True cases of adverse possession are exceedingly rare.  Some of the requirements are easily met –  possession of some or all of a property, under claim of right, for a period of five years.  The final requirement – payment of the property taxes assessed against the property being possessed – is nearly impossible to satisfy.  In over 30 years of real estate litigation practice, I have handled only two cases where each of these requirements was met.

But what if no property taxes have been assessed?  In that situation, the tax requirement is waived and mere possession for a period of five years is enough to acquire title to the property.

In the recent case of Hagman v. Meher Mount Corporation (2013) 215 Cal. App. 4th 82, Hagman mistakenly fenced in about .44 acre of neighboring property owned by Meher Mount Corporation.  Meher Mount is a nonprofit public benefit corporation.  As such, it is entitled to an annual exemption from property taxes, which it took each year.  After possessing the fenced-in property for more than five years, Hagman sued to quiet title.

The trial court granted summary judgment.  On appeal, the Court of Appeal held that, because Meher Mount had been granted an exemption from property taxes, no such taxes were ever levied or assessed, so there was nothing for Hagman to pay.  Hagman’s title was affirmed.

The Court of Appeal could have taken a different approach.  It could have ruled that payment of taxes is an affirmative obligation to acquire someone else’s property and that you cannot gain title by adverse possession unless you actually pay some taxes.  Instead, the Court ruled that the adverse possessor only has to pay any taxes that are actually assessed and if there are none, this requirement is waived.

The upshot is that it is easier to acquire property through adverse possession from a charitable organization than from a private individual or for-profit corporation.

Of course, this method will not work against public agencies – although these entities do not pay property taxes, their property is exempt from adverse possession claims by statute.

If you have any questions, please contact Mark Hudak at: (650) 342-9600 or mhudak@carr-mcclellan.com.