How to Claim Abandoned Real Estate

How to Claim Abandoned Real Estate

How to Claim Abandoned Real Estate

Everyone wants to get something for nothing, but is there ever really such a thing as a free lunch? When it comes to real estate, it is indeed possible to claim abandoned houses for free. A free house? Yes, that's right, but it might not be quite as straightforward as that.

House prices have increased this year by 6 percent, according to Reuters, pricing many potential homeowners, and especially young people, out of the market. Combined with rising house prices, there has also been a decrease in average incomes, especially among the poorest people. The National Bureau of Economic Research reported on figures showing that life for America's poorest citizens is worse now than it was 30 years ago.

Being able to afford to own property nowadays is a fantasy for many working Americans and why more and more people are interested in opportunities to find abandoned homes for sale. Scoring a property for free considerably decreases your monthly expenses by negating, for most people, what is their single biggest regular expense.

According to the Cornell law school, "a person who finds abandoned property may claim it. " However, they define property as personal effects abandoned in a dwelling, such as furniture or clothing and not real property.

Real property is fixed dwellings or commercial properties like land and buildings. These types of real property usually always have an owner. Even if the owner dies, there is likely a relative who will be awarded the property. Property ownership reverts to the next of kin in the case of death, so there may well be another owner who already considers the property to be theirs. So although it's rare, you may be able to find abandoned houses for free.

How Can You Tell if a House Is Abandoned?

Observing that a home has been left unattended isn't enough to presume that it has been abandoned. After the economic downturn, many people fell into mortgage arrears or found their homes were in negative equity and some abandoned their homes altogether. Although these homes may be empty, it doesn't mean they don't have an owner. In many cases, the banks have repossessed the house, and you may not have a valid claim.

If you're wondering how to buy an abandoned house in your area, you'll first need to conduct some research to see if you can locate the correct and current owner. If you find the owner has indeed abandoned the property or you believe the chances of them objecting or launching legal action are low, then you may wish to proceed with trying to take legal possession of the residence.

You can do this by checking your area's county tax records since the owner will be paying property taxes or be in arrears; either way, there will be an official record to follow. You can also look up the deed of the property to find the contact details for the owner.

The number of abandoned properties have been increasing since the recession and subsequent foreclosures, so you may find more opportunities than ever to buy or acquire abandoned properties.

If you are unable to locate the owner of an abandoned house, there is still another way you can attempt to move in through the process of adverse possession.

What Is Adverse Possession?

The process to acquire someone else's property for free includes a series of conditions that must be met. Adverse possession is when you obtain rights to someone else's property by fulfilling the following criteria:

  • You must maintain continuous possession of the property.
  • You must not have express permission from the prior owner, otherwise called "hostile" possession.
  • You cannot be living in the house secretly; it has to be an open possession.
  • You must be in actual possession of the property.
  • You cannot share control of the property with another person; it has to be exclusively yours.

The Cornell Law School provides a mnemonic to help people to remember the steps; "CHOATE" – C for continuous, H for hostile, O for open, A for actual, T for the requisite time and E for exclusive.

Your attempt to claim adverse possession could be declined or challenged for many reasons including if you leave the property for a period and then try to return. It could also be declined if the previous owner finds out and allows you to stay. A decline is likely if you hide the fact you are living in the home, if you live somewhere else or if you allow someone else to try and claim adverse possession at the same time.

People often think that if they have permission from the owner their claim will have more validity, but the opposite is true. To have a chance at claiming adverse possession, you must meet all the requirements and been living in the home continuously for a set period. In some states, this may amount to a total residence of up to 30 years.

You can boost your case in court if you've shown intent to take legal possession by paying the property taxes and making necessary repairs, especially for a set period from five-to-30 consecutive years, depending on the state. The repairs you undertake do not need to be substantial renovations; simply putting up curtains or repairing a leaky faucet can count as maintaining the property to a good and livable standard.

What Are Squatters Rights?

Many people consider squatters to be criminals who trespass on somebody else's property and refuse to leave. However, adverse possession is also known as squatters rights. Squatters commonly take possession of a property and can be difficult to remove legally. In California, for example, if a person moves into a property and pays the property taxes, even if they don't pay any rent, the home becomes theirs after five years.

Rules can differ from state-to-state, so if you think you may have a claim to a property, you'll need to consult your local jurisdiction and see what steps you may have to take to make the property yours.

Squatters rights laws were initially intended to protect the rights of tenants so that unscrupulous landlords could not get away with putting up rents unfairly and pushing renters out of their homes.

Lots of people argue that the many empty properties found in cities across the country should be given to homeless or low-income families to help them improve their lives and build stronger communities. Homes left empty are, after all, a waste and can fall easily into disrepair which can lower the value of other homes in the neighborhood as well.

Are There Any Risks?

Trying to obtain property through adverse possession is not without risk. The owner could return at any time before the waiting period is up and demand that you vacate the property, or they could lay a trespassing charge. If you have invested money in improving the property, you could lose it. That's why it's a good idea to make every possible attempt to locate the owner before trying to take possession of a property.

It might sound silly, but it can be a good strategy to mail a letter to the property you wish to claim since a forwarding address could get your letter to the rightful owner in due time.

If you can find the owner and make contact, you could make an offer for the home. If the house has become an inconvenience, the owner may be willing to part with it for a reasonable price. If he owes a lot of back taxes, he may agree to give you the property as long as you clear the debt.

Make sure you know exactly how much you'll have to pay and exactly what the ownership details will be before you sign anything or part with any money.

It's also a good idea to have a property inspector value the home and highlight any structural problems to avoid costly repairs in the future.

Why Would an Owner Abandon a House?

There can be many reasons why an owner would abandon her property. She could have moved far away and even forgotten she had a claim to a piece of land or dwelling.

There could be a case where the owner became unwell and was unable to live in the home.

An owner may have decided it wasn't worth the bother to try and list the house and sell it, especially if it's in poor repair or in an area where homes have been devalued. Or the owner could be unaware they own the property, for example, in the case of an inheritance from a long-lost relative.

How to Buy an Abandoned House

Even if you can't find abandoned houses for free, you may still be able to get a house for an absolute steal, or at least, for a fraction of the market price.

Some homes are listed for just a few thousand dollars due to abandonment as a result of the national housing crisis. This Old House produced a list of ultra-cheap properties, each listed under $6,000 – one property was listed for sale for the bargain price of just $750, representing less than a month's rent payment. These homes may have been on the market for a long time or are located in less-desirable areas. They are unlikely to have good resale value, but as a residence, the prices are still incredibly low.

You may be able to find a great deal by going to a trustee or sheriffs' auction after a foreclosure. Look in local newspapers to find details of these auctions. Sometimes you can even buy a house directly from the bank.

If the location doesn't matter to you, then you should focus on areas where populations have been dwindling, or there has been a loss of industry since these places often have the cheapest possible property prices.

According to the Cheat Sheet, some towns will even pay you to live there. Buffalo, New York offers plots of land for new residents for just $1. The town of Tribune, Kansas will pay off your student loans if you set up home there, as well as waive your income taxes.

These incentives are meant to bring more people, especially young professionals, into cities and towns where the population has been declining over the years. The cost is worth it for municipalities who are trying to revitalize their areas and welcome new generations of soon-to-be locals.

If you work from home or belong to a profession that is always in demand, moving to a new city or even state could save you thousands of dollars in incentive programs and reduced property prices.

It may not be a smooth or speedy process to buy an abandoned property or take possession of a home through exercising squatters rights, but it is possible to get an abandoned house for free or for an exceptionally low price.

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About the Author

Fiona Tapp is a freelance writer and educator. Her work has been featured on The Washington Post, HuffPost, The Toronto Star, Brit+Co, and others. She writes about a variety of topics including Homes, Parenting, Education, and Travel. Fiona is a former teacher and masters degree holder.