Squatter laws in the spotlight after developer finds empty house

A property developer who came across an empty house in Sydney 20 years ago has been awarded title to the million dollar property under squatter laws.

Mr Gertos discovered the home in Ashbury in 1998 and, having found the home open, changed the locks, conducted renovations and began renting it out.

Relying on the law of adverse possession, Mr Gertos applied to be registered as the legal title holder of the property, estimated to be worth $1.6 million..

Mr Gertos was successful despite being challenged by the family of the registered title holder in the Supreme Court of New South Wales. The decision raises alarm bells for absent owners – but is there cause for concern?

What is adverse possession?

The law of adverse possession allows for the extinguishment of a “documentary title” by a “possessory title” through the passage of time. Three things are required for this to occur.

1. The squatter must be in adverse possession of the property. A squatter will be in adverse possession when they have factual possession of the property and demonstrate an intention to possess the property.

Factual possession requires an exercise of physical control that is “open, not secret, peaceful not by force; and adverse, not by consent of the true owner”.  An intention to possess may be demonstrated by acts such as: erecting fences, effecting improvements, erecting “no trespassing signs”, taking up residence, cultivating land, running livestock or payment of rates and other outgoings.

2. The adverse possession must be continuous for the duration of the limitation period. Upon the squatter being in adverse possession, the registered title holder can bring an action to recover the land.

In Queensland and New South Wales the limitation period on an action to recover land is 12 years, whilst in Victoria it is 15 years. In cases involving disability, fraud or mistake, the limitation period can be extended up to a maximum of 30 years in each of these States. Where the true owner’s identity cannot be established, the limitation will not expire until 30 years have expired.

3. Once the limitation period has expired, the squatter must apply to the Registrar-General for registration of title by possession. A process is then followed whereby in broad terms:

• An application is made by the squatter in the approved form;
• The Registrar of Titles assesses whether the application has merits;
• General public notice of the application is given along with notice to the registered owner; and
• The registered owner has an opportunity to object by way of caveat and/or institute Court proceedings as occurred here, failing which the squatter’s interest may be registered.

Takeaway points

The outcome in the Gertos case is highly unusual and requires a situation where someone is allowed to occupy an owner’s land for many years. It does, however, highlight the risks of adverse possession which can sometimes arise.

An example might be where owners suffer ‘run down’ houses to be occupied without any formal arrangements believing this is the better approach rather than assuming any legal obligations to an occupant.

If you have any concerns, please contact us our Property Developer team.

This article was written by Ryan Prygiel, Administration Assistant – Property and Construction.