TRANSFER BY INVOLUNTARY ALIENATION

Laws of descent

Escheat

Foreclosure

Eminent domain

Adverse possession

Estoppel

 

Involuntary alienation occurs when a title-holder dies without a valid will. It also occurs under other special circumstances. State law regulates all forms of involuntary alienation, whether such transfer occurs by the laws of descent, abandonment, foreclosure, eminent domain, adverse possession, or estoppel.

Laws of descent         

The state’s statutes of descent and distribution identify heirs and the respective shares of the estate they will receive.

Escheat                        

In the absence of heirs, title transfers to the state by escheat. Property that has been abandoned for a statutory period may also escheat to the state.

Foreclosure                 

A property owner who fails to fulfill loan obligations or pay taxes may lose an estate through foreclosure.

Eminent domain         

In many cases, public acquisition of property is a voluntary transaction between the government entity and the private owner. However, if the private party is unwilling to sell, the government may purchase the property anyway. The power to do this is called eminent domain.

Eminent domain allows a government entity to purchase a fee, leasehold, or easement interest in privately owned real property for the public good and for public use, regardless of the owner’s desire to sell or otherwise transfer any interest. In exchange for the interest, the government must pay the owner “just compensation.”

To acquire a property, the public entity initiates a condemnation suit. Transfer of title extinguishes all existing leases, liens, and other encumbrances on the property. Tenants affected by the condemnation sale may or may not receive compensation, depending on the terms of their agreement with the landlord.

Public entities that have the power of eminent domain include:

  • all levels of government
  • public districts (schools, etc.)
  • public utilities
  • public service corporations (power companies, etc.)
  • public housing and redevelopment agencies
  • other government agencies

To acquire a property, the public entity must first adopt a formal resolution to acquire the property, variously called a “resolution of necessity.” The resolution must be adopted at a formal hearing where the owner may voice an opinion. Once adopted, the government agency may commence a condemnation suit in court. Subsequently, the property is purchased and the title is transferred in exchange for just compensation. Transfer of title extinguishes all existing leases, liens, and other encumbrances on the property. Tenants affected by the condemnation sale may or may not receive compensation, depending on the terms of their agreement with the landlord.

In order to proceed with condemnation, the government agency must demonstrate that the project is necessary, the property is necessary for the project, and that the location offers the greatest public benefit with the least detriment.

As an eminent domain proceeding is generally an involuntary acquisition, the condemnation proceeding must accord with due process of law to ensure that it does not violate individual property rights. Further, the public entity must justify its use of eminent domain in court by demonstrating the validity of the intended public use and the resulting “public good” or “public purpose” ultimately served.

The issue of eminent domain versus individual property rights has recently come under scrutiny in light of a 2005 Supreme Court ruling that affirmed the rights of state and local governments to use the power of eminent domain for urban re­development and revitalization. The ruling allowed that private parties could undertake a project for profit without any public guarantee that the project would be satisfactorily completed. The ruling brought the issue of “public use” into question, as the use of the re-development could well be private and even a private for-profit enterprise. The winning argument was that the “public purpose” is served when re­development creates much needed jobs in a depressed urban area. As a result of this decision, many see the power of eminent domain and the definition of public good as being in conflict with the constitutional rights of private property ownership. New and different interpretations of the public’s right to pre-empt private property ownership by eminent domain may be expected.

Adverse possession   Florida laws allow a real property owner to lose legal title to an adverse possessor. An adverse possessor is someone who enters, occupies, and uses another’s property without the knowledge or consent of the owner, or with the knowledge of an owner who fails to take any action over a statutory period of time.

To claim legal title, the adverse possessor must:

  • be able to show a claim of right or color of title as reason for the possession
  • have notorious possession, which is possession without concealment
  • maintain a consistent claim of hostile possession, which is a claim to ownership and possession regardless of the owner’s claims or consent
  • occupy the property continuously for seven or more consecutive years without owner consent
  • pay taxes

A claim of right is based on the adverse possessor’s occupying and maintaining the property as if he or she were the legal owner. Color of title results when a grantee has obtained defective title, or received title by defective means, but occupies the property as if he or she were the legal owner. A court may hold that a claim of right or a claim of colored title is a valid reason for the possession.

Notorious possession and hostile possession give constructive notice to the public, including the legal owner, that a party other than the legal owner is occupying and claiming to own the property. It is possible for such notice to prevail over notice by recordation as the dominant evidence of legal ownership, provided the possessor has occupied the property continuously for the statutory period of time.

In Florida, the possessor must have paid taxes over the entire period of possession to obtain title. However, if the possessor has paid rent of any kind, the claim of ownership might be refuted.

Avoiding adverse possession. An owner can avert the danger of involuntary alienation by adverse possession by periodically inspecting the property within statutory deadlines and evicting any trespassers found. The owner may also sue to quiet title, which would eliminate the threat of the adverse possessor’s claim to legal title.

Estoppel                      

Estoppel prevents a person from claiming a right or interest that is inconsistent with the person’s previous statements or acts. As a basis for involuntary alienation, the doctrine of estoppel can prevent an owner from re-claiming a property that was transferred under false pretenses. For example, an owner conveys a property with a defective title. The grantor is fully aware of the defect but makes no disclosure to the grantee. The grantor later cures the defect and then claims to be the rightful owner of the property on the basis of the effort and expense of clearing the title. Estoppel disallows the grantor’s claim because of the prior conveyance action. The grantee remains legal owner and benefits from the cleared title as well.