was only used because of the grazing agreement and Graham had not actually been in possession of the land.
  • This case went to the House of Lords, where they looked to tighten the rules when it comes to registered estates and awarded in favour of Graham and the High Court judgment.

While this case was being heard, parliament was introducing the Land Registration Act 2002. This meant ten years of possession had to be shown, as well as reasonable belief that the land belongs to them. The introduction of Legal Aid, Sentencing and Punishment of Offenders Act 2012 further restricted claims for adverse possession in that it made squatting in residential properties illegal. When the legislation came into force, it was unclear as to how this would affect adverse possession; which law took precedence? Could someone still apply for adverse possession even if they had illegally obtained occupancy through squatting?

Best v Chief Land Registrar and the Secretary of State [2015] allowed Best to claim adverse possession where he had acquired an empty and vandalised property that he developed to live in. This has been furthered by Rashid v Nasrullah [2018], where the adverse possession was allowed to stand, despite being acquired by fraud.

Thorpe v Frank (2019) took the view that the act of paving an area of land constituted a sufficient degree of exclusive physical control to amount to ‘possession’. This case has varied the test for adverse possession making the act of enclosing the land not a definite requirement. It was held that the nature and character of the land was important.

It is clear from case law that the rules on adverse possession with regards to registered land need to be clarified. A recent case in the news shows the devastating effects, both financially and personally, of fighting an adverse possession battle. A couple, the Rolands, bought a holiday cottage in the Cotswolds in 2016 with the belief that a 7ft x 12ft paved patio area belonged to them. Three years down the line, and having already incurred £8,000 in legal costs, the Rolands are still locked in a dispute with their neighbour (Mr Annett) who claims that the land actually belongs to him. The Rolands case is that Mr Annett is entitled to a third of the disputed land, as per the title plan registered at the Land Registry, however Mr Annett claims that the plans have been drawn up incorrectly and that he has use of the entire area, as the previous owners had granted him possession.

The matter is further complicated by the fact that most new case law is still decided on the old principles of adverse possession. If the possession, even of registered land, has accrued 12 years prior to the introduction of the 2002 Act, that application disregards the new rules and we go back to the Limitation Act 1980.

Due to the serious impact such a loss can have on a property and the potentially costly and time-consuming remedying process in correcting an adversely possessed piece of land, insurance is a useful solution. DUAL Asset insure transactions every day throughout the world where land falls outside the registered legal ownership of the property. However, the level and complexity of each case often varies significantly. While it is not impossible to insure registered land, there are a lot of factors to take into consideration given the high chance of a claim every time the registered land is transferred by the ‘true’ owner. Key facts include (but are not limited to) what structures are on the land, whether the land has been subject to physical acts of exclusive possession by the ‘squatter’, and whether there is any prospect of another party having an interest in the land. DUAL Asset will always seek to provide a solution that will enable a transaction to proceed, and consider every case on the individual merits in a pragmatic and efficient manner.

For more information, please contact Megan Eustace – Assistant Underwriter on meustace@dualgroup.com or 0203 808 2592 / 07763 528 345.

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