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Quick, pop quiz: You can’t walk into a property and claim it as your own — or can you?
Ready for the answer?
In many states, you can.
Being a real estate investor requires being prepared for any challenges that can come your way.
In certain parts of the country, squatters can legally become the owners of property by occupying it for a specific amount of time (also known as “adverse possession”).
Squatters can be a nightmare for real estate investors.
That’s why it’s important, regardless of which real estate niche you focus on, to understand squatters' rights, your rights when dealing with a squatter, and how to legally remove them from a given property.
What Are Squatters Rights?
Squatters are individuals or groups who occupy a vacant property illegally and without paying rent.
Property owners may think they can easily get rid of these uninvited guests since they are unlawfully occupying their house or land.
Unfortunately, if squatters have been present undisturbed for a specific amount of time (between five and twenty years, depending on the state), not only do they become protected by squatters’ rights, but they can legally claim ownership of the property.
Under squatters’ rights, trespassing individuals who occupy a vacant property for long enough must be served with an eviction notice and go through the eviction process to be forced to vacate the premises.
Squatters’ rights also allow them to claim ownership of the property's title as long as they pay back any taxes and transfer fees associated with the property.
Squatting vs Trespassing
When discussing squatting, many real estate inventors wonder how it differs from trespassing.
Squatters technically start as trespassers.
Trespassing is defined as the act of temporarily occupying or entering a property without the owners’ permission.
Landlords are allowed to remove them from their property by calling on the local police.
However, after a set period of time of using the vacant property — again, between five and twenty years depending on the state — trespassers change legal status and qualify as squatters.
Unlike trespassers, who typically aim to steal or vandalize the building, the squatters’ goal is usually to use it as their residence.
Which States Have Squatters Rights?
Many states have squatters’ rights. The following lists indicate how long trespassing individuals have to stay on the property for squatters’ rights to take effect.
States where squatters’ rights take effect after seven years or less include:
States where squatters’ rights take effect after 10 years include:
- New Mexico
- New York
- Rhode Island
- South Carolina
- West Virginia
States where squatters’ right take effect between 15 and 20 years include:
States where squatters’ rights take effect after 20 years include:
- New Jersey
- North Carolina
- North Dakota
- South Dakota
How to Evict Squatters in 4 Steps
As frustrating as it may be, property owners must go through the gruesome and often expensive eviction process to get rid of squatters protected by squatters’ rights.
Step 1: Determine if the unlawful occupants are trespassers or squatters.
The first step: determine if the occupants of a given property are trespassers or squatters, which itself can be challenging.
Properties that are illegally occupied have often been vacant for long periods — for example, a building that was foreclosed for many years before being purchased by a real estate investor as part of a wholesale deal.
In many cases, the rightful owner may have never set foot on the property.
To check if you are dealing with a squatter, you may need to rely on statements from neighbors, whether the occupant made any improvements to the property to make it livable, paid property taxes or utilities, and so on.
To claim squatters’ rights, occupants must show that their takeover was hostile: there was no agreement, implicit or explicit, with the property owner. It must be actual — they cannot claim ownership if they used the space as a storage area for their possessions, for example.
Besides, their occupancy must be notorious and continuous — they cannot leave for months or rent the property to other occupants.
Step 2: Check the eviction laws in your state.
If the unlawful occupants have been living on the property undisturbed for the time determined by your state and are protected by squatters’ rights, you will need to investigate the eviction process in your area.
In most cases, it is best to hire a real estate lawyer to guide you through the process.
Although it may seem counterintuitive, you may want to offer a financial incentive for the squatters to leave and avoid a more costly eviction procedure.
Step 3: Go through the litigation process.
The litigation process often starts with a written notice.
If the occupants do not comply, you will need to start a legal procedure and hope that the judge rules in your favor.
It is often a lengthy process, especially if the squatters fight back or appeal the court’s decision.
If the occupants have not been on the property long enough to claim squatters’ rights, the judge may rule in your favor.
Step 4: Dispose of the squatters’ possession and take ownership of the property.
If the court rules in your favor, the local constable or sheriff will be in charge of physically evicting the occupants.
Individuals protected by squatters’ rights must be dealt with peacefully according to the law.
You may not take the matter into your own hands to force the squatters out or speed the process.
Depending on your local regulations, you may need to hold the occupants’ possessions for a set time.
At last, you will finally be able to retake ownership of the property.
The Bottom Line: Squatters’ Rights
Squatters’ rights can lead to stress and financial woes for real estate investors.
To avoid dealing with squatters’ rights, keep a close eye on all your properties, either directly or by hiring a property management company, and also investigate that there are no unlawful occupants before investing in a new property.
Doing so can ensure that your real estate investment is secure and profitable.