Adversarial House Hunting and the Recovery

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As banks continue to turn their attention toward the glut of foreclosed properties heading to work its the auction block, they are encountering a legal hurdle they likely did not expect-a surprising number of squatters who have been inhabiting seemingly abandoned homes and are attempting to assert adverse possession claims to the properties. Last week, the Florida Sun-Sentinel reported the story of Andre "Loki Boy" Barbosa, a Brazilian national who filed an adverse possession claim of a 7,200 square foot waterfront Boca Raton mansion owned by Bank of America. Mr. Barbosa's claim of the $2.5 million home is reportedly Palm Beach County's largest adverse possession filing. The Sentinel goes on to state that Florida's adverse possession law allows someone to gain title to a property if he or she is living there openly, maintaining the property and paying the taxes. Other coverage of the "Loki Boy" drama refers to the adverse possession law as "obscure" and "archaic", but adverse possession filings have seen a steady rise during the recession and collapse of the housing bubble, particularly in markets hit hardest by foreclosure such as Phoenix, Las Vegas, and much of Texas and Florida. Perhaps most notable is the saga of Kenneth Robinson, the man who made a name for himself by living in an abandoned $340,000 house in an upscale Flower Mound, Tex. subdivision for $16-the cost of an affidavit of adverse possession. Before Mr. Robinson was ultimately ordered out of the home in February 2012, he developed a website entitled the "16 Dollar House" as well as an eBook and series of YouTube videos chronicling his endeavors and dispensing advice to would-be adverse possessors. Robinson and other adverse possessors tout their actions as "one method of relieving the mortgage crisis meltdown."In the years, decades, and centuries before the latest financial recession, the doctrine of adverse possession evolved to discourage absentee land ownership and reward "peaceable possessors" of land who were making the highest and best possible use of the property. The doctrine requires actual, open and notorious, exclusive, continuous, and non-permissive possession of the land in a way in which a normal owner would for a statutory period (ranging from 2 years in Arizona to 30 years in New Jersey). See Brown v. Gobble, 474 S.E.2d 489 (W. Va. 1996). After the statutory period has run, an owner who has not field an action in ejectment against the adverse possessor has waived their right of possession, the most important stick in the proverbial "bundle of property rights." While the discouragement of  absentee ownership supports the actions of Robinson, Barbosa, and other adverse possessors, their squatting presents formal realizability challenges or, in other words, confusion about who actually owns the property. Such confusion is distressing to lenders acting as the owner of record- not to mention frustrated neighbors and homeowners associations from Boca to Dallas. Thus, the squatters have placed abandoned properties into a vicious cycle: while adverse possession claims can theoretically provide incentive for banks to keep a closer track of abandoned properties and prevent these homes from sitting neglected for years at a time, the presence of an adverse possessor-viewed, of course, by the bank as a trespasser-makes it more difficult for the bank to bring the property to auction and transfer ownership to a new (and paying) owner. Adverse possession, though a doctrine that can potentially protect present and industrious land use, should not be used by a few bold speculators to profit at the expense of reintroducing abandoned properties into the marketplace amidst the housing sector's gradual recovery