Peter Hogan is considered an expert on claiming empty or abandoned properties for his own portfolio. It may seem too good to be true. It’s not…
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Read on for a whistle stop history lesson from Peter on claiming properties and how you can profit from them.
William the Conqueror started it. The Law of Adverse Possession that is…
The Law of what…? I hear you ask. Adverse Possession.
It means that you can take possession of empty or abandoned property or land and, if you possess it continuously for a certain period of time, you can claim full title to it, 100% legally.
So what has William the Conqueror got to do with it? Well, in 1066 he came over here from France and beat us at the Battle of Hastings, proclaimed himself King, and declared that from then on all land in the country belonged to the Crown. (It still does, incidentally, so whilst you may own your house, you don’t own the land it stands on, you borrow it from the Crown.) Of course, we are allowed to trade land, bequeath it and use it, but if a person dies intestate (with no heir, or without leaving a will) that land reverts to the Crown, who owned it in the first place, and is then known as bona vacantia, or vacant goods.)
Now, it’s one thing declaring yourself (or the Crown) owner of the country, but managing it is quite another thing altogether, and William would have had major problems trying to do that. His answer was to divide the country up into smaller parcels of land called estates, or manors, and to control these manors. He created lords, – the ‘Lords of the Manor’ – and there were just under 2000 of these manors. The titles, and the manors, still exist today.
The Lords had duties, either to pay taxes, or food or livestock etc to the Crown, and others would be called upon to provide soldiers in times of need. The Lord would be required to lead those soldiers.
In the event of the Lord dying in battle – or anywhere else for that matter – and not leaving any heirs, any other Lord was free to take possession of his land and property. Then after continuous possession of six months he could legally claim the land and the title. This was necessary to prevent the land from falling into disuse or into the hands of common people. It also ensured the continuation of payment of taxes etc to the Crown.
The law is still in force today, with modifications, and with different lengths of time required for a claim. The time has changed from six months to as much as sixty years, and now stands at ten years for registered land or property, and twelve years for unregistered land or property.
You know about squatters, of course. You’ve seen the stories on the news – usually when they are being evicted from a trashed, graffiti-daubed shell of what used to be someone’s home. You’ve tutted, probably saying something like ‘Disgraceful, shouldn’t be allowed’.
Well, it is allowed! Not only that, but it is legal – 100% legal.
At this point lest us state emphatically that as professional investors we distance ourselves from the illegal activities of the ‘squatters’. We NEVER possess properties where we can trace the owners, and we certainly NEVER possess properties where the owners have left temporarily, for example, on holiday. That is just plain wrong, in my view. No, the properties or land we possess have no known, traceable owner. We may spend up to six months, and use the services of a professional tracing agency in an effort to find the owner. If, between us, we cannot find any owner during that time, then we may feel it is safe to go ahead….
So what is the law? The law says that if you can possess, in adversity (without permission) any property or land for ten years (registered) or twelve years (unregistered) then you can apply to land registry to claim title to that land, and, if you are successful you will receive the title deeds.
Once you have the title deeds you can do what you like with the land/property, including selling it, and you have no mortgage, remember! However, you can use the property during the qualifying period. Indeed, it wouldprobably be advantageous to do so, as it would help to establish your rights when you came to claim title.
There are certain conditions you must comply with during your qualifying period (the legal term is animus possidendi) but they are not onerous – quite reasonable, in fact.
During your possession you must:
• Show an intention to possess (not necessarily to own) the property or land.
• Your possession must be continuous.
• Your possession must be open.
• Your possession must be factual.
Let us use a patch of waste ground as an example.
You have identified a plot of overgrown waste land near where you live. It has been unused for as long as anyone remembers, and is overgrown, with the inevitable rubbish dumped on it.
The first job is to claim it. This is as simple as posting a notice, saying ‘Private property, Keep out’, and showing your name and telephone number.
Legally, posting this notice gives you the second best claim to the land, after the legal title owner. The law says that you must take factual ownership, and this means exclusive ownership, so you should fence off the land, keeping it for yourself.
You can let other people use the land, but make it plain that it is with your permission. You can make a gate, and padlock it, and as you have the only key, you have demonstrated exclusive possession.
The second job is to identify the land. Use an Ordnance Survey map and mark the boundaries of the plot in red on the map. Alternatively you can print a Google Earth screen shot of the area. Mark the boundaries in red, and send the map to the Land Registry. Make sure adjacent streets are named, and the town/area, so Land Reg. can identify the land. Land Reg. Will now identify the land for you and you will be able to download a copy of the title deeds, if it is registered land, or they will tell you if it is unregistered.
If it is registered, you will have the name of the owner. Your task now is to make every effort to trace that owner, and don’t take shortcuts; they will come back to haunt you.
Or rather, the owner will….
If you do manage to trace the owner, and he is likely to return and disrupt your possession, the best bet may be to contact him and offer him a deal, although in my experience very few, if any, owners of deteriorating property or land are prepared to sell: they have doubtless had many offers before, and could have sold many times. I have never figured out why people are prepared to let land or property deteriorate to their personal financial detriment, but they do, and I now no longer question it, I just accept the fact that there is ‘nowt as strange as folk’, as we say ‘up North’.
It is quite likely, however, that the land will be unregistered. That means that it has not changed hands since at least 1974, and your job of identifying and tracing the owner is more difficult. It does, however, make ultimate ownership much easier.
However, let us assume that the land is registered. You will now have a name. Use your tracing agency. Do everything you can to trace the owner of the land. One thing you can be sure of – all land is owned by someone, at the last resort, the Crown, so do what you can to trace the owner(s).
If you can trace the owner, determine the likelihood of their returning to the property. If they have emigrated to, say, Australia 25 years ago, they are unlikely to suddenly turn up. If they live three streets away, they almost certainly will.
I was running an Adverse Possession course last July, and one of the attendees, who lives in North London, was very excited. He had lived in his road for the last twelve years, and there was a house that had been empty for all that time. He was going to claim possession that very evening. By 12 noon the next day the owner contacted him: he had lived in the street all that time, watching the house deteriorate, and doing nothing about it. No-one knew he owned the property.
In legal terms, ‘The clock starts ticking’ the moment you post the notice on the land, so you have nothing to lose by taking as much time as you like trying to trace the owner. I cannot emphasize enough, however, how important this due diligence is. Don’t take chances, don’t take risks. If you are at all unsure, move on to the next plot – there are plenty around. The only time I ever ‘lost’ a property through the owner turning up was because I had taken a short cut on the due diligence. Never again.
So let us assume you have done all you could to trace the owners. The council have no information, and your tracing agency cannot find them. No-one has shown any kind of possession or ownership for many years, so you feel it is safe to continue. The law expects you to treat the land as if it were your own, so do so. Depending where it is, you could rent it out as car parking, or as allotments. That would make some income, but you don’t have to do anything. Having said that, you do need to show continuous possession (animus possidendi) so you should clear the rubbish and trim the grass periodically, so that people can clearly see that someone has possession.
It is now merely a case of waiting for time to pass. In this case, ten years, as the land is registered. Sounds a long time? Don’t worry, ten years will pass – it always does, and you may as well have the land coming to you at that point as not.
I recently identified, and claimed, a large area of land in London, approximately ten acres. It is surrounded by residential property, and is close to a main road into London. It is unregistered, and no-one knows who owns it. It has been vacant for many, many years. It is probably worth in the region of £10m today,
Any guesses as to its value in twelve years time? I can wait – it’s my pension!
So, the time has passed, and you are ready to claim possession?
I own the house next-door-but-one to this house, and had been walking past it for three months before I realized it was empty!
My research indicated that it is registered, but abandoned, so I claimed possession. It has a current market value of £100k and produces £650 per month.
West London (Property 1)
They are unregistered and had been empty for many years.
I have claimed them, but I am still researching the background. They look positive, and should realise £900 – £1,000 per month between them.
West London (Property 2)
This house, on a main road, is in sound condition, although it was filthy inside.
It is unregistered and is just about to be let at £650 per month.
It’s current market value is approx £100K.
This unregistered mock-Tudor house was in an absolutely dire state when I found it, which was as a result of an internet search. It was totally overgrown, and the owner, who was a hoarder, had completely filled the house and garden with rubbish. The picture of the lounge shows it after a considerable amount of rubbish had already been cleared!
I am just about to receive title to it, and am preparing to spend £20K on the re-furb, which will start soon. It’s value is approx. £225K, and it will produce approx. £900 per month.
You need to send your claim to the Land Registry, proving the four points required by law. Land Reg, will now contact any registered owners at the address for notice that Land Reg has. That is the address on the title deeds. You will know that address, and will have tried judiciously, ten years previously, to contact the owners at that address.
The assumption is, that the owners will not receive that letter. However, legally they have 65 business days to contest your claim. If they fail to do so, the land will be registered in your name. If they do contest your claim, and succeed, they then have two years to physically remove you from the land. If they fail to do so , you will get title to the land anyway, and the owners have no appeal.
Interestingly, your time in adverse possession, or any other person’s time in adverse possession, can accrue to one person, which means you can use time gained by another person. You can pass your time on, bequeath it in your will, or sell it…
A guy on one of my courses knew of a property that had been squatted for the last five years. He paid the squatters £5000 for their time, which they signed over to him, and he gave them written permission to remain there for the next five years. He reduced his ten year waiting period by half, and has already had a substantial offer on the property from a developer for when he has the deeds.
All in all, this is a fantastic law, which is at the core of British common law. During the Land Registry reform of 2002, one of the aims was to see whether the law of adverse possession could be annulled. It was decided that it could not – the land registry system could not work efficiently without it. It is here to stay.
I have acquired many properties using this law, without disadvantaging anyone. In fact, in my experience, you don’t make enemies, you make friends. The neighbors love you: who wants a dilapidating property in their road, attracting crime, vermin and dragging down local property prices? The police love you: another potential worry off their shoulders. The council love you: another home brought into use, reducing their housing problem a little, council taxes will now be paid, and they don’t have any responsibility any more.
So, whatever your stand on this law, there is no doubt that, used wisely and properly, it is a moral and ethically sound way to acquire land and property.
I hold courses and seminars monthly, where we go into the right and proper way to use this law to our advantage. We go into the law in detail, covering the major cases and how they might affect us. (This law has been tested at the Grand Chamber of the European Court of Human Rights – there is no higher court in Europe). We show you exactly what you need to do to be compliant, how to claim, ‘gain entry’, possess properties and make your final claim. Not forgetting how to source them in the first place.
How to use the Freedom of Information Act to your advantage, who to speak to, how to write letters…