Squatter’s Rights: The Basics

Since the era of Henry I in England, societies have understood that property ownership is an important means to building wealth for individuals and creating value for communities. Therefore, when property was left unclaimed or abandoned it wasn’t realistic to leave such a valuable resource unused and the government allowed the person who had labored to improve the land to be the legal title holder. Today, property abandonment still occurs as it did around 1068 and property rights obtained through these same methods are still recognized as a legitimate legal means to property ownership in the United States, Europe, and Brazil.

The term squatter’s rights is generally used when referring to the legal theory of adverse possession, but can also refer to homesteading, which is legal, government-sanctioned squatting. The notion that a squatter can have legal rights frequently invokes a negative reaction at first glance. How could a person who stole or took land for free have legal rights to keep the property? However, the laws of adverse possession and homesteading have existed throughout history because they serve important social functions.

Anyone who has paid value to purchase or develop property expects certainty in their right to realize accumulated gains in value along with the legal right to exclude others from it or to profit from allowing others to use it. But, consider any piece of property and whether a property owner can be certain that any particular piece of land has never been taken without compensation at some point.

It wouldn’t be fair to the current owner who openly claims title to a piece of property for many years and invests to improve it to suddenly have a past owner swoop in and evict the current owner by exerting legal title. Real property has little value without certainty of the right to exclude others and to pass title for compensation. Therefore, the statute of limitations to evict a trespasser on land expires after a reasonable amount of time and title passes to the current holder, providing certainty in the property rights of a title holder after a set period of time, called the statutory period.

With adverse possession, the issue is not whether the current holder has knowledge that a previous owner was a squatter or is a squatter himself, the issue is that the original owner failed to evict a trespasser within a reasonable amount of time. In order to provide the opportunity for someone to realize value from that property, the law steps in and passes title to the person deriving the most use from it.

The requirements to gain title by adverse possession are purposely difficult for a squatter to meet due to the harsh recourse against the original title holder when adverse possession is established. To establish adverse possession a squatter must have:

1) Actual and continuous possession of the property for the entire statutory period, which varies by jurisdiction, but in the United States tends to be approximately 20 years;

2) Use of the property that is open and notorious putting the title holder on notice of the squatter’s intent to claim title by constructing buildings, fences, signage, etc.;

3) Exclusive use of the property by the squatter absent concurrent use by the title holder of the property; and

4) Entering the land without permission from the title holder, also known as an initial trespass or hostile intent.

When all the requirements are met, title passes from the previous title holder to the squatter without compensation and carries with it the right to exclude others, to sell the property to another with the value of full legal title, and the right to rent or mortgage the property. It is required that an ejectment action be brought within a specified time, otherwise the original title holder is assumed to have acquiesced.

When government property is concerned, government sponsored homesteading provides legal title for squatting on authorized government land. Through homesteading the government grants land to individuals without compensation in order to confer benefits on society. The 1862 Homestead Act in the United States provided that individuals were allowed to obtain title to certain authorized land without compensation after five years of occupation and use. The government determined that providing certain land to individuals would provide more benefits to the country than the costs associated with the law and it was an impressive success. Homesteading was open to all citizens including freed slaves, providing a means to increase wealth for people who had very little in terms of assets. Because land ownership provides the ability to rent, mortgage, improve, transfer for value, and otherwise use the land for profits, there is a direct correlation between wealth and land ownership. By giving individuals who lacked other assets the opportunity to own property and the related incentives to improve it, the United States government was able to dramatically increase the economic conditions for individuals and the nation with one act.

This history of granting title to those who use and occupy land for a duration of time is a long standing tradition, principle and device available to governments to provide certainty, fairness and increased economic conditions for its citizens. Property law serves primarily to protect the title holder from claims against all others. However, when property is abandoned by the original owner as evidenced by the failure to evict a trespasser, the social function of property requires the law to step in and protect rights of those who seek to benefit from the value that property carries when having reasonably relied on the actions of abandonment by previous owners.