They say there is no such thing as a free lunch. However, with a bit of luck, ingenuity and effort you may be able to get a free home?

Now I’ve got your attention. 

With, all the fuss in relation to rising property prices there might just be another way for some bold, canny and enterprising entrepreneurs to get into the property market! You may think I’m joking but it is true.

This is exactly what happened in the recent case of McFarland v Gertos [2018] NSWSC 1629, a case which has had significant media interest.

In this instance Mr Gertos was successful in becoming the registered owner of a property despite never having bought or rented the premises.

How you may ask, if it’s too good to be true it probably is. Read on?

The Facts in McFarland v Gertos

Mr Gertos made a claim for adverse possession. Mr Gertos was an accountant and was apparently visiting clients in the street. He noticed the property, which he described as vacant and falling into disrepair. He thought there were squatters living in the dark and smelly building which had broken windows, a failed bathroom, a leaking roof, rubbish in the rooms including dirty mattresses and no power.

Wasting no time, he hired a builder, carried out significant renovations, secured the property and changed all the locks. Mr Gertos was smart, he sought legal advice and once receiving that legal advice began to renovate the property incurring significant expenses.

Once renovated, he openly advertised the property in Ashbury for rent, paid council rates and arranged for a real estate agent to manage the property.

In considering Mr Gertos’ claim Justice Darke, who heard the case, found that the possession of the property was open, not a secret, was peaceful and not by force, adverse and not by the consent of the true owner. It also continued for more than 12 years uninterrupted.

Under NSW law it is possible for you to become the owner of land by ‘adverse possession’ if you can prove you have had possession of land continuously for a period of 12 years or more. 

To be able to establish that you have possessed the land physically, you have to show that you occupied the land in a hostile fashion, i.e. against the rights of the legal owner, that you actually possess the land that you have occupied it in an open and notorious fashion, that you have possessed the land continuously and exclusively, that you have paid taxes on the property and carried out repairs and maintained the property to the exclusion of the true or owner.

Such occupation must also be ‘adverse’ to the registered proprietor.  Accordingly, you cannot obtain possessory title of land that you have leased or occupied pursuant to some arrangement with the registered proprietor.

The Facts in McFarland v Gertos

The original owner of the property in question passed away in 1947.  At the time of death there was a tenant in the property who remained as a tenant right up until the tenant’s death in 1998.

Following the death of the tenant, noticing that the property was vacant, Mr Gertos took possession.  He changed the locks and made renovations to the property.  Following 14 years of alleged continual possession he made his application.

The plaintiffs argued that they were entitled to the land through intestacy but ultimately, they were unsuccessful and Mr Gertos became the legal owner.

Lessons

While this case gained significant media attention and understandable outrange from homeowners, it is important to note that cases of adverse possession are rare.  Presumably this is because the period of uninterrupted and exclusive possession must be for at least 12 years in NSW.  Additionally, investing in a property that is adversely possessed is of some risk.  

Had the Plaintiffs brought forward a valid claim before the expiration of 12 years the significant expenditure to renovate the property would have been in vain and would not have made him entitled to become the registered proprietor of the property.

You are now probably thinking that I may be able to make a claim for adverse possession. If my fence encroaches upon my neighbor’s property and that encroachment has been in place for more than 12 years. 

Often, especially in rural properties, no one really knows if the boundary fencing is correct unless a survey of the property is made and that can be quite expensive. However, with Torrens Title land, the adverse possession may also have to apply to the whole parcel of the land and not part of it. As most land ownership in New South Wales is Torrens Title, this means that in most cases, for example, where there is a dividing fence placed in the wrong place for a number of years, the owner, with the benefit of this extra strip of land cannot claim ownership of it under this principle. Further adverse possession is not available for Crown land.

Encroachment

The same principle applies in relation to the encroachment of buildings. There is the encroachment of buildings act 1922. As the name suggest this regulates situations where a building is built across a boundary. It applies to substantial building of permanent character and includes walls, overhangs and any part of a building above or below ground that crosses the boundary.

If there is an issue as to the exact boundary, and hence, whether the building will or does encroach, an application can be made to the Registrar General for a boundary determination under the real property act or if this is not applicable, to the Land and Environment court for an order to determine the market recall of the true boundary.

If there is an encroachment you can apply to the Land and Environment Court for an order for compensation; a grant of interest like a transfer or easement, or have the encroachment removed. 

In determining compensation and the orders the court considers who made the application, the circumstances, how the encroachment arose, the situation and value of the land, the character and use of the encroaching building and any loss or damage that may be incurred as a result of the encroachment.

Now if you’re thinking you know the whereabouts of a vacant block of land, or that little old house that appears to be abandoned and you’re bold enough you may be able to make a claim for adverse possession. It’s not easy. But as the recent case shows it can be done. In cases such as these, before you start developing the property, it would be essential to obtain some good legal property advice before getting your hopes up. 

It’s also a salient lesson for executors of deceased estates who take their eye off the ball for too long, or in this case their eye off the house. 

Funny you should be thinking who I can ask for such advice. Paton Hooke lawyers and Conveyancers has been providing property Law and Conveyancing advice for over 30 years. Not only do we have experienced and qualified lawyers who have been drafting clauses and contracts for many years, we also have an award-winning licensed conveyancer who specialises purely in property and conveyancing Law.

Don’t leave any windfall to chance, come and see us and we can help you with your adverse possession claim. You may have more luck, however, if you buy a metal detector.

James Paton.