Sunday, March 22, 2015

Your adverse possession claim didn't die in your neighbors Estate.

For us property law geeks, the February 27,2015 Nimro v. Holden decision by the Maryland Court of Special Appeals is a fun and important decision. It marks a very important intersection between the law of adverse possession and the claim process in probate matters.

First, some background on the probate process:

  • When somebody dies an estate is created to administer all their "things."  This includes property rights, contract rights, ownership and debts.
  • The rules require that any claims against an estate must be made within a six-month limitation, or the claim is lost forever.
  • The six-month restriction on claims allows for the orderly and prompt administration of estates, and lets heirs inherit in a reasonable time.  Our country is built on the ability to efficiently move property and things from one generation to the next.
Next, some background on adverse possession:

  • It is a claim that takes ownership away from the title owner.
  • Among the requirements, the claimant must demonstrate adverse use for a 20 year period.
  • A court order must declare the transfer of ownership, if all the elements have been proven.
  • This involuntary transfer of ownership is meant to keep land in productive use.
This lawsuit highlighted an apparent gap in the law- what happens when someone dies, and an adverse possession claim has not yet been made against his land?  Is that claim lost if not raised in the probate proceedings within six months?

Mr. Nimro owned several lots overlooking the water. He claimed adverse use of the lots owned by the dead person's estate as an extended front yard that gave him unobstructed water views and beach access.  He did not make a claim in the estate, electing instead to sue in the Circuit Court for Anne Arundel County.

The Circuit Court judge sided with the estate, and ruled that the failure to make the adverse possession claim within the six-month limitation of the probate process extinguished the claim.  Mr. Nimro's claim was dismissed without a trial.

In this decision, the Maryland Court of Special Appeals got it right, and reversed the Circuit Court decision. In summary, the property rights created by the elements of an adverse possession action cannot be extinguished by the passing of the six-month probate limitation period (yes, that is a long sentence).

In the language of real property lawyers (and my inner property geek is now on full display), Maryland does not favor the creation of determinable and defeasible estates (fancy words that simply mean that an ownership interest can change based on future events). And to adopt the reasoning of the lower court would mean that a fully formed adverse possession claim would be subject to defeat if not brought prior to the death of the current legal title owner.  In essence, the court confirms what we practitioners have believed to be the better practice for years- an adverse possession claim need not be filed in a probate case.

This is consistent with other areas of established law, like the statute protecting mortgages and other recorded liens- a secured creditor does not lose a recorded lien if it doesn't file a probate claim within six months.

Well, that was fun.