A decision in the NSW Supreme Court has ruled in favour of a property developer who claimed squatter's rights to obtain ownership of a property that is now valued at $1.3 million.

Claiming a right to property under adverse possession

In 1998, Sydney developer Bill Gertos found a vacant house in a derelict state in Ashbury, in Sydney's inner west. The woman who had been living there had died and no one had claimed rights to ownership of the property.

Mr Gertos noticed the property while visiting clients in the street. He thought squatters had moved in and were destroying the place, so he changed the locks and commenced repairs.

Seeking advice on the legal principle of adverse possession, also known as squatter's rights, Mr Gertos discovered that if he occupied the house, paid the council rates and taxes, restored it to a liveable standard and installed tenants, after 12 years he could apply to register himself as the property owner.

Applying squatter's rights to request ownership of land

In 2017, Mr Gertos actioned his squatter's rights and applied to be recorded as the registered proprietor of the land under adverse possession. (See McFarland v Gertos [2018] NSWSC 1629.)

The legal notion of adverse possession goes back to a British House of Lords decision in 1833, in a case where the judge noted that the original owner had not lived in the house for some time, as it was riddled with termites.

An obscure and technical area of law, adverse possession allows a person to apply to take ownership of land if they can prove to have had uninterrupted and exclusive possession for at least 12 years.

Descendants of original owner try to claim ownership of property

The court heard that the owner of the property had died in 1947 without a will. A woman had then rented the home, staying there in a "protected tenancy" until she died in 1998, after which Mr Gertos found the property abandoned and in a state of disrepair. However, after he made his application for ownership, a daughter and two grandchildren of the original owner claimed they were the rightful proprietors of the property.

The case sent property lawyers delving into the complexities of section 45D of the NSW Real Property Act 1900 and section 65 of the NSW Limitation Act 1969.

Property entitlement under adverse possession

In order to claim adverse possession of a property, possession must be open, not secret, not by force and not with the consent of the true owner.

The court dismissed the relatives' application, as Mr Gertos had openly advertised the property for rent and had paid taxes on the property for 19 years.

The judge ruled that Mr Gertos was entitled to own the property under the Limitation Act, as he had been in possession of it for the required period with the intention of possessing it.

This is an extraordinary legal case, demonstrating how squatter's rights can come into effect and grant property ownership under the doctrine of adverse possession.

Merrill Phillips
Stacks Law Firm

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