Methods of transferring real estate
The typical method of transferring real estate from one party to another is by deed. Types of deeds that could affect the transfer of the real property include but are not limited to General Warranty Deeds, Special Warranty Deeds, Quit Claim Deeds, Personal Representative’s Deeds, and Beneficiary’s Deeds. However, in certain instances the title to real property may also be transferred through legal proceedings—either by another type of deed (Sheriff’s Deed, Public Trustee’s Deed) or by court proceeding, as in a claim of adverse possession.
In reaction to a recent adverse possession case, the Colorado legislature amended certain provisions of the Colorado Revised Statutes. These modifications create additional standards and requirements for claimants to obtain title to real property by adverse possession in addition to the prior common law and statutes.
The statutory modifications are effective on July 1, 2008, for all cases of adverse possession filed after this date. For cases filed prior to July 1, 2008, the old common law and statutory standards continue to apply.
Claim of adverse possession
A possession of the real property may give rise to a claim of adverse possession when the claimant has been in actual possession of the property, and when possession is adverse, hostile, exclusive, and uninterrupted for the statutory period. Colorado statutes define this statutory period as being 18 years, or 7 years if the adverse possessor, under a good faith claim and color of title, was paying taxes on the possessed real property. To obtain title to the claimed property, the adverse possessor must bring a court action of quiet title to the real property, and if the party obtains such a court order they would then have fee simple title to the real property.
Two categories of acquisition
Adverse possessory rights fall under two categories: adverse possession and easements by prescription.
Adverse possession is addressed in both common law and by the Colorado statutes, while standards for obtaining a prescriptive easement are made pursuant only to common law.
A claimant who satisfies the elements of adverse possession in a civil action and obtains a court decree gains fee simple title to the real property, whereas a claimant who satisfies the elements of a prescriptive easement will only acquire an easement interest in real property.
A claim for adverse possession or a prescriptive easement may only be made against a private party. Claimants may not obtain property through adverse possession against real property owned by a governmental entity.
Elements of adverse possession
The required elements of an adverse possession claim are that the possession must be actual, adverse, hostile, under a claim of right, exclusive, and uninterrupted for the statutory period.
- Actual possession. Actual possession is defined as the use of the real property that a true owner would typically make of the land, and such use is consistent with the character of the land.
- Adverse. This means an interest contrary to the interest of the record owner made by claimant and evidenced by some clear, positive, and unequivocal act. The possession of the property must be such that the record owner of the property can visually observe that another party is claiming possession of the subject property—i.e., open and notorious. Examples of open and notorious possession include fencing, erection of a building, cultivation, or other uses of land that would customarily occur with actual ownership. Such possession cannot be secret or hidden.
- Hostile. The claimant under adverse possession claims ownership against all others, and such claim of ownership includes both the record owner and the general public.
- Under a claim of right. The adverse possessor claims an ownership interest of the subject property. To validate this claim, the adverse possessor cannot recognize the ownership of the true record owner of the real property.
- Exclusive. Exclusive possession means there can be no sharing of possession with the legal holder of title or the general public.
- Uninterrupted for the statutory period. The adverse claimant’s possession must be uninterrupted for a period of 18 years, or 7 years if there has been the appearance of title and payment of taxes. Uninterrupted possession requires only the degree of occupancy and use that the average owner would make of the property. The person claiming the property by adverse possession cannot relinquish the land to another for any period. However, uninterrupted possession may be able to be passed on to successive adverse possessors of the same property by a doctrine known as “tacking,” but only if the adverse claimant conveys interest in the property in question to a successor with a proper deed.
The act of adverse possession does not in itself transfer fee ownership or record ownership of the real property; it merely gives rise to a claim for fee ownership of the real property to the adverse claimant. To obtain fee title and record title to the real property, the adverse claimant must prevail in a quiet title lawsuit against the record owner. A court decree in favor of the adverse claimant when recorded establishes record title in the real property.
The effect of changes to Colorado statutes regarding adverse possession (July 1, 2008)
- To prevail on a claim in any civil action for adverse possession after July 1, 2008, the adverse claimant must prove each element of adverse possession as set forth above by “clear and convincing evidence.”
- In addition to the elements of adverse possession mentioned above, the claimant must also prove that it had a good faith belief that the adverse possessor was the actual owner of the property, and that such belief was reasonable under the circumstances.
- In the event an adverse claimant prevails on the claim, the court may determine that an award of compensation must be paid to the party losing title to the real property. Further, the adverse claimant may be required to reimburse the losing party for all taxes and assessments that can be apportioned to the lost property that were paid by the then record owner over the prior 18 year period. This amount will also bear interest at the statutory rate from the dates on which the losing party made payment on such taxes and assessments.
NOTE: These statutory modifications are not applicable to prescriptive easements.
Elements of a prescriptive easement
A party may also obtain an easement interest in real property if the following three elements of prescription are met:
- Open and notorious. The user must not attempt to conceal the use and that such use will be apparent to the record owner upon inspection.
- Adverse and under claim of right. The use must not be with the owner’s permission. Unlike adverse possession, the use needs not be exclusive. The user of a common driveway, for example, may acquire possession of an easement.
- Continuous and uninterrupted for the statutory period. A continuous claim of right with periodic acts that put the owner on notice of the claimed easement fulfills the requirement.
Land Title does not insure easements by prescription. However, as in an adverse possession claim, a claimant may obtain an easement interest in the real property through a quiet title action, which may be insurable as described below.
Marketability of title
Once a decree of quiet title has been obtained by the claimant as to either adverse possession or a prescriptive easement, the marketability of the newly obtained property remains an issue due to the possibility of an appeal of the decree by the losing party. As such, a title company will not insure the property obtained by the judicial decree for at least 6 months from the time the decree is recorded, provided that no appeals have been initiated to set aside or to otherwise impair the effect or validity of the decree.