Ownership or Occupation? How adverse possession can impact the value of your assets

Dividing fences can be one of the most controversial elements of land transactions, development and ownership. How often do we hear of long and bitter disputes over dividing fences between adjoining land owners, with both parties strongly believing that they are in the right.

For developers and owners’ it is critical to understand the difference between ownership and occupation, the importance of the location of dividing fences, as well as the true extent of land that is available for development as early as possible.

This knowledge is critical as it could make a significant difference to the value or profitability of projects.


 

For example:

A recent Client of Charter purchased 3 titles and was intending to develop the land into medium density townhouses. The Client engaged Charter to complete a Title Re-establishment survey as there appeared to be more land between the fencing than on title.

After completing the survey Charter determined that an old private, unmade drainage reserve wrapped around the site. Measuring nearly 4 meters in width and running along the rear and western boundary of the site, the total area of the reserve was almost 250 square metres. This reserve was still in the name of a private entity and had been enclosed by the existing site fencing for over 30 years.

Fortuitously this fence had not been demolished and Charter assisted the Client to remove the reserve status and reclaim the land via Possessory rights, which resulted in a much higher profitability for the project.


FENCES AMENDMENT BILL: PROVIDING CLARITY AROUND DIVIDING FENCES

The Fences Amendment Bill 2013, an amendment to the Fences Act 1968, is currently before the Victorian Legislative Assembly and is due to be passed in 2014. The Bill’s aim is to provide clarity around dividing fences – particularly in the sharing of costs, dispute resolution and the role of the courts.

Importantly the Bill details the role of Licensed Land Surveyors in fencing and boundary disputes and allows Land Surveyors to determine the true position of a boundary relative to a dividing fence.

It has been over 40 years since the original Fences Act came into operation. During that time the number of fencing disputes has increased rapidly. The Fences Amendment Bill 2013 attempts to provide this clarity by detailing what constitutes a dividing fence, the responsibilities of land owners and the process of dispute settlement. The aim is to reduce the number of disputes reaching the Courts and to minimise the costs involved to all parties.

OWNERSHIP VERSUS OCCUPATION: POSSESSION POSSESSION POSSESSION

A dividing fence is defined by the Fences Act 1968 as “a fence separating the lands of different occupiers”. It is important to note that the term “occupier” is used rather than “owner” – the distinction between the land one owns and the land one occupies is important and the dividing fence plays a key role in this distinction.

The State of Victoria still has provision for a person to claim title to land based on long, uninterrupted and exclusive occupation. This form of title, known as Adverse Possession, is commonly dealt with under Section 60 of the Transfer of Land Act 1958.

The key to Adverse Possession is proving at least 15 years of exclusive possession, with dividing fence location being the most common form of evidence.

An adverse possession claim can be made directly to the Registrar of Titles and requires a Plan of Survey from a Licensed Surveyor to clearly identify the area being claimed. Typically the area being claimed is wholly enclosed by dividing fences, implying exclusive possession of the land by the claimant.

The dividing fence is one of the most critical forms of physical delineation between occupied lands and therefore it is paramount to retain dividing fences as is, until you have confirmed their location relative to title boundaries. This will give you the best chance of claiming Adverse Possession.

The Titles Office will not necessarily consider evidence of previous fencing alignments; they want to see the current conditions on site.

UNLOCKING POTENTIAL: LAND DEFINED BY TITLE VERSUS LAND POSSESSED

Developments in Melbourne’s oldest suburbs or suburbs undergoing land use transition – i.e. light industrial/mixed use to residential – are particularly exposed to land tenure and fencing issues. Richmond, Abbotsford, Cremorne, Collingwood and Port Melbourne are just some that immediately come to mind.

Understanding the difference between land defined by title and land possessed and the implications for intended use can be an important determinant of land development potential.

Astute vendors and developers understand the full picture of the land before they dispose of or acquire a site or commence applications. Identifying these issues as early as possible by engaging a licensed surveyor prevents potentially more serious and costly events later in the process and also alerts developers to the extra potential of the land they are disposing or acquiring.

Conversely, engaging a non-licensed surveyor to satisfy the minimum town planning requirements can risk the full development potential of the land not being realised or expose the project to significant costs and delays.


 

For example:

Charter was engaged by a land owner who was aware that he occupied a piece of land on the adjoining title that had an approved permit for a high density apartment development. The endorsed plans showed the intended development was built over the piece of land he occupied.

Our Client approached the developer to seek resolution so as to allow the development to proceed. The developer aggressively disputed the claim (on the advice of non-licensed surveyor who had conducted an incorrect feature and level survey).

Charter’s Client successfully claimed adverse possession and the intending developer was required to redesign the development and obtain a variation to the approved plans – delaying the project significantly and undermining its feasibility.

If discrepancies between the land defined by title and land possessed are identified, it is the experience of Charter’s Licensed Land Surveyors that it is beneficial to engage the neighbours and seek resolution of any boundary disputes before they become costly to the development.

We have observed that adjoining land owners are much more co-operative if they have been informed and involved from the outset.

Engaging a Licensed Surveyor to survey the title boundaries during the due diligence phase of a land transaction, or before planning applications are commenced, will identify any particular issues regarding land entitlement and possession – either for or against.

A typical Title Relocation survey will take about a week to complete and will identify the majority of issues.


 

Charter Keck Cramer’s Land Surveyors have experience in all forms of land title surveys and have resolved a range of possession issues. We can provide expert advice on how to deal with any land tenure issues that may be present on a particular site across Victoria.

Find out more about our Land Surveying and Projects capability and consulting services