In California one can obtain title to someone else’s property through a process known as “adverse possession.” The requirements for adverse possession are (1) pay the property taxes on the subject property, (2) actual possession that is (3) open and notorious, (4) continuous and uninterrupted for five years, (5) hostile and adverse to the true owner’s title, and (6) under either color of title or claim of right.” California Maryland Funding, Inc. v. Lowe (1995) 37 Cal.App.4th 1798, 1803. Adverse possession often comes up in cases where there is a dispute over a fence line that was not on the property boundary. Typically, the problem with establishing a right by adverse possession is that the person claiming the right has not paid the property tax on the other party’s property and thus, the claim fails.
In the recent case of Hagman v. Meher Mount Corporation (2013) 215 Cal.App.4th 82, the Second District Court of Appeal held that where the property owner suffering the encroachment is a non-profit organization and therefore exempt from the payment of property tax, the party claiming title by adverse possession need not pay the property taxes in order to establish a claim of adverse possession.
In California, it is not legally possible to obtain title to property by adverse possession against the state or a public entity. California Civil Code § 1007. Thus, Meher Mount Corporation argued that because it was formed as a public benefit corporation, that it was an exempt public entity. The Court rejected that argument, holding that what distinguished public entities from non-public entities was the fact that a public entity “is vested with some degree of sovereignty.” “Public benefit corporations lack any element of sovereignty” and so public benefit corporation are not exempt from adverse possessions claims.
The Court then went on to decide that since Meher Mount Corporation had applied for, and been granted, a welfare exemption to the payment of property taxes, that Hagman was “not required to pay property taxes on that land” in order to establish a claim under adverse possession.
Meher Mount Corporation then argued that since it had been paying the Mosquito Control and Vector Borne Disease Prevention Assessment (“mosquito assessment”), its payment of the mosquito assessment was a defense to the adverse possession claim. The Court rejected that argument as well, holding that the mosquito assessment was not a tax and therefore payment was not required. Ultimately, the Court upheld the judgment in favor of Hagman and awarded Hagman title under a claim of adverse possession.
While this case does present fairly unique factual issues, it should be seen as a warning to non-profits in California, including many religious organizations that own land, that they should be more diligent about protecting the rights to their property and especially their diligent regarding their boundaries. Boundary issues can present complicated legal issues and it is always best to consult an attorney to know what your particular rights are and to choose that attorney based on their experience in that area.
If you have any questions about such matters or any other real estate related legal issues, please contact Brewer Offord & Pedersen LLP at (650) 327-2900 or on the web at www.BrewerFirm.com.