Monday, November 8, 2010

Adverse Possession and the Foreclosure Crisis?

This New York Times article, At Legal Fringe, Empty Houses go to the Needy, tells the story of a guy in Florida who seems to be attempting to use adverse possession to take abandoned homes and then lease them for low rent to needy families.  

NORTH LAUDERDALE, Fla. — Save Florida Homes Inc. and its owner, Mark Guerette, have found foreclosed homes for several needy families here in Broward County, and his tenants could not be more pleased. Fabian Ferguson, his wife and two children now live a two-bedroom home they have transformed from damaged and abandoned to full and cozy.

There is just one problem: Mr. Guerette is not the owner. Yet.

In a sign of the odd ingenuity that has grown from the real estate collapse, he is banking on an 1869 Florida statute that says the bundle of properties he has seized will be his if the owners do not claim them within seven years.

A version of the same law was used in the 1850s to claim possession of runaway slaves, though Mr. Guerette, 47, a clean-cut mortgage broker, sees his efforts as heroic. “There are all these properties out there that could be used for good,” he said.

Apparently most of the homes are in foreclosure.  Guerette has taken possession, made some improvements, and is paying the property taxes.  The tenants and the neighbors--at least the ones quoted in the article, who understandably prefer occupied to abandoned houses next door--think he is doing a great thing.  The State of Florida disagrees.  He is being prosecuted for fraud.  

Is this an innovative response to the foreclosure crisis, or is it a scam?  No one likes adverse possession in theory when they first hear about it.  Students always ask, like Jennifer Aniston in Office Space, "so how is that not stealing?"  But of course the justification for AP--we prefer that abandoned land go to someone who will put it to its highest and best use--seems to have some application here.  On the other hand, this certainly isn't a "good faith" trespass under a belief in legitimate title.  The article quotes Florida law prof Michael Allan Wolf, who expresses concern that using adverse possession this way can lead to a serious disruption in chains of title and with the foreclosure process.  And it's not hard to see how this kind of activity could lead to widespread confusion and potential fraud.  

If this idea takes it a little too far, then what can we do about the parallel problems of massive foreclosures, abandoned buildings, and the lack of affordable housing?  Thanks to Scott Rempell for the pointer.  

Matt Festa

Affordable Housing, Financial Crisis, Housing, Mortgage Crisis, Mortgages, Property, Property Theory, Real Estate Transactions, Suburbs, Sun Belt | Permalink

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What? who's the victim? What about Unlawful Detainer procedures? Meas Rea?

On constitutional law basis, due process, search and seizure, confronting adverse witness, etc...

For trespassing to happen someone who has title has to file a complaint. The officers need to determine criminal vs. civil issues. This clearly is a civil issue with no felonies for probable cause....where's the profs to hold gov't accountable?

Instead of looking at the subject of article, we need to find out why the government is able to proceed unimpeded by our constitution.

Posted by: Tai | Nov 9, 2010 12:25:36 PM