As the blogger for HousingWire, a chunk of my day is spent ambling the interwebs finding blogging inspiration. A story aired last week by Dallas-Fort Worth television station WFAA caught my eye.
The story, found here, is of a Dallas man who filed adverse possession of a property that neighbored his in order to clean it up. Evidently, the property, which had sat vacant for two years, fell into such disrepair that he was concerned it would have a negative effect on his own home value. In the end, he spent a few thousand dollars on taxes and repairs to take control of what he felt was a deteriorating situation.
If only adverse possession was that simple.
WFAA insinuates that Ally Financial [stock GJM][/stock] owned the property the entire two years it sat vacant and falling into disrepair. The bank disputes that, saying it completed the foreclosure sale last month and hasn’t yet been granted legal possession of the property by the court.
“Until we have possession of a property, we are limited in what maintenance we can do,” said Susan Fitzpatrick, spokesperson for Ally. “Once the court grants possession, GMAC Mortgage will make any necessary repairs and provide any required maintenance on the home, according to investor guidelines.”
Ally declined to comment on why it took two years to complete the foreclosure in a state known for its quick process. It typically takes only about 90 days to foreclosure in Texas.
So if the bank isn’t responsible for the upkeep, who is?
I spoke with Julie Forrester, a professor at Dallas’ Southern Methodist University Dedman School of Law, who said that in the two years between when the property was vacated and when Ally completed the foreclosure sale, it was still the original owner’s responsibility to maintain the property — even if the owner abandoned it. It does not — and legally cannot — become the bank’s responsibility until it is granted possession.
This means a sticky situation for property upkeep.
“Right now, lenders aren’t rushing to foreclose,” said Forrester. “So, when the owner abandons the property and the bank doesn’t foreclose, no one ends up taking possession and issues like maintenance arise.”
Efforts have been made to change this slow shift of responsibility. As HousingWire reported last summer, Chicago passed a statute requiring lenders to take up maintenance responsibilities when owners abandon their properties. The issue will likely face a constitutional challenge from bank representatives, who maintain that because the banks do not own the properties, being forced to take responsibility for them flies in the face of traditional property rights.
But, as of now, there is no Dallas statute placing responsibility in the hands of the banks. Here, the responsibility for maintaining the property still falls to the homeowner.
WFAA did not indicate whether the neigbhoring homeowner made any prior legal attempts to remedy the situation, and he did not return voicemails left at his office. The house in question currently has three outstanding code violations for rotting wood, litter and a dirty pool, according to the city of Dallas.
As for the concerned neighbor's effort to fix the property through adverse possession, Derrick Logan, senior vice president of REO Allegiance - a property preservation company - said he has never seen the doctrine applied in such a manner successfully.
"In my experience, adverse possession is only considered by the court when a party has been actively inhabiting a property for a long period of time, generally measured in decades," he said. "A neighbor cannot and should not just walk across the street and change the locks on a property because they are unhappy with the upkeep."
Forrester said a more logical option would have been for the man to file a nuisance action against the owner for failing to maintain the property.
“That would have been my first choice,” she said. “While he seems to be being careful, adverse possession is risky. Nuisance actions, on the other hand, are usually successful.”
So, another problem here is the unexplained gray area of adverse possession.
Dallas County actually removed the man’s filing from the official record, citing a letter filed last fall stopping all claims because — as the later states — there is “no legal requirement for the County Clerk to accept them for filing.”
That doesn’t mean that you can’t use adverse possession. Forrester said there is no reason to “file” adverse possession because all you have to do is take possession. After a period of time, you show that you’ve met the requirements and adverse possession can be granted.
Forrester said the point of the doctrine is multifaceted, but is traditionally used to solve questions over property boundary lines. For instance, if you accidentally build a fence that encroaches on your neighbor’s property because you aren’t sure where the line falls. After a period of time — typically 10 years — you can claim the land under adverse possession. No initial paperwork is necessary.
There seems to be a national trend in which houses fall into a limbo of no ownership and no responsibility, a compelling issue that deserves our attention.