In past blog articles, we have discussed the doctrine of adverse possession, and some of the difficulties in prevailing on an adverse possession theory. In order to prevail on an adverse possession claim, the adverse possessor must prove each of these five elements:
- Possession must be held under either a claim of right or color of title.
- There must be actual, open, and notorious occupation of the premises in such a manner that constitutes reasonable notice to the record owner.
- Occupation must be both exclusive and hostile to the title of the true owner.
- There must be uninterrupted and continuous possession for at least five years.
- The possessor must pay all of the taxes levied and assessed on the property during the five-year period.
The most difficult element to prove in an adverse possession case is the requirement that the adverse possessor pay the taxes on the land they seek to obtain title to. In the recent case of Hagman v. Meher Mount Corporation, the Court carved out an exception to when taxes need to be paid.
Facts
Larry Hagman owned a parcel of land in Ojai, California. As a result of a fence being built in the wrong place, Hagman occupied a portion of land owned by his neighbor, the Meher Mount Corp.
Meher Mount qualified for a welfare exemption as a religious organization using its property for educational purposes. Part of this exemption resulted in Meher Mount being exempt from taxation, including for property taxes.
In 2011, Hagman sued Meher Mount to quiet title to the disputed portion of land, arguing that he had acquired title by adversely possessing the parcel. The trial court agreed and quieted title in favor of Hagman. On appeal, Meher Mount argued that it was a public entity and thus, was immune from adverse possession (in California, the title of property owned by a public entity or public utility cannot be obtained by another through adverse possession). Meher Mount further argued that Hagman had failed to pay the taxes on the disputed land and thus could not prevail.
Decision
To obtain title, an adverse possessor is required to prove that he or she “timely paid all state, county, or municipal taxes that have been levied and assessed upon the land for [a] period of five years.” CCP 325(b). At trial, Hagman admitted he paid no taxes on the disputed land. However, the Court held that as no property taxes were ever levied or assessed on the property due to Meher Mount’s tax-exempt status, Hagman was not required to pay taxes to prevail on an adverse possession claim. This is an interesting decision, as it allowed the adverse possessor to avoid having to prove the most difficult element of an adverse possession claim.
The appellate court also found that a public benefit corporation, such as Meher Mount, is neither a public utility nor a public entity. “Public entities” are bodies that have been vested with some degree of sovereignty. On the other hand, “public benefit companies” lack any degree of sovereignty because they are not created by the government. Thus, Meher Mount was not immune from adverse possession and the trial court correctly quieted title in favor of Hagman.
This is an interesting decision as the Courts have generally limited the adverse possessor’s ability to obtain title, whereas this case is arguably an expansion of adverse possession in that it makes it easier to acquire title in specific situations. We will continue to monitor these adverse possession cases as they are published, and keep our readers informed of additional changes in the law.
If you have any questions about a potential adverse possession claim, or real estate related legal issues in general, please contact the Law Offices of Peter Brewer at (650) 327-2900 or on the web at www.BrewerFirm.com.
