Adverse Possession – Get Off My Lawn!

What is Adverse Possession?

Disputes over boundary lines that are longstanding may result in a change in ownership, therefore, a change in the boundary line, regardless of the results of a survey.  The common offensive or defensive theory to get around the legal description and survey is adverse possession. Adverse possession is legal conclusion based on facts. Specifically, facts that show the adverse possessor has been treating the property as an owner would for the period of the statute of limitations for a quiet title or ejectment action.

So the court is asked to quiet title to the property in the name of the adverse possessor or the record title holder depending upon the facts proven. The legal conclusion confirms the ownership of real property arising from certain facts which are not of record. It is not the result of a judicial decision. Rather, the court confirms that sufficient facts have already created a superior interest in real property.

Technically then, the action is one for quiet title or ejectment under Chapter 7.28 RCW.  The record owner may attempt to eject the adverse possessor using the statutory cause of action, the response to which would be a counterclaim for quiet title based on adverse possession. Or, the adverse possessor may file an action to quiet title as against the record owner and the record owner defends by disputing the facts establishing possession, and counters with ejectment.

7.28.010. Who may maintain actions – Service on nonresident defendant

Any person having a valid subsisting interest in real property, and a right to the possession thereof, may recover the same by action in the superior court of the proper county, to be brought against the tenant in possession; if there is no such tenant, then against the person claiming the title or some interest therein, and may have judgment in such action quieting or removing a cloud from plaintiff’s title; . . .

The ten-year rule is the general statute of limitations for recovery of real property.  Facts amounting to adverse possession, with nothing more, must exist for ten years for superior title to arise in the claimant.

§ 4.16.020. Actions to be commenced within ten years – Exception

The period prescribed for the commencement of actions shall be as follows:

Within ten years:

(1) For actions for the recovery of real property, or for the recovery of the possession thereof; and no action shall be maintained for such recovery unless it appears that the plaintiff, his or her ancestor, predecessor or grantor was seized or possessed of the premises in question within ten years before the commencement of the action.

Adverse possession plus color of title or payment of taxes shortens the limitations period to seven years:

7.28.050. Limitation of actions for recovery of real property – Adverse possession under title deducible of record

That all actions brought for the recovery of any lands, tenements or hereditaments of which any person may be possessed by actual, open and notorious possession for seven successive years, having a connected title in law or equity deducible of record from this state or the United States, or from any public officer, or other person authorized by the laws of this state to sell such land for the nonpayment of taxes, or from any sheriff, marshal or other person authorized to sell such land on execution or under any order, judgment or decree of any court of record, shall be brought within seven years next after possession being taken as aforesaid, but when the possessor shall acquire title after taking such possession, the limitation shall begin to run from the time of acquiring title.

The record owner who does not actively seek

§ 7.28.070. Adverse possession under claim and color of title – Payment of taxes

Every person in actual, open and notorious possession of lands or tenements under claim and color of title, made in good faith, and who shall for seven successive years continue in possession, and shall also during said time pay all taxes legally assessed on such lands or tenements, shall be held and adjudged to be the legal owner of said lands or tenements, to the extent and according to the purport of his or her paper title.

The attorney will see these facts come up in the context of a boundary dispute involving anywhere from a few square feet to tracts of acreage.  One party may have been using the property of another  for many years without knowledge and then a new owner comes in that asserts ownership.  A surveying mistake or a difference of opinion or method in resolving surveying issues may result in conflicting surveys.

In any case, traditional attitudes toward private ownership of real property, from the depths to the heavens, as a sovereign, in effect create the “Get off my lawn.” Mentality and confrontation.

Part Two Coming Up Next Week

Get of my lawn about adverse possession

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Beware Of Equity Skimming

Equity Skimming is Creative Financing

Property owners, whether they are landlords or occupy their own home, need to be aware of “creative financing” that may be against the law and also financially risky.  In the current recession, some may not be aware of the dangers in seller financing of sales of distressed properties in a falling or recovering market.

A common illegal practice called “equity skimming” works generally like this:

A purchaser asks a seller to take a second mortgage for most of the purchase price and places a senior lien on the property in order to borrow the equity in cash.  Usually there is a promise to use the cash to take care of deferred maintenance and add value to the property.  Instead, the skimmer pockets the cash and lets the senior lienholder foreclose.  The seller’s junior lien is foreclosed and the senior lender takes the property, while the skimmer gets away with the cash. Sellers and lenders may be victims in this scam but the lender may also be accused of the crime.

What You Need To Know

A law was passed that makes this practice a felony and a violation of the Consumer Protection Act.  Courts have also held that a pattern of such practices violates laws against Racketeering, i.e. such practices are held to be organized crime.

The specific prohibitions in Chapter 61.34 RCW are  as follows:

The person purchases a dwelling in a transaction in which all or part of the purchase price is financed by the seller and is

(A) secured by a lien which is inferior in priority or subordinated to a lien placed on the dwelling by the purchaser, or

(B) secured by a lien on other real or personal property, or

(C) without any security; and

(ii)   The person obtains a superior priority loan which either

(A) is secured by a lien on the dwelling which is superior in priority to the lien of the seller, but not including a bona fide assumption by the purchaser of a loan existing prior to the time of purchase, or

(B) creating any lien or encumbrance on the dwelling when the seller does not hold a lien on the dwelling; and

(iii)   The person fails to make payments or defaults on the superior priority loan within two years subsequent to the purchase; and

(iv)   The person diverts value from the dwelling by applying or authorizing any part of the proceeds from such superior priority loan for the person’s own benefit or use.

Criminal Penalties From Equity Skimming

image of a law book and gavel

Courtesy of nirots at Free Digital Photos.net

Any person who willfully engages in a pattern of equity skimming is guilty of a class B felony under RCW 9A.20.021 . Equity skimming shall be classified as a level II offense under chapter 9.94A RCW.

 Civil Actions From Equity Skimming

There are also actions brought by the Attorney General’s office and individual civil actions and penalties under the Consumer Protection Act including damages, increased damages, attorney fees and costs. This is a fraud that is not cured by “as is” or “buyer beware” language or any consent or waiver by the seller. Any kind of creative financing that puts the seller in a junior position also requires transparent disclosures by closing agents and sellers are advised to consult their independent attorney for legal advice.