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Dear Steve,
My son and his wife have been living in a house that I own in another city for three years. They've made some
improvements, such as putting in a new bathroom. I charge them no rent and I pay the taxes and all the utility
bills. If this arrangement continues, could they claim ownership in the future under squatter's rights?
-- Jonathon
Dear Jonathon,
There's a chance that your son and daughter-in-law could try to claim squatter's rights, or adverse possession,
as it's more commonly referred to in the U.S. But their claim would likely fall on very shaky legal ground.
For the most part, adverse possession laws in the U.S. are intended to impact minor encroachments,
like neighbor's fences, garages or driveways that were mistakenly built over other neighbors' property lines. Such
laws protect unwitting homeowners from suffering the financial strain of moving or rebuilding structures after
using said property as their own for a set period that's prescribed by local or state law.
In your case, you have a couple of things working for you. You, not the inhabitants, continue to
pay taxes on the property, indicating your continued ownership. Plus, your son and his wife have open -- not adverse
-- possession of the house. In other words, you know they are there because you allow them to be there. So it is
not a hostile possession and that's a key tenet to making such a legal claim.
In some municipalities and states, there's a set possession period that usually spans between 10
and 21 years before a squatter claim can even be considered an adverse possession, and that's only if the owner has
out-and-out abandoned a direct interest in the property. However, laws vary greatly, so it may give you peace of mind
to consult a local real estate attorney on the subject.
But you're probably in the clear. Without questioning why you feel compelled to extend such long-term
largesse to married adult family members, it's obvious that you need to address the habitation of your house in a
formal legal document.
Work up a formal lease agreement that obligates your son and daughter-in-law some form of rent --
even it's a nominal $1 a month -- for a set term that is subject to renewal periodically. The lease should also
clearly spell out responsibilities, such as upkeep, utilities and repairs.
Before you do anything, you should determine if your insurance company requires you to be in possession
of the home to have full coverage on it. You may be shocked to find you weren't fully covered for the past three years!
Regardless of what you discover, I strongly suggest you obtain renter's insurance coverage on the place.
And a note to readers in general: Beware those intrafamily "sweetheart" real estate deals. They can
sour in a hurry.
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