Daily Development for Tuesday March 21, 1995

By: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri
prandolph@cctr.umkc.edu

ADVERSE POSSESSION; MORTGAGES: Lien rights of mortgagee not are not extinguished by subsequent adverse possession of the mortgaged property. Berryhill v. Moore, 881 P.2d 1182 (Ariz. App. Div. 1 1994).

Neighbors adversely possessed a strip of land belonging to a mortgagor by tethering grazing animals on the property. The court, noting that Arizona is a lien theory state and that the mortgagees had no immediate right of possession of the property until the mortgagor defaulted on the loan, held that any cause of action by the mortgagee to recover the adversely possessed property had not yet accrued. Thus, the statute of limitations did not begin to run against the mortgagees because they had no cause of action for possession of the property; therefore the mortgagees retained their lien claim with respect to the disputed land.

Comment: Of course, the notion that lien theory or title theory of mortgages should have anything to do with the issues in this case is absurd. The question ought to be one of adverse possession policy. The reason is easy to understand - modern adverse possession theory is designed primarily to quiet title in the person treated by the world as the owner - the person having continuous uncontested possession. Remember that when adverse possession runs, title reverts back to the time that possession commenced. Leaving the adverse possession subject to a mortgage executed by someone who, under the theory, gave up title to the adverse possessor before entering into the mortgage, is totally inconsistent with this quiet title notion.

Nor is the decision consistent with analogous adverse possession situations. If the owner of property subject to a running adverse possession "splits the title" of the property, such as by creating a life estate or a mineral estate, or even by actually transferring or subdividing the property, this normally makes no difference insofar as the adverse possessor is concerned. When adverse possession is complete, the possessor gets title that belonged to the former owner at the time the adverse possession began. Note that in certain of these cases, such as where the property is divided between a remainder person and a life tenant, one of the parties would have no right to bring a possession action. Nevertheless, that party is cut off by the completed adverse possession, even in states with statutes similar to Arizona's. Thus, the fact that a "true owner" interest does not have a present right to bring a possessory action will not, in every case, bar adverse possession from running against that interest.

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