Property Owners Beware: You could lose your investment

GOMEZ SIMONE Oct. 4, 2017

Trending Now– Sophisticated Squatters

Studies release in 2015 revealed that California has 21 percent of the country’s homeless population, adding up to around 116,000 people. Owning property and letting it sit idle now can be considered not only a waste of space, but due to a trend of “Sophisticated Squatters,” a very risky proposition for the owner. It has long been known that there is a legal process called “adverse possession,” clarified in California Code of Civil Procedure sections 315 to 329.5 that enables individuals who publicly move into a neglected property to acquire legal title after living there continuously for at least five years. The possession must “open and notorious” and during the five years these individuals, referred to as “squatters”, must have been acting as a true owner would, including paying utilities and property taxes. What has not been known until now is that there gas been an increase of “Sophisticated Squatters” who spot properties – usually houses, townhomes and condominiums whose owners are out of state – and then form a legal plan to take ownership of the property through adverse possession. These Squatters are not bums and hobos as in days of old, they systematically search for properties whose owners are out of state and particularly those who have inherited properties. Then they move in and truly live “open and notoriously.”

Squatters in California

Who knew, Squatting has become a massive issue in California. Reports of squatters taking over single-family homes were found to be “in subdivisions hit hard by last decade’s housing bust.” Squatting in upscale coastal communities has also became commonplace. There was a case on the news recently of a squatter who took possession of a condominium who not only paid the property taxes and HOA dues, but even went so far as attending and voting at HOA board meetings. Even the HOA Board had no idea that this person was living in the unit without any authorization; everyone took the squatter’s word that he had purchased the property in a private sale. Of course, if the owner was handling his business, none of this could have happened. In this case, the owner inherited the property free and clear and then simply forgot about HOA dues and property taxes. It is possible the owner may not have been receiving notices from the HOA, as the homeowner’s association may not have the titleholder’s current contact information, especially since many years had passed. A California law which took effect in 2014 (Civil Code section 5260) states that HOAs are now required to send specific notices (at the request of the titleholders) to two different addresses provided by the owner, but if the owner did not update the addresses there is nothing the HOA can do.

Even if the Squatter did not go to court and gain title by adverse possession, the owner still has the unpleasant task of evicting the squatter. Evictions in California are technical and should be handled by an attorney. Titleholders who have lost title of their property to the squatter do still have a chance to gain it back. If these squatters failed to pay taxes on the property at any time during their possession, or left the property for a period of time, then the initial titleholder may be able to file and win a “quiet title” lawsuit. It would eject the inhabitants and update the property’s ownership records. However, if the squatters paid the property taxes for five years and lived there openly, then a lawsuit would most likely be unsuccessful.

What the Property Owners Should Know

Advice to out-of-area property owners: Remember, even if the property is owned in fee simple (free & clear), YOU will always be responsible to pay (1) Property Taxes, (2) HOA dues (if any), (3) Utilities (most likely), and (4) Property Insurance (unless you have a gambling problem). If you’re not getting utility bills and/or the homeowner’s association does not contact you, do not assume there are no payments to be made. This could indicate that a squatter is living in your property and paying instead of you. In this situation, it is your responsibility to contact the homeowner’s association and the utility companies and sort out the issue.

Nerd Alert: History of adverse possession: Under the Roman law, a person who took possession of a good becomes the owner if the original owner did not show up in one or two years. The Napoleonic Code included adverse possession and recognizes two time periods for the acquisition for property (30 years and less). The Napoleonic Code was adopted as the basis of law in France, Belgium, Italy, Spain, and other various European countries. In England, squatting is deeply intertwined with its history of property and obtaining land. Currently, squatting in England is a method for land to be efficiently utilized. Since squatting dates back hundreds of years in England, the practice took root in America.