How To Protect Yourself

From Squatters

The following are my observations in dealing with squatters in the past, as well as conversations with attorneys and research on the topic. It is for information only, and is not legal advice. If you like any part of what I have to say, run it by your legal counsel before taking any action. I am not a lawyer and I offer no legal advice, accounting advice or investment advice.

Hollywood Hills Mansion was taken over by squatters for years

California has some of the most favorable laws for squatters. Squatters, for those fortunate enough to not have experience with them, are individuals who trespass onto property and live in it, with an objective to stay long term and attain tenant status, with possible escalation to "adverse possession" and ownership of the property. Other states tend to have similar laws, though often with different timeline requirements and less leniency toward the squatter.

Squatting is another form of deed theft. Here's how.

To illustrate the methodology of deed thief squatters, I'll use a fictional example based on real cases.

INVASION

Jeremy brought his mother Alice back to her home after she had convalesced at her son's home post surgery. She had lived at her home for many years, and owed only around $80,000 on a value of about $700,000.

The two arrived at Alice's home to find that the locks were changed. Someone had invaded and was living in the home. Jeremy's call brought police, but the squatter, Donald, immediately told them the owners were lying and he had a lease and all right to be on property.

DEEMED A CIVIL MATTER

Because police are not qualified to determine the truth of Donald's statement, they immediately deem this a civil matter. This works in Donald's favor because he can verify to others that the police already determined his right to live there is a civil matter and not criminal. There is no risk of being found to be trespassing. Jeremy and Alice try to simply change the locks, but the locksmith won't do so because there is a pending civil matter regarding access. They turn off the power, but the power company turns it back on, still in their name, because of the same reason. They realize they must evict the squatter.

THE CONVERSION AND DELAYS

The squatter, in the mean time, has racked up much more than 30 days that they can prove they have lived in the property, thus making them legally a tenant. Jeremy and Alice have to file a 30-day notice of eviction on Donald. But he contests it, taking the timeline out three months. At that hearing, he alleges an agreed lease, points to how long he has been in the property, claims paperwork against him was improper on a technicality, and the the property owners are retaliating against him by filing the eviction. This demands a trial, pushing the date out to around a year.

TURNING THE TABLES ON THE OWNER

In the mean time, Alice has to continue making the property payments, taxes, and utilities, all without access to her home. It becomes too much. She falls behind. The squatter begins making payments on the taxes and even the mortgage.

Partly due to the stress and depression, Alice passes away after a few years out of her home. Jeremy deals with her jumbled and partially litigated estate for a few more years, trying to get his mother's home probated. Before he knows it, five years have transpired since the squatter got access. The squatter then files an adverse possession claim, citing his payment of taxes and other expenses for over five years. Jeremy has no defense to Donald's claim of having made the payments. The squatter is legally granted the property by the court.

Squatter Prevention 101

Restrict Access. Anyone who crosses your threshold into your home can instantly become a squatter, by simply claiming invitation, and refusing to leave. They won't have the protections of tenant status that the thirty day requirement typically provides, but you can easily still spend thousands getting them out. It's even worse if they can document a conversation about renting, such as a vacation home guest who won't leave, or someone who comes to look at a room, or even rents a room for a month, stops paying, and refuses to leave. You have no choice but to strictly control who can come in your home.
Harden the residence. When the rightful resident is not home, the property must be virtually impenetrable. A house that can not be entered can not be squatted. Consider the fact that a squatter can actually steal your home and its contents, legally, where as a burglar only steals its contents, illegally. Secure accordingly.
Post a "Not For Rent" Sign. Make sure it is clearly visible outside all exterior doors. If worded and posted properly, this can help you enforce trespassing status on anyone who openly refuses leave and has not yet been in the property long enough to gain tenant rights or status.
Post a "No Trespassing" Sign. Make sure it cites the law supporting it, and is clearly visible outside all exterior doors. This helps law enforcement more more often enforce the trespassing law instead of deeming it a civil matter when someone won't leave.
Deploy a Deedsafe™ Backstop. The ultimate stop-loss failsafe nuclear option, is the same as the protection against other kinds of deed thieves, even eminent domain.

Like the other solutions above, this must be done in advance as a preparation, not after trouble starts, in order to be effective. But Among other things, a Deedsafe™ Asset Protection Backstop legally separates the homeowner's equity from the deed to the property, and places the equity in a separate trust completely controlled by the property owner, as a debt instrument against the property.

This (a) disappears the equity in the property which deed thieves and squatters search for, making the property appear underwater in debt, and eliminating it as a target for professional deed thieves; and (b) gives the homeowner the the additional position of mortgage holder on the property. This is especially important because the owner can not file an eviction without cause, but if the owner forecloses on the property as a lender, they can evict the tenant without proving "bad behavior" under eviction law. Doing so would also wipe out any mechanics liens and other clouds to title that squatters and deed thieves often get recorded against target properties; also (c) it insures your equity position with a major national insurer; and lastly (d) it can, with an inexpensive optional add-on, record debt against an entire inventory of contents of the home, making repossession of those items a separate and generally easier action than eviction.

The Deedsafe™ documents utilize an integrated legal document structure. Not only would a successful takeover of the property by a squatter mean that they owe more on the home than the equity, it kicks in a very high default rate of interest when the deed transfers, making holding the property hopeless for the deed thief or squatter.