Squatters' Rights Explained | Can Someone Claim Your Tenanted Property?

Why Learning Squatters’ Rights Matters 

Squatters’ Rights, also known as adverse possession, is a legal concept that allows someone to occupy property without permission, then potentially claim ownership.  It’s a nightmare scenario for landlords and investors, so it’s best to understand these laws to protect your properties and investments. 

As a landlord, you would think that if someone trespassed on your property and started living there without your permission, it would be a clear-cut case of illegal occupation. But the reality isn’t always so simple.  

For example, you lease out an investment property to what seems like reliable tenants. The lease term ends, but instead of moving out, the tenants stay on without signing a new agreement. They even stopped paying rent. You assume they’ll leave soon and life gets busy, so you put off addressing the situation. Months pass, and when you finally try to take action, the tenants claim they’ve been taking care of the property, maintaining the garden, and making repairs. They invested time and resources in it, and they now refuse to leave. Worse still, they suggest they have rights to stay. 

The impact of adverse possession on landlords and property investors is devastating. Squatters claiming rights to your tenanted property could result in costly legal battles, loss of ownership, and stress. Properties left vacant or neglected between tenancies are especially vulnerable. 

Squatters’ Rights and How They Work 

If you own multiple rental properties or face occasional vacancies, understanding squatters’ rights safeguard your investments. Remember, not all trespassers will be able to claim squatters’ rights. To invoke this protection, your ex-tenant or trespasser has to meet all the following criteria: 

• Continuous occupation: Squatters must have occupied the property without interruption for the entire required period. 
• Open and obvious possession: The squatters’ presence on the property must be visible and not hidden from the owner or the public. 
• Exclusive possession: They must act as if they are the property’s rightful owner, excluding others, including the legal owner, from use. 
• Without the owner’s permission: The occupation must be unauthorised; any form of agreement with the owner, such as a lease that is in effect, nullifies an adverse possession claim. 
• For a certain period of time: The adverse possession timeframe varies by state. In Queensland and most other states, it’s 12 years, and in Victoria, the minimum is 15 years. The ACT and South Australia, however, does not recognise Squatters’ Rights. 

But what happens when a tenant overstays their lease and starts acting like the property’s owner? This is where things get complicated. If a tenant remains on the property without renewing their rental agreement and the property owner fails to take action, the line between tenant and squatter blurs. 

Over time, if the tenant continues to maintain the property, pay utility bills, and make improvements without objection from the owner, they could begin meeting the legal requirements for adverse possession. This is why property owners should enforce lease terms and address overstaying tenants immediately. Ignoring a tenant’s prolonged, unauthorised stay risks financial loss and opens the door to potential ownership claims. 

Can Tenants Claim Property through Squatters’ Rights? 

There are also instances when tenants claim Squatters’ Rights. You might think that once a lease ends, any right to stay on the property ends with it. But if a tenant remains after their lease has expired and stops paying rent, there’s a possibility that they could eventually claim adverse possession, especially if the owner does not intervene. 

To maintain effective property management and mitigate potential risks, address lease expirations immediately. Implement a proactive strategy that includes: 

• Regular Property Monitoring: Conduct periodic assessments to make sure the tenants comply with the terms of their lease and identify impending expirations. 
• Formal Notice Procedures: Issue timely and legally compliant notices to tenants regarding lease expiration and subsequent actions. 
• Comprehensive Documentation: Maintain records of all communications, lease agreements, and related documentation to establish a clear audit trail. 

Failure to address the tenants’ overstay will result in financial losses and complex legal proceedings, so monitor your property to safeguard its interests. 

How Squatters’ Rights Affect Property Value 

Protecting your investment means addressing squatters promptly because their presence directly correlates with decreased property value. 

Once a squatter claims their rights over your property, selling or leasing becomes far more complicated. Potential buyers or tenants may be deterred by the legal entanglements and risks associated with the property, so they think twice before committing. 

Even before any legal claims, properties occupied by squatters often suffer from neglect, damage, and lack of proper maintenance. Squatters may not have the same incentive to care for the property as an owner or paying tenant would. Over time, this leads to significant wear and tear that are costly to fix. This state of disrepair reduces your property’s market value and makes it less attractive to potential buyers or renters. 

Moreover, if word gets out that your property has been occupied by squatters, it will develop a negative reputation in the market. Prospective buyers may worry about lingering legal issues or future security problems, or safety issues. This drives down interest and price. 

This combination of legal complications, physical damage, and reputational harm lead to a significant devaluation, making your investment less profitable. 

Managing Risks and Protecting Your Investment 

How do you protect your property from squatters? The key lies in being proactive and vigilant. Squatters often take advantage of neglected or poorly monitored properties, so stay on top of your property’s condition and security. 

Secure and monitor your properties. Install proper security systems like alarms, cameras, and motion sensors. Conduct regular inspections, especially if the property is vacant, and make friends with neighbours who keep an eye out for suspicious activity. If necessary, hire a property management company to oversee your property, especially if you live in a different state or abroad. 

See to it that your properties aren’t left vacant for extended periods. Even short-term vacancy attracts unwanted occupants. 

Maintain clear boundaries. Install fences, gates, and signs clearly mark your property’s limits. Clearly defined boundaries make it obvious that the property is cared for and monitored, so it discourages any potential squatters from making a move. 

Build strong tenant relationships. If you’re renting out the property, maintaining good communication and staying on top of lease agreements reduces the risk of tenants overstaying their welcome. 

These steps reduce the likelihood of squatters targeting your property, so your investment remains secure and profitable. 

Legal Recourse for Property Investors 

If you discover squatters on your property, act quickly and through the proper legal channels. In Queensland, you’ll typically need to issue a formal notice to vacate, clearly stating the legal grounds for their removal and giving them a set timeframe to leave. If they refuse to comply, the situation escalates, and you may need to apply for a court order to enforce their removal. Once the court order is approved, police officers will handle the eviction process for you; their presence will mitigate risks or possible damages against your property. 

Legal action is time-consuming and costly but allowing squatters to remain only strengthens their case for adverse possession. Every day they stay on your property without intervention works in their favour if they want to pursue a legal claim. Ask your lawyer for advice to avoid complicating the process even further. 

Document everything, including any attempt to communicate with the squatter, evidence of their occupation, and the condition of the property. This documentation becomes necessary if the case goes to court. In some situations, law enforcement may be involved, especially if the squatters refuse to comply with legal notices or if there’s property damage. 

While the legal route might feel overwhelming, it’s the most effective way to protect your rights and prevent a bad situation from getting worse. 

Key Takeaways for Property Investors 

Real estate investment comes with risks, and Squatters’ Rights are one you can’t afford to ignore. By staying informed, securing your properties, and taking legal action when necessary, you avoid costly legal battles. 

Understanding Squatters’ Rights is about being prepared. Don’t wait until someone’s claiming your property. Protect what’s yours by conducting regular property inspections to maintaining strong security measures. 

If you’re facing issues with squatters or need expert legal advice on property matters, our team is here to help. Contact us if you have squatters trying to claim your property.