Adverse Possession Insurance: A Post Subprime Mortgage Crisis Necessity?

Given that a large number of banks in the US have lost their recently repossessed real properties via adverse possession, is adverse possession insurance now a post subprime mortgage crisis necessity?

By: Ringo Bones

It might only be a “luxury problem” for the upper echelons of the socio-economic ladder, but adverse possession can be a serious issue to real property owners given that belligerent homeless people have used preexisting adverse possession laws and statutes in various states in America for “legalized squatting” purposes. Could the establishment of an adverse possession insurance remedy such a predicament? But first, here’s a primer on what this adverse possession and its rather nebulous legal rigmarole is all about.

At the height of the subprime mortgage crisis in America, many “legal jurisprudence savvy” homeless people had resorted to adverse possession as a way to possess a new house without paying a single cent. After all, given that most preexisting adverse possession laws in the U.S. allows belligerent squatters to legally occupy and own foreclosed property – i.e. a hose and lot – if the bank who now owns it didn’t report a break on to the local law enforcement agencies concerned.

Like it or not (you certainly won’t if you own the “legally squatted” property), adverse possession is a process by which premises can change ownership. It is governed by statutes concerning the title to real property – i.e. land and the fixed structures built upon it. Strange as it may seem, statutes of limitation in most U.S. states allow an adverse possessor to acquire legal title if the owner does not seek timely possession.

Adverse possession consists of actual occupation of the land with the intent to keep it solely for oneself. 

Merely claiming the land or paying taxes on it, without actually possessing it, is insufficient. Entry on land – whether legal or not – is essential. A trespass may commence adverse possession, but there must be more than temporary use of the property by a trespasser for adverse possession to be established. Physical acts must show that the possessor is exercising the dominion over the land that an average owner of similar property would exercise. Ordinary use of the property – for example, planting and harvesting crops or cutting and selling timber – indicates actual possession. In some states, acts that constitute actual possession are found in statute. An adverse possessor must possess land openly for the entire world to see, as a true owner would. Secretly occupying another’s land does not give the occupant any legal rights. Given that such defines adverse possession, how can adverse possession insurance prevent one from losing his or her own real property to a “belligerent adverse possessor”?

Well, insurance companies could model their adverse possession insurance policies, or an “adverse possession risk insurance” policies after preexisting kidnap and ransom insurance policies because both are primarily designed to work in a “risky environment” given that there is very little difference between kidnappers and belligerent adverse possessors as both are utterly devoid of respect for other fellow human beings’ life and property. I mean the legal precedents for establishing one are already there, right?

Awareness and prevention clause could be added to an adverse possession insurance policy, especially to real property located in “high-risk areas” – i.e. ineffectual local law enforcement agencies and largely unenforced local real property laws and statutes. And let’s not forget a reimbursement clause where financial reimbursement of the true owner of the real property subject to a adverse possession event by a belligerent individual or individuals that may require either a regional court-sanctioned armed intervention by specialist security contractors or a lengthy legal court proceedings up to the agreed policy limit.