Adverse Possession (Lecture Note)

Introduction

Where land is unregistered, a squatter can acquire title by their adverse possession over a period of time. This is through a combination of the positive effect of the adverse possession giving them title and the negative effect of the LA 1980, which extinguishes the documentary or paper title¹.

¹ LA 1980, s.17.

Under the law as it was prior to the coming into effect of the LRA 2002 on 13 October 2003, the provisions of the LA 1980 applied in the same manner to registered land as unregistered land except that the estate of the registered proprietor, instead of being extinguished at the end of the appropriate limitation period, was deemed by section 75(1), LRA 1925 to be held on trust for the squatter². This form of trust was abolished under the LRA 2002³ but paragraph 18(1) of Schedule 12, LRA 2002 provides that a squatter who is already a beneficiary under such a trust has a right to be registered as proprietor. So these transitional provisions in paragraph 18 of Schedule 12, LRA 2002, can only operate where the land was registered as at 13 October 2003 and there had been adverse possession for the appropriate limitation period by that date.

² This gave the squatter the right to apply for registration in place of the existing registered proprietor: LRA 1925, s.75(2); Central London Commercial Estates Ltd v Kato Kagaku Co Ltd [1998] 4 All ER 948, 958-959.

³ There is no equivalent to s.75(1), LRA 1925 in the LRA 2002.

                          

Adverse possession – the essentials

You must show that:

• the squatter has factual possession of the land
• the squatter has the necessary intention to possess the land
• the squatter’s possession is without the owner’s consent, and
• all of the above have been true of the squatter and any predecessors through whom the squatter claims for at least 12 years prior to the date of the application (see section 4 The limitation period).

                                  

1. Factual possession

In Powell v McFarlane⁴, Slade J said:

"Factual possession signifies an appropriate degree of physical control. It must be a single and [exclusive] possession, though there can be a single possession exercised on behalf of several persons jointly. Thus an owner of land and a person intruding on that land without his consent cannot both be in possession of the land at the same time. The question what acts constitute a sufficient degree of exclusive physical control must depend on the circumstances, in particular the nature of the land and the manner in which land of that nature is commonly used or enjoyed. Everything must depend on the particular circumstances, but broadly, I think what must be shown as constituting factual possession is that the alleged possessor has been dealing with the land in question as an occupying owner might have been expected to deal with it and that no one else has done so."

⁴ (1979) 38 P & CR 452. The House of Lords approved this statement of the law in J A Pye (Oxford) Ltd v Graham [2002] UKHL 30.

Where the land was previously open ground, fencing is strong evidence of factual possession, but it is neither indispensable nor conclusive.

                           

 2. The intention to possess

What is required is "not an intention to own or even an intention to acquire ownership but an intention to possess"⁵. This means "the intention, in one’s own name and on one’s own behalf, to exclude the world at large, including the owner with the paper title if he be not himself the possessor, so far as reasonably practicable and so far as the processes of the law will allow"⁶.

⁵ Buckinghamshire County Council v Moran (1988) 86 LGR 472, per Hoffman J, approved by House of Lords in J A Pye (Oxford) Ltd v Graham [2002] UKHL 30.

⁶ Powell v McFarlane (1977) 38 P & CR 452, 471-472, per Slade J, approved by House of Lords in J A Pye (Oxford) Ltd v Graham [2002] UKHL 30.

Where the squatter has been able to establish factual possession, the intention to possess will frequently be deduced from the acts making up that factual possession but this deduction will not always be made, as Slade J explained in Powell v McFarlane⁷:

"In my judgement it is consistent with principle as well as authority that a person who originally entered another’s land as a trespasser, but later seeks to show that he has dispossessed the owner, should be required to adduce compelling evidence that he had the requisite animus possidendi in any case where his use of the land was equivocal, in the sense that it did not necessarily, by itself, betoken an intention on his part to claim the land as his own and exclude the true owner."

⁷ (1979) 38 P & CR 452, 476, cited with approval by Lord Hutton in J A Pye (Oxford) Ltd v Graham [2002] UKHL 30, [2002] 3 All ER 865; [2002] 3 WLR 221; [2003] 1 P&CR 128.

Use of land for access purposes is an example of an equivocal act. Such use over time might give rise to an easement by prescription but is not, by itself, sufficient to establish an intention to possess the land.

                                 

 3. Possession without the owner’s consent

In Buckinghamshire County Council v Moran⁸, Slade LJ explained:

"Possession is never ‘adverse’ within the meaning of the 1980 Act if it is enjoyed under a lawful title. If, therefore, a person occupies or uses land by licence of the owner with the paper title and his licence has not been duly determined, he cannot be treated as having been in ‘adverse possession’ as against the owner of the paper title."

⁸ [1990] Ch 623, 636.

                                      

 4. The limitation period

4.1 The normal period

Section 15(1), LA 1980 states:

"No action shall be brought by any person to recover any land after the expiration of twelve years from the date on which the right of action accrued to him or, if it first accrued to some person through whom he claims, to that person."

The right of action accrues, and so the limitation period starts to run, from the start of the adverse possession⁹.

⁹ LA 1980, Sch 1, paras 1 and 8.

4.2 Extended periods

The time limit of 12 years is extended to 30 years for the Crown. This then is the relevant limitation period when the owner is a company that has been dissolved; the property of such a company vests in the Crown or one of the Royal Duchies as bona vacantia¹⁰. You should, therefore, carry out a company search where the owner is a company.

¹⁰ Companies Act 2006, s.1012. If time starts to run against a company which is then dissolved before the 12 years have expired, the limitation period will become 30 years from the start of the adverse possession.

The limitation period is 30 years for any spiritual corporation sole (bishops, vicars and certain other office holders in the Church of England) LA 1980, Sch 1, para 10.

. The 12-year period applies, however, to corporations aggregate, such as the Church Commissioners, a diocesan trust, or one of the Oxford or Cambridge colleges. Where the land is foreshore owned by the Crown, the period is 60 years (LA 1980, Sch 1, para 11). The normal 12-year period applies to foreshore owned by parties other than the Crown.

The normal limitation period may also be prolonged by disability of the person entitled to recover the land  (LA 1980, s.28), by fraud or deliberate concealment of a cause of action, and by mistake (LA 1980, s.32). A person is to be treated as under a disability while an infant (ie under the age of 18), or of unsound mind (LA 1980, s.38(2)). We shall assume that none of these factors apply unless the evidence indicates otherwise.

Where the land is held on trust the estate of the trustees continues, even after the expiry of the limitation period against them, until the rights of action of all the beneficiaries have been barred¹⁶. Where there is some indication that trustees hold the land on trust for beneficiaries other than themselves, we are unlikely to be able to register with anything other than a qualified title unless the squatter can establish details of the trust and can prove that the rights of action of all the beneficiaries have been barred. Arguably the fact that the estate of the trustees continues in this way means that an application cannot be made where the limitation period relied on starts to run (i) after the death of the owner and while their estate is being administered, (ii) after the bankruptcy of the owner and while their property is being administered by the trustee in bankruptcy or (iii) (being a company) while the owner is being wound up. In each of these cases the owner is subject to a form of trust¹⁷.

¹⁶ LA 1980, s.18(3).

¹⁷ Ayerst v C & K (Construction) Ltd [1976] A.C. 167.

Time does not run against one beneficiary while another beneficiary is in possession of the land¹⁸. LA 1980, Sch 1, para 9. See Earnshaw v Hartley [1999] 3 WLR 709 for the operation of this provision in the context of beneficiaries under an intestacy.

4.3 What stops time running?

For the purposes of the LA 1980, a period of adverse possession can be brought to an end by a signed, written acknowledgement of the owner’s title by the squatter¹⁹ and a written acknowledgement by the agent of the squatter is as effective as one signed personally by the squatter²⁰. A written offer by the squatter to purchase the land from the owner is treated as an acknowledgement²¹.

¹⁹ LA 1980, ss29(2) and 30(1). An oral acknowledgement may be evidence that the squatter did not have the necessary intention to possess: Pavledes v Ryesbridge Properties Ltd (1989) 58 P & CR 459.

²⁰ LA 1980, s.30(2).

²¹ Edginton v Clark [1964] 1 QB 367.

If the squatter remains in possession after the acknowledgement then time may start running again. But it will not start running if the acknowledgement results in a change in the relationship between the squatter and the owner (for example, the grant of a lease or a licence) so that the possession is no longer adverse.

Once the limitation period has expired, any subsequent acknowledgement does not revive the owner’s right of action²².

²² LA 1980, s.29(7).

A demand for possession from the owner does not stop time running²³. Nor does the mere issuing of proceedings which are later dismissed²⁴, or the making of related applications or objections to Land Registry²⁵.

²³ Mount Carmel Investments Ltd v Peter Thurlow Ltd [1988] 1 WLR 1078.

²⁴ Markfield Investments Limited v Evans [2001] 1 WLR 131.

²⁵ J A Pye (Oxford) Ltd v Graham [2000] Ch 676 at 699-703; upheld on appeal to the House of Lords, where this question was not considered: [2002] UKHL 30.

4.4 Successive squatters

The squatter can pass on their interest in the land, for example to a purchaser or under a will or intestacy. The purchaser etc needs immediately to follow the original squatter into possession and hold for the remainder of the 12 years²⁶.

²⁶ LA 1980, Sch 1, para 8(2).

If a second squatter dispossesses the first, the second acquires the benefit of any time that had already run against the owner. However, the first squatter will retain the right to recover possession from the second, until the full limitation period has run from the date when they were dispossessed. So if B dispossesses A (the owner) in 1986 and is then dispossessed by C in 1994, A loses the right to recover possession from C in 1998 but B could still bring possession proceedings against C until 2006. One way a second squatter can show that they did not dispossess the first squatter is by obtaining a transfer of all the first squatter’s estate, right or interest in the land. However, such a transfer is not essential for the purposes of registration. Time stops running if a squatter abandons the land before the limitation period has expired. If a second squatter later takes possession time starts running afresh against the owner.

                              

Leasehold

  

Adverse possession of leasehold land

As soon as the squatter takes possession of land that is leased, time runs against the tenant.

However, where the lease is unregistered Land Registry will refuse an application for first registration. This is because the tenant, although no longer able to recover possession of the land from the squatter at the end of the limitation period, can still surrender the lease to the landlord⁵⁴.

⁵⁴ Fairweather v St Marylebone Property Co Ltd [1963] AC 510. This is not the case where the lease is registered and the limitation period expired before 13 October 2003: Spectrum Investment Co v Holmes [1981] 1WLR 221; Central London Commercial Estates Ltd v Kato Kagaku Co Ltd 1998] 4 All ER 948.

Time does not run against the landlord until the lease expires – unless the adverse possession started before the lease, in which case time will continue to run against the landlord during the term of the lease.

Non-payment of rent before the lease expires is irrelevant. However, if a stranger wrongfully continues to receive the rent of leasehold land for 12 years, provided that the lease is in writing and not granted by the Crown and the rent is at least £10 a year, the landlord’s title becomes statute-barred and, where the estate in registered and the transitional provisions apply, the stranger becomes entitled to be registered⁵⁵.

⁵⁵ LA 1980, Sch 1, para 6.

  

Encroachment from leasehold land

- Encroachment from leasehold land by a tenant squatting on an unregistered freehold estate and seeking first registration of a leasehold title

If the squatter is the lessee of adjoining land, the encroachment will usually be presumed to amount to an accretion to their lease. The additional land will be included in the surrender to the landlord when the tenancy ends⁵⁶.

⁵⁶ See Smirk v Lyndale Developments Ltd [1974] 3 WLR 91 and the authorities cited therein. The Court of Appeal approved what was said by Pennycuick V-C on the encroachment by a tenant point: [1975] Ch 317, 337. See also Tower Hamlets v Barrett [2005] EWCA Civ 923.

8.2.3 Encroachment from leasehold land by a tenant squatting on registered land which was registered on 13 October 2003, there having been 12 years adverse possession by that date, the tenant accepting that the presumption applies that the encroachment amounts to an accretion to their lease

Where the presumption that the encroachment amounts to an accretion to the lease applies, the tenant squatter cannot be the beneficiary under a trust under s.75(1), LRA 1925 and therefore cannot apply for registration under paragraph 18 of Schedule 12, LRA 2002. However, you can apply on form FR1⁶¹ for first registration of the leasehold title they had acquired by 13 October 2003. This is provided that there is more than seven years of the squatter’s documentary lease term still to run⁶². It is also provided that the title has not been subsequently lost through registration of a registrable disposition of the registered estate for valuable consideration at a time when the leasehold estate was not an overriding interest⁶³.

⁶¹ LRR 2003, r.23.

⁶² LRA 2002, s.3(3).

⁶³ LRA 2002, s.29.

Protection prior to registration of the squatter

We will not register a squatter's title to unregistered land unless there is evidence of adverse possession for at least 12 years. Furthermore, in the meantime the squatter cannot lodge a caution against first registration (subject to what is said in the next paragraph). The squatter will be claiming to be the owner of a legal estate in land arising out of possession, and a caution cannot be lodged by virtue of ownership of a freehold estate in land⁶⁵, which is the estate to which the squatter has title⁶⁶. This is not to say, however, that the squatter will necessarily lose the benefit of the adverse possession on first registration of the paper title. The first registration will be a mistake if it takes place after the paper title has been extinguished, and so the squatter should be able to apply for alteration⁶⁷ (the registered title being closed) and for first registration of their own title⁶⁸. If the first registration takes place before the paper title has been extinguished but the squatter stays in adverse possession, then once there has been 10 years adverse possession in total⁶⁹, they can apply to be registered as proprietor of the registered estate under Schedule 6, LRA 2002.

 ⁶⁵ LRA 2002, s.15(1)(a) & (3)((a)(i).

⁶⁶ Rosenberg v Cook (1881) 8 QBD 162, 165, per Jessel MR.

⁶⁷ LRA 2002, Sch 4, para 5.

⁶⁸ If the squatter is in actual occupation or the first proprietor has notice of the squatter?s estate, the estate vested in the proprietor will be subject to that estate: LRA 2002, s.11(4)(b) & (c). Alteration of the register will not, therefore, prejudicially affect the proprietor?s title. This means that the alteration will not constitute rectification, and so the proprietor will not be entitled to indemnity in the event that the title is closed: LRA 2002, Sch. 8, para 1(1)(a) & 11(2)(b).

⁶⁹ So that Sch 6, para 1 is satisfied.

The position would seem to be different where the squatter is a successor in title to an earlier squatter who has transferred the possessory estate. If the squatter does not apply for first registration within two months of the transfer of the possessory estate, the title to this estate will revert to the transferor/first squatter, who will then hold it on a bare trust for the squatter⁷⁰. The same reversion would appear to take place if the squatter does apply for first registration but the application is cancelled⁷¹. Thus the squatter will have a beneficial interest in this freehold estate, and so can, if they choose⁷², lodge a caution against first registration on the basis that they are entitled to an interest affecting a legal freehold estate in land⁷³, as opposed to being the owner of such an estate. Note that this reasoning applies equally whether or not the documentary title has been extinguished by the time of the transfer of the possessory estate.

 ⁷⁰ LRA 2002, ss.6 & 7.

⁷¹ Sainsbury's Supermarket Ltd v Olympia Homes Ltd [2005] EWHC 1235 at [67]-[71].

⁷² A person must not lodge a caution without reasonable cause; this duty is owed to anyone who suffers damage as a result of its breach: LRA 2002, s.77.

⁷³ LRA 2002, s.15(1)(b). The freehold estate involved is the possessory estate which is the subject of the transfer by the earlier squatter.

The squatter's right to be registered under paragraph 18 of Schedule 12, LRA 2002, is a proprietary right and so is capable of being an overriding interest. It will not be lost as a result of the registration of a transfer or other registrable disposition for valuable consideration, provided the squatter remains in actual occupation at the time of the disposition⁷⁴.

 ⁷⁴ LRA 2002, s.29(2)(a)(ii); Sch 3, para 2. Whether there must also be actual occupation at the time of registration of the disposition for the right to be an overriding interest is not certain: Thomson v Foy [2009] EWHC 1076.