Real estate investors searching for property acquisitions often locate properties with deceased owners. These properties might make a good investment if the property could be legally purchased from the owner. But if the owner is deceased and left no heirs, or the heirs cannot be found, it may not be possible to purchase the property.
These properties are unfortunately sold at a sheriff tax sale when the taxes go unpaid. The potential acquisition may no longer make sense when the investor must bid at the tax auction against many other investors.
How can an investor purchase a property abandoned by the owner or heirs?
The law of Adverse Possession (“squatters rights”) creates a potential solution but also risks to investors. A person who has held continuous possession of a property without permission of the owner may make a claim for legal title after a certain period of time. Title can only be obtained in this way through a lawsuit called a Quiet Title action. The purpose of this law is to achieve a fair result when a landowner abandons a property, or when the owner dies and the heirs do nothing.
How does adverse possession create risks and opportunities to investors?
From the perspective of an investor, if you are considering a purchase with someone residing in the property, make sure the occupant does not have an adverse possession claim. An investment can be lost if you purchase a property subject to a valid adverse possession claim. On the other hand, it might make sense to negotiate a purchase from the person who claims title to the property by adverse possession after the claim is resolved by a Quiet Title lawsuit.
The minimum period of adverse possession is 21 years in Pennsylvania. However, the waiting period will soon be reduced to just 10 years in June 2019 for residential properties with a single family home on a lot of less than ½ acre.
As a real estate litigation attorney to developers and investors, I help my clients avoid costly mistakes and resolve disputes. If you or someone you know needs to bring clarity to a real estate problem, please call our office at (484) 690-4613.
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