An abandoned house, a missing owner, a mysterious squatter could add up to a young banker taking ownership of a million-dollar home without paying a cent. We catch up with a prominent property lawyer, George Vlahakis, who says it could happen.
Kevin: A really interesting story I came across the other day about an abandoned house in Redfern in Sydney. The owner has been missing for some time and there is an archaic law that says that if you take occupation, you could actually take ownership. Well that’s actually what’s happening. A young banker is trying to do that. He’s currently living there as a squatter. It’ll be interesting to watch what happens here.
Let’s get a bit of background on this, and also the law around this. George Vlahakis is a solicitor with Kydon Segal Lawyers and also Click Conveyancing.
George, thanks for your time.
George: Thank you.
Kevin: I know this law is not strange to you because you had a similar situation recently, didn’t you? But let’s firstly talk about this one and then we’ll reflect back on what you learned from your previous experience. What do you know about this one in Redfern?
George: Well, this is quite a unique and rare occurrence, which for the person in question who is squatting, is potentially a bit of a windfall. Under the Real Property Act there is a provision that allows someone who takes possession of a property to become registered as the owner of that property if they’ve been in continuous possession for a period of 12 years. My understanding is that this chap has been there for about eight or nine years now, so he’s getting close to that threshold.
Kevin: He probably should have just kept his head down really, shouldn’t he, and maybe waited for the full 12 years you have to be in occupation.
George: That’s right. You have to be in possession for 12 years. Once that period of time has elapsed, you make an application to the Land Titles Office or Land Property Information in New South Wales as it’s known here, for the property to be registered in your name.
In order for that to be processed, you need to provide them with evidence that satisfies them that you have been in possession of the property for 12 years and you also need to satisfy them that the rightful owner – if you want to call him that – is AWOL, and to support your application you need to provide evidence from third parties in the form of statutory declarations or affidavits that they have known you and are aware that you’ve been in possession of the property for that period of time.
Kevin: That could be difficult, couldn’t it? In this particular case, the rightful owner is a Chinese-born man. His name is Paul Fu. He bought the house in the middle of 1991. He hasn’t been heard from for the past nine years, but I believe that the council also had to do some rectification work on this property. Is that right?
George: That’s right. My understanding from the media articles that have been circulated is that there are some outstanding orders in relation to rectification of some hazardous defects in that property. The person who is in possession of the property would probably be well served to take care of those repairs, which is further evidence that he is in possession of the property and is saying to the world “This is my property.”
One of the requirements under the legislation is that your possession is open and not a secret, so you can’t be seen to have snuck your way in there and hidden from the real owner for that 12 years.
Kevin: So you have to get to know the neighbors really, don’t you?
George: That’s right. So you do things like pay council rates, connect electricity, and get bills in your name. You can’t sneak in and out of there; it has to be open.
Kevin: It’s a big gamble, too. You could do that for 11 or 12 years and then find that the owner turns up at the last minute and claims it back.
George: That’s right. The other risk that he’s running, which is always a risk in these situations, is that he is in reality trespassing. The property does belong to this Chinese chap who is presumably overseas. The rightful owner has all rights to exclusive occupation and possession of the property. This guy here, according to reports, has allegedly broken into the property effectively, through the front door and is in there without the permission of the rightful owner, which is, at law, trespass. If you’re sued for trespass, you can be sued for damages, which could result in substantial penalties and fines and legal costs.
Kevin: Who would have to bring that action? Does that have to be the owner pressing those charges, or can the police do that without him?
George: Just to give you an example, a scenario that may happen is that the original owner, this Chinese guy, has moved overseas, has suffered some unfortunate accident and passed away. The beneficiaries under his estate are now entitled to ownership of this property through a probate process or otherwise. They then might bring a claim for trespass against the person who is occupying the property, and part of their damages might be the fact that they’ve been denied rental income from the property for the period of time that he’s been in there.
You can imagine if he’s been there for seven years, the rental on a terrace in Surry Hills or Redfern might be $1000 a week, $50,000 a year, multiplied by seven plus legal costs. You could be looking at a half a million dollar bill before too long.
Kevin: Yes, I mentioned at the outset, too, George that you had a similar situation recently. Is that right?
George: That’s right. I can’t obviously go into specifics or addresses or names, but I did represent a client who came across a property that was abandoned and started going down this road of claiming adverse possession. Thankfully, the beneficiaries or heirs of the rightful owner were found and the property is back in their hands, I understand.
Kevin: Was he in occupation?
George: He took possession of the property, but the property was extremely run down, so he wasn’t living there. He took possession by changing the locks and making the property secure. It was open to the elements and in an extremely dilapidated state in the inner city. He changed the locks and put a sign up and said, “I’m the owner. If anyone needs anything, you can contact me.”
Kevin: Okay, yes. That’s an outward statement, isn’t it? He’s making claim to it. Would he have also paid back rates or anything like that?
George: He was in the process of arranging to do that. There was a substantial levy outstanding for council rates, which he didn’t get the opportunity to pay, thankfully.
Kevin: If he had paid that and the owner then came forward, could he claim that back?
George: The person who paid the rates, not being entitled to the property, would have a very difficult time getting them back from the owner.
Kevin: It’s a gamble, isn’t it?
George: That’s right, yes.
Kevin: Yes, it certainly is. We’ll watch this one with interest. It could be a long, drawn-out process. Where would he stand now if this person doesn’t come forward, and assume no one makes claim to it? Could there be a dispute? Could someone else move in, as well, or because of the period of time he’s been there, is he pretty safe in that case?
George: He does have some legal rights to the property because he’s in possession of the property. You can’t move him out by force, short of getting an order of the court and having the courts intervene on your behalf. So he does have some protection being in possession of the property now.
Kevin: He’s probably done the right thing by coming out and making it known. It’s a bit like your guy putting a sign on there saying “Hey, I’m in ownership.” He’s just got to hold his breath now and hope that nothing happens in the next few years.
George: That’s right. Paul Fu, the Chinese-born rightful owner, and his relatives if they’ve come across now or this has been brought to their attention, should be making moves fairly quickly to take possession of the property back.
Kevin: I’ve been talking to George Vlahakis who is a solicitor from Kydon Segal Lawyers about this very interesting case. We’ll continue to watch it.
George, thanks for your time, too.
George: Thank you very much.