The Acquisition of an Estate in Land by Adverse Possession

In the public imagination, adverse possession is often equated with squatters obtaining freehold title to valuable Hackney townhouses, something which many find inexplicable and unjustifiable.

The reality, however, is generally more mundane; more often adverse possession will arise in the context of a sliver of land between two suburban gardens or a disputed parking space.

BACKGROUND

The means of acquiring title to land commonly referred to as ‘Adverse Possession’ is in fact the combination of two things: (1) ’Adverse Possession’ and (2) Limitation.

There is a well-known saying that “possession is nine-tenths of the law”. In the case of title to land, there is some truth in that formulation. Historically, the common law has emphasised possession as the root of title. Someone ‘in possession’ was taken to have good title unless and until someone else could prove that they had a better (that is to say, pre-existing) title. Clearly, in the days before a centralised register, this would be a sensible way of arranging things. The fly in the ointment, however, is that it becomes hard to sell or transfer property if the seller’s title could be impugned by a prior owner appearing out of the blue – hence the practical necessity of a limitation period.

Accordingly, from as early as the Limitation Act of 1623, there have been statutory time limits for the bringing of claims for possession of land.

Looking at the rational for adverse possession in the modern world, the Law Commission in its report “Land Registration for the Twenty-First Century” (Law Com 254) said as follows:

10.5 It is of course, remarkable that the law is prepared to legitimise such “possession of wrong” which, at least in some cases, is tantamount to sanctioning a theft of land. So sweeping a doctrine requires strong justification. Of the reasons that are often given for it, four are particularly cogent, and of these the fourth is the most compelling.

10.6 First, because adverse possession is an aspect of the law of limitation, it is of course customary to account for it, in part at least, in terms of the policy of limitation statutes generally, namely to protect defendants from stale claims and to encourage plaintiffs not to sleep on their rights. However, adverse possession does not merely bar claims. Its effect is positive: “a squatter does in the end get a title by his possession and the indirect operation of the [Limitation] Act and he can convey a fee simple”. This can only be justified by factors over and above those which explain the law on limitation. In this context it should be noted that a landowner may be barred even where he or she is quite blameless. As we have explained above, adverse possession can take place without it being readily detectable. In any event, this particular justification has much greater force in relation to unregistered land than it does for land with registered title. Unregistered title ultimately depends upon possession. It therefore behoves a landowner to be vigilant to protect that possession and not to sleep on his or her rights. We explain below why the position is different where title is registered.

10.7 Secondly, if land ownership and the reality of possession are completely out of kilter, the land in question is rendered unmarketable if there is no mechanism by which the squatter can acquire title. This situation can easily happen, as for example where—
– the true owner has disappeared and the squatter has assumed rights of ownership for a substantial period; or
– there have been dealings with registered land “off the register”, so that the register no longer reflects the “true” ownership of the land.

10.8 Thirdly, in cases of mistake, the law of adverse possession can prevent hardship. For example, a squatter may have innocently entered land, mistakenly believing that he or she owned it, perhaps due to uncertainty as to the boundaries. He or she may have incurred expenditure under the mistaken belief of ownership. Although in some cases the squatter may have a claim based upon principles of proprietary estoppel, because the true owner knew of the acquiesced in the squatter’s mistake, that will not always be true.

10.9 Fourthly, title to unregistered land is relative and depends ultimately upon possession. The person best entitled to land is the person with the best right to possession of it. The fact that adverse possession can extinguish earlier rights to possess facilitates and cheapens the investigation of title to unregistered land. The length of title that a vendor is required to deduce is and always has been closely linked to the limitation period. Indeed, the principal reason for having limitation statutes in relation to real property appears to have been to facilitate conveyancing.

The reservations expressed by the Law Commission concerning the notion that a landowner could be dispossessed of such a valuable asset in the absence of any fault were also shared by the courts and, indeed, society at large.

Over time this lead to (1) courts incrementally raising the bar vis-a-vis the requirements necessary to prove ‘adverse possession’ and (2) to a political impetus to ‘close the loop-hole’.

By co-incidence, these two strands came together in 2002 – possibly the most important year in the history of adverse possession.

In respect of the meaning of ‘adverse possession, the House of Lords gave clear guidance in Pye (Oxford) Ltd v Graham [2002] UKHL 30.

In respect of limitation, the Land Registration Act 2002 completely re-wrote the Limitation Act in respect of registered land.

THE LANDSCAPE PRE 2002

The relevant rules for all claims for adverse possession prior to 2002 are set out in The Limitation Act 1980 which provides:

15(1) No action shall be brought by any person to recover any land after the expiration of 12 years from the date on which the right of action accrued to him or, if it first accrued to some person through whom he claims, to that person.”

Schedule 1, paragraph 1 provides:
Where the person bringing an action to recover land, or some person through whom he claims, has been in possession of the land, and has while entitled to the land been dispossessed or discontinued his possession, the right of action shall be treated as having accrued on the date of the dispossession or discontinuance.

8(1) No right of action to recover land shall be treated as accruing unless the land is in the possession of some person in whose favour the period of limitation can run (referred to below in this paragraph as ‘adverse possession’); and where under the preceding provisions of this Schedule any such right of action is treated as accruing on a certain date and no person is in adverse possession on that date, the right of action shall not be treated as accruing unless and until adverse possession is taken of the land.

(4) For the purpose of determining whether a person occupying any land is in adverse possession of the land it shall not be assumed by implication of law that his occupation is by permission of the person entitled to the land merely by virtue of the fact that his occupation is not inconsistent with the latter’s present or future enjoyment of the land.

It is to be noted that the right of action to recover the land is barred whenever 12 years have elapsed from the time when any right of action accrued: it does not have to be a period immediately before action is commenced.

In the case of unregistered land, on the expiration of the limitation period, the title of the paper owner is extinguished (s17).

In the case of registered land, under section 75(1) of the Land Registration Act 1925 on the expiry of the limitation period the title is not extinguished but the registered proprietor is deemed to hold the land thereafter in trust for the squatter.

A period of adverse possession can be made up of an aggregation of a series of ‘squatters’ so long as there is no temporal break in the chain.

PYE (OXFORD) LTD V GRAHAM 2002 UKHL 30

Pye (Oxford) Ltd (‘Pye’) was a property development company. In the early 70s it purchased a large farm which it considered had future development potential. In 1977 it divided the farm into two plots: (1) the farmhouse with 67 hectares of land and (2) 25 hectares of land for development. In 1982, Mr Graham (Snr) became the owner and manager of the farm. He also sought and obtained an agreement allowing him to graze and mow the development land. When that agreement expired, he sought further licences (the last time in 1984) but none was not forthcoming. Despite this, the Grahams continued to farm the land. In 1997 Mr Graham (Jnr) applied to the Registrar to have the land conveyed to him on the basis that he had acquired title by adverse possession. It is estimated that the value of the development land was as much as £10 million so, unsurprisingly, the application was disputed. Neuberger J at first instance found for Graham. The Court of Appeal reversed the decision. Graham appealed to the House of Lords.

The key question in the case was whether Mr Graham had exercised sufficient control over the property to amount to “adverse possession”.

Lord Browne-Wilkinson gave the lead judgment. He states that, contrary to the views expressed in some of the authorities,

“From 1833 onwards … old notions of adverse possession, disseisin or ouster from possession should not have formed part of judicial decisions … the only question was whether the squatter had been in possession in the ordinary sense of the word … After 1833 the phrase “adverse possession” did not appear in the statutes until, to my mind unfortunately, it was reintroduced by the Limitation Act 1939 “

The question, he states “is simply whether the defendant squatter has dispossessed the paper owner by going into ordinary possession of the land for the requisite period without the consent of the owner.” (36)

There are two limbs: factual possession and an intention to possess (‘animus possidendi’)

In respect of factual possession, he states: “Factual possession signifies an appropriate degree of physical control. It must be a single and exclusive possession, though there can be a single possession exercised by or on behalf of several persons jointly. Thus an owner of land and a person intruding on that land without his consent cannot both be in possession of the land at the same time. The question what acts constitute a sufficient degree of exclusive physical control must depend on the circumstances, in particular the nature of the land and the manner in which land of that nature is commonly used or enjoyed … Everything must depend on the particular circumstances, but broadly, I think what must be shown as constituting factual possession is that the alleged possessor has been dealing with the land in question as an occupying owner might have been expected to deal with it and that no-one else has done so. (41)

As to intention, Lord Brown-Wilkinson holds that what has to be proved is an ”intention, in one’s own name and on one’s own behalf, to exclude the world at large, including the owner with the paper title if he be not himself the possessor, so far as is reasonably practicable and so far as the processes of the law will allow”. (43)

The Court of Appeal had found that the Grahams had originally been occupying the land under a license that did not extend to exclusive possession and, after the expiry of the licence, they continued to occupy on the same, non-exclusive, basis. Lord Browne-Wilkinson rejected this reasoning, stating:

“Once it is accepted that the necessary intent is an intent to possess not to own and an intention to exclude the paper owner only so far as is reasonably possible, there is no inconsistency between a squatter being willing to pay the paper owner if asked and his being in the meantime in possession. An admission of title by the squatter is not inconsistent with the squatter being in possession in the meantime.”

From the judgment the following hallmarks of adverse possession are apparent:

Possession will be open, not hidden;

Possession will not be by virtue of any form of consent;

There must be possession as a matter of fact together with an intention to possess. An intention to possess is not the same as an intention to own.

Possession involves a level of control and management ordinarily expected of an owner, exclusive of any control or management by the paper owner;

There can only ever be one party (or group, jointly) in possession at any one time;

An earlier willingness to take lease or license is not necessarily inconsistent with an intention to possess.

An earlier acknowledgement of title is not inconsistent with an intention to possess – however, an acknowledgement of title will reset the limitation period by virtue of LA 1980 s29(2).

NB Compelling evidence of ‘animus’ is required where a trespasser’s use of land does not by itself clearly demonstrate an intention to possess to the exclusion of the true owner. (Powell v McFarlane (1977) 38 P&CR 452)

In the judgment of the House of Lords, the Grahams were indeed in possession of the land for the limitation period and, therefore, entitled to it.

ECHR ARTICLE 6 AND ARTICLE 1 PROTOCOL 1

Following the civil action, Pye brought a challenge in the European Court of Human Rights as to whether the provisions of the Limitation Act were in breach of Convention rights. At first instance, by a narrow margin, the Chamber found that there was a breach to the extent that there should be an obligation on the state to compensate for a loss arising out of the effect of the Limitation Act. However, this finding was reversed in the Grand Chamber.

THE LAND REGISTRATION ACT 2002

As can be seen from the Law Commission’s observations above. It felt that the rationale for adverse possession is not so persuasive in the context of a system of land registration, where the register is supposed to reflect the reality of legal rights.

Accordingly, the Commission recommended that the limitation should be disapplied in the case of registered land and a new, statutory regime imposed. That regime was enacted in the Land Registration Act 2002, Part 9.

Under the Land Registration Act 2002, the relevant provisions of the Limitation Act 1980 are expressly disapplied and a new regime created with prospective effect (s96).

Schedule 6 sets out the procedure to be followed. Under the new regime a putative adverse possessor can apply to be registered as proprietor after 10yrs. This period must immediately precede the application. (Para 1)

On receipt of such an application, the Registrar will notify the registered owner and any other interested parties of the application. (Para 2)

The registered owner and any party notified has right to oppose by filing a counter notice to reject the application.

If no counter-notice is filed, then the applicant has a right to be registered as the proprietor (para 4)

On receipt of the counter notice, the LR must reject the application unless one of 3 conditions applies (Para 5). The conditions are:
the applicant has an ‘equity of estoppel’. ie a proprietary estoppel in one of the recognised forms.
the applicant has some other entitlement to be registered (perhaps under a will or trust)
there has been a reasonable mistake as to a land boundary.

If the registered proprietor fails to bring proceedings to regain possession within 2 years of the application, the applicant may make a further application to be registered which will be successful.

Adverse possession has the same meaning under this Act as under the LA 1980 (Para 11)

NB The Act is prospective so does not extinguish rights that have accrued prior to its enactment.

ADVERSE POSSESSION AND LEASES

Where land is subject to a lease, there can be no adverse possession by the tenant.

If the tenant extends into other land owned by the landlord, there is a presumption that this amounts to an extension of tenancy, not adverse possession.

If a tenant extends into land belonging to a third party, there is a presumption that tenant possesses on behalf of landlord.

A successful adverse possessor in respect of leasehold land, will obtain title to the leasehold interest. On expiry of the leasehold interest, a new limitation period would arise in respect of the freehold.

ADVERSE POSSESSION BY UNLAWFUL ACT

Adverse possession has always been an unlawful act insofar as it comprises a civil trespass. However, following the enactment of the Legal Aid, Sentencing and Punishing of Offenders Act 2012, it became a criminal offence to live in a residential building as a trespasser.

R(Best) v The Chief Land Registrar [2014] EWHC 1370. This case decides the question of whether s144 LASPOA bars such an occupier from successfully claiming adverse possession. The Court of Appeal found that it did not.