>
>Daily
Development=20
for Wednesday, July 9, 2008
>by:
Patrick A.=20
Randolph, Jr.
>Elmer F. Pierson
Professor of=20
Law
>UMKC School of
Law=20
>Of Counsel: Husch Blackwell
Sanders=20
>Kansas City, Missouri
>=20
>ADVERSE POSSESSION; REQUIREMENT OF HOSTILITY:
Maryland=20
claimant can adversely possess land she knows to be titled in another
after the=20
titled owner has abandoned the property in the face of a threatened
third party=20
foreclosure.
>
>Yourik
v.=20
Mallonee, 921 A. 2d 869 (Md. App. 2008) cert. denied, 925 A.2d 635=20
>
>This=20
is a fascinating =E2=80=9Cmother vs. son=E2=80=9D case, quieting title
in the mother to a home=20
formerly owned and entitled to the son. The son abandoned the property
pending a=20
third party foreclosure and the mother and her deceased husband entered
and for=20
the next forty years, repaired and maintained and paid taxes on the
property,=20
and at various times either occupied it or rented it out. All
along the=20
mother knew that the son had title and the son knew that his parents
were=20
occupying the property.
>
>The
son originally=20
obtained title when his parents bought the property for him as a sort of
wedding=20
present. The parents paid the down payment and all the closing
expenses=20
and arranged for title to be transferred from third part sellers to the
son and=20
his new bride as tenants by the entireties. The balance of the
purchase=20
price was financed by a mortgage. The court doesn=E2=80=99t tell
us whether the=20
parents cosigned or guaranteed the mortgage note, but it was clear that
the new=20
could undertook originally to make the payments and they, undoubtedly
were=20
themselves on the note, as they were owners.
>
>Unfortunately, the=20
marriage quickly fell apart, and within a year the wife had left the
home and=20
more or less disappeared from the scene. (In this action, she
resurfaced=20
long enough to quitclaim any interest she had to the mother and
acknowledge=20
mother=E2=80=99s ownership. Her actions may be moot because the
court never=20
indicates that there was a divorce, so one assumes the wife could not=20
unilaterally transfer the entireties estate. To keep things
simple, we=E2=80=99ll=20
just assume as the court did, that the departed wife had nothing much to
do with=20
the dispute.)
>
>As
indicated,=20
mother and the late father cured the defaults, took over payments on the
mortgage, and continued to look after the property for the next forty=20
years. During that time, father died, and ultimately mother took
up=20
residence in the property. Apparently the parents had lived there
on and=20
off over the years.
>
>The
testimony was=20
full of disputes as to who said what to whom about what the parties
intended=20
concerning the state of ownership of the property. The trial court
concluded that the parents occupied the property under claim of
ownership, and=20
not pursuant to the son=E2=80=99s permission, and that such possession
was sufficiently=20
hostile to qualify as adverse possession. The appeals court here
affirmed=20
that decision.
>
>The
son argued=20
that Maryland=E2=80=99s adverse possession statute, as interpreted by
prior Maryland=20
case law, requires that there be both claim of right and =
=E2=80=9Ctitle.=E2=80=9D The=20
court concluded that, despite the language of prior cases saying that a
=E2=80=9Cclaim=20
of title=E2=80=9D was required, the only requirement for adverse
possession hostility in=20
Maryland was occupation under claim of right, even when title is known
to be in=20
another:
>
>=E2=80=9CThe rule at law,=20
as well as in equity, established by an unbroken course of authority,
is, that=20
possession, to be adverse, must be accompanied with a positive and
exclusive=20
claim of the entire title, and if the title claimed be subordinate to,
or admits=20
the existence of a superior title, the possession will not be taken as
adverse=20
to that title; nor does it matter how long such a possession may be
continued,=20
for it can have no effect in the way of barring the legitimate title.=20
[Son] misconstrues this language, along with the oft-repeated test
that=20
adverse possession claimants must occupy the property "under claim of
title or=20
ownership," to mean that adverse possession can never be established by
a=20
claimant who occupies the property with knowledge that another person
has legal=20
and/or record title. This interpretation rests on [Son=E2=80=99s]
misunderstanding=20
of the terms "claim of title," "color of title," "claim of
ownership," and=20
"claim of right," all of which are alternative methods
of proving that the claimant's possession was=20 sufficiently "hostile" to be "adverse." As a first step in sorting through the=20 semantics, we observe that "color of title" has a narrower meaning than "claim=20 of title." "Color of title is that which in appearance is title, but which in=20 reality is not good and sufficient title." . . . When adverse possession is=20 premised upon a deed or other instrument believed to convey title, but does not,=20 whether because the instrument is invalid or otherwise fails to convey the=20 claimed interest, that instrument will "give color" only if it is "prima facie=20 good in appearance [so] as to be consistent with the idea of good faith on the=20 party entering under it." . . . Yet the established rule, followed in Maryland,=20 is that proof of color of title is not necessary to establish adverse=20 possession.=E2=80=9D
>
>Consequently,=20
Mother=E2=80=99s possession of the property was sufficient to satisfy
the =E2=80=9Chostility=E2=80=9D=20
requirement. The fact that Son knew that she was there did not
mean that=20
she was acting with his permission, rather than under her own
independent claim=20
of right.
>
>Comment 1: Not=20
only are the facts interesting, but it is fascinating that in all
Maryland=E2=80=99s=20
long legal history the Maryland courts have never had occasion to
construe the=20
adverse possession doctrine to determine whether a claim of title is=20
required.
>
>Of
course, in most=20
adverse possession cases, the possessor does claim title, even if the
possessor=20
lacks =E2=80=9Ccolor of title=E2=80=9D because the possessor believes
that the possessor=E2=80=99s=20
record ownership includes the land occupied. In other words, most
adverse=20
possession involves boundary disputes where possession over the legal
boundary=20
begins by mistake, but later is confirmed as establishing a new
ownership due to=20
the long established fact of the adverse possession.
>
>This
case is quite=20
different, since mother knew all along that Son had title.
In fact,=20
she had originally intended that Son receive title, and no one
documented any=20
transfer or title or other interest when parents moved in following
Son=E2=80=99s=20
abandonment of the property. On these facts, it seems clear that
the=20
parents were not possessing the property as agents of the son.
They made=20
all decisions and rented it out as they saw fit, apparently keeping any
net=20
rents. So the editor agrees with the decision, and views it as
consistent=20
with established law.
>
>Comment 2: But=20
note the outcome of this precedent when applied in other circumstances,=20
unfortunately all too prevalent in the current period: After a mortgage
holder=20
goes into default and abandons the property, a third party comes in and
somehow=20
convinces the mortgagee to reinstate the mortgage and accept payments
from that=20
third party. With the number of foreclosures going on, it is
not so=20
surprising that a mortgagee might jump at the chance to reinstate a
defaulted=20
file and ignore the fact that a home theft might be occurring. In
fact,=20
the third party, waving around a bit of cash, might even convince
the=20
lender to renegotiate the default payment claims or even the principle.=20
>
>The
third party=20
continues to rent out the property as the years go by, paying the taxes
and=20
ultimately retiring the mortgage. The title holder, of course,
assumes=20
that the property passed at foreclosure and probably is simply grateful
that no=20
one is pursuing a deficiency. Voila!! After the appropriate
time -=20
title passes. Note that in Maryland the adverse possession period
is 20=20
years, but in California it is only five years, and many other states
have=20
shorter periods than Maryland=E2=80=99s.
>
>Comment 3: Some=20
might say that the outcome described above seems about right? Who
cares=20
whether the =E2=80=9Cinterloper=E2=80=9D began with title?
Wasn=E2=80=99t title earned by=20
retirement of the debt?
>
>The
Editor,=20
however, fears that recognition of the possibility of adverse possession
in this=20
case might lead to a =E2=80=9Ccottage industry=E2=80=9D of foreclosed
home occupiers. In=20
fact, this is exactly what happened in California during the RTC years,
and the=20
Editor believes California now has a statute that regulates this
behavior. =20
>
>Once
the practice=20
is established, it is a short step from looking for abandoned homes to
helping=20
the abandonment along through dishonorable =E2=80=9Cforeclosure
advisors=E2=80=9D creating=20
situations in which they can step in and take over a home while
purporting to=20
act in the interests of the defaulted homeowner.
>
>Much
as we dislike=20
the widespread foreclosures, is permitting any clever interloper to
seize=20
defaulted property by adverse possession a wise approach to the=20
problem?
Comment 4: The general issue of whether an adverse possessor=20 ought to be able to claim title to property the possessor knows belongs to=20 another has been much in the news lately. The majority view, certainly, is that=20 "good faith belief in ownership" is not an issue, and the court in the reported=20 case above cites to Tiffany for the notion that such a rule would only cause=20 "liars=E2=80=99 competitions."
A recent New York case refused to depart from the rule,=20 affirming that "good faith claim of right" is not a requirement. But the New=20 York decision did receive criticism from "landowners=E2=80=99 rights" groups, and, the=20 editor understands that legislation to change the long standing common law rule=20 was introduced but failed. The editor also recalls that in Colorado, where a=20 judge allegedly adversely possessed a neighbor=E2=80=99s land, and won in court,=20 legislation requiring good faith possession was adopted - but this based on=20 hearsay and a foggy memory.
>Items reported here and in the ABA=20
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information=20
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or in the=20
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>Patrick A. Randolph, Jr., Professor of Law,=20
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