Owning a home is part of the American Dream. But making that dream a reality can be really costly. A home is one of the most expensive purchases an individual or family may ever make in their lifetime—one that requires a lot of time, effort, and dedication, not to mention, a lot of money. This is especially true when real estate prices are lofty. But even in a depressed housing market, you may have trouble finding the cash it takes to become a homeowner.

Fortunately, there is a way around this whole business of exchanging your hard-earned money for a house. Depending on the circumstances, you can own a house for free—no inheriting or auctioning involved. It's not a government program, it doesn't involve threatening the existing owner's family, and it's all perfectly legal. This article examines one of the most unorthodox ways of becoming a homeowner—by squatting.

Key Takeaways

  • Squatters or adverse possessors reside in a home without any legal title, claim, or official right to it.
  • Adverse possession laws vary by state, but most require the squatter to live in the home continuously for anywhere between five and 30 years.
  • Courts generally rule in favor of adverse possessors in cases of absentee landlords and/or where homes are otherwise neglected.

Squat

No, we aren't talking about the exercise. When it comes to real estate, squatting means that you take over a piece of property and reside in it without any legal title, claim, or official right to it. This is especially true in cases where the legal and rightful owner doesn't inspect the property on a regular basis. In fact, if the registered owner challenges another person's ownership claim—say, a squatter who has lived there right under the registered owner's nose—the courts generally rule with the resident every time. That's assuming they follow some other simple conditions that we'll get to in a second.

Squatting and the Law

The law doesn't actually use the inelegant word squatting. Squatters are actually called adverse possessors. But don't get too excited—adverse possession doesn't mean you can wait until your rich neighbor leaves for a vacation, move in, change the locks, and have your mail forwarded. There's a little more to it than that.

The rationale behind taking property from a taxpaying owner and giving it to a seemingly larcenous tenant is that every piece of land should enjoy its best possible use. With an absentee landlord who never visits or has a representative to keep an eye on the place, a property on an otherwise clean and tidy street could be covered in unkempt weeds and graffiti—or worse. The owner of the ignored property negatively impacts the neighbors and decreases their property values.

As far as real estate case law is concerned, the person living in the property cares enough about the place to inhabit it. That's more than you can say about an absentee owner. But again, we're talking about an absentee owner—someone who pays no attention to the place and hasn't for a long time.

How Long Can You Squat?

Each state has its own laws surrounding adverse possession. In some states, squatters need seven years of continuous possession to lay claim on privately-owned property. There may also be other requirements to fulfill the claim. For instance, Nevada requires an adverse possessor to live on someone else's land for at least five years before he can claim it as his own. In Hawaii, it's 20 years. Most states range from five to 30 years.

But there's more to adverse possession than that. You can't build an underground tenement on one corner of the property and only come and go under cover of darkness. Every state requires that you live there openly and notoriously. Your residence must be continuous and uninterrupted. So if your rich neighbor goes to the Bahamas every winter, you can't move into his house for 15 consecutive winters, return home every spring, then go down to the county assessor's office and claim his place as your own.

Your presence on the property must be conspicuous, so you can't claim adverse possession by living in the shadows.

Some landlords have found ways to use the law by skirting around squatters. For instance, Rockefeller Center in New York City closes for one full day every year in order to keep squatters out.

Does it Really Happen?

You bet it does. While it's not easy to find national statistics about the number of adverse possession cases that actually hit the court system, it's safe to assume that they run in the hundreds, if not thousands each year. Some cases can be pretty outlandish.

For instance, a Boulder, Colorado, couple let their land sit unused for well beyond the state's 18-year requirement. In 2007, their neighbor—who just happened to be a judge as well as the city's former mayor—laid claim to the couple's prime tenth of an acre. The courts ruled in the ex-mayor's favor, and the couple had nothing but property tax bills to show for the site of their would-be dream home.

The Bottom Line

If you're uncommonly determined, you can take adverse possession of a property, have all the contingencies break in your favor, and hope the current owner never gets wise within the prescribed period. But for most of us, it's easier to just shop for houses the old-fashioned way.