‘Squatter’s Rights’ – How Time Can Lead To Ownership of Land

How can you own land through the benefit of time only?

The answer is the principle of adverse possession, colloquially known as ‘squatter’s rights’.

This principle can be relied on where a person, who is not the legal owner of the land, has possession of the land for a continued period of time. An argument can then be formulated that the person acquires possessory title to the land, which in turn extinguishes the registered proprietor’s interest in the land, such that the person becomes the legal owner (hereafter referred to as the possessory title holder).

The Law of Adverse Possession

In New South Wales, the law of adverse possession is governed by the Limitation Act 1969 (NSW), the Real Property Act 1900 (NSW), and common law principles.

For land to be adversely possessed, a person must possess the land:

  1. exclusively against all others,
  2. openly, i.e. it cannot be secret,
  3. adversely to the registered proprietor, i.e. without their consent (where a person has leased or occupied the land under agreement from the registered proprietor, the principle of adverse possession could not be relied upon),
  4. peacefully and not with force, and
  5. for a continuous and uninterrupted period of at least 12 years.

If the above criteria are met, the registered proprietor’s legal interest in the land is ‘extinguished’ and cannot be revived by any Court application or process except with the possessory title holder’s consent.

Adverse possession may also be established where the adverse possessor had a mistaken belief that the land belonged to them and there was no deliberate intention to adversely possess the land.

Whole of the Land vs Part of the Land

Whether you can rely upon the principle of adverse possession for a portion of a lot of land depends on the form of land ownership. Typically, in New South Wales, a person would need to possess the whole of the relevant lot of land, and not just a slice or portion of the lot of land.

Limitation Periods

If a registered proprietor wishes to recover land that a person has had possession of, the registered proprietor must either retake physical possession of the land, or if this is not possible, commence proceedings in the relevant Court before the person has possessed the land for a continuous period of 12 years.

If the registered proprietor fails to take such action, the person will acquire possessory title and the registered proprietor will no longer have any interest in the land.

Where the continuity of possession has been broken, for example, where the person ‘abandons’ possession of the land, then the 12 year period will stop and recommence if the subject land is again adversely possessed by the same or a subsequent party.

Registration of Adverse Possession & Possessory Title Applications

Claims for adverse possession are exceedingly rare, however, they do still occur and more commonly where a registered proprietor has passed away and their Estate (Executors or Administrators) loses track of land.

A person wishing to register their possessory interest in land can do so by lodging an application with NSW Land Registry Services with the required supporting documentation, which includes:

  1. a plan of survey prepared by a surveyor,
  2. statutory declaration by the applicant,
  3. statutory declarations from a number of parties who do not have an interest in the application or land, and who can testify to the extent and nature of the possessor’s occupancy, and
  4. a letter from the local Council in regards to payment of rates.

Parties who are intending to lodge an application for possessory title should also be aware that transfer (stamp) duty is payable on the application at the same rates as a normal transfer of land. The person liable to pay the transfer duty is the applicant. As transfer is required to be paid on the market value of the land, the applicant will be required to obtain a market valuation of the lot or part of the lot so that transfer duty can be properly calculated.

Key Takeaway: It is important for landowners who do not reside on, or otherwise lease out, their land to undertake inspections during ownership to ensure a party is not occupying the land adverse to their ownership.
Key Takeaway: Prospective purchasers, especially of Qualified or Limited title land, should also undertake thorough due diligence searches and inspections of the property prior to exchanging Contracts for land. Roberts Crosbie Mortensen Lawyers can assist prospective purchasers in making all relevant enquiries.

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The information in this article is not legal advice and is intended to provide commentary and general information only. It should not be relied upon or used as a definitive or complete statement of the relevant law. You should obtain formal legal advice specific to your particular circumstance. Liability limited by a scheme approved under Professional Standards Legislation.