Does paying property taxes give you ownership rights?

Q: I own five acres of land with two other people. Two of us have paid all property taxes on the property for 30 years. Can the two owners who paid the taxes own the property? His share of the property was handed over to the third owner about 30 years ago but he never paid anything. Now this owner has applied for judicial sale of the land.

Doesn’t paying property taxes give us property rights? Do you have any advice for us?

A: We receive questions similar to yours from time to time, and our answer is generally the same. You do not automatically become a property owner just because you have paid property taxes and maintenance costs.

You may have heard the term “adverse possession.” Adverse possession allows you to become the owner of property if you openly and famously use someone else’s land, pay property taxes on that land, and use the land exclusively for at least 21 years. (In some cases, it may take less time depending on your state’s laws.)

Here’s how it might work. First, you are claiming the property as your own. Do not allow others to use the property, even the rightful owner. You do everything an owner would do with that property including maintaining it and paying property taxes.

In this scenario, it is unlikely that the rightful owner will be found anywhere. Maybe they forgot the property. Or perhaps they inherited it unintentionally. Or they simply stopped taking care of it because they couldn’t afford it. You walk in and start using the drug. You treat it as your own and let others know that it is yours.

In your case, we do not believe you passed the negative possession test. First, you acknowledge the third owner’s right to the property. Then, while pointing out the landlord’s failure to pay expenses, you are not asserting that you used the property exclusively as your own. It does not say, for example, whether you have prevented him from using or accessing the property. We bet you’ve reached out to him over the years to request reimbursement for expenses. Even if you never get a response, reaching out means you acknowledge the owner’s interest in the property.

Let’s say you’re found to have owned the property for the required period of time in your state (the number of years varies somewhat by state), and you can claim adverse possession. You will still need to go to court to prove your case and obtain sole ownership of the property.

So, negative possession is a long shot. However, there may be a way you can recoup some or all of the money you and the other owner have spent over the years.

It appears from your letter that you and the other owner have paid all expenses for the property over the 30 years. We don’t know if you lived there or rented it. If you live there and benefit from the use of the property, it is fair that you pay the property taxes and other maintenance expenses for the property.

If you and the other owner rent the house, do you split the rent with the third owner? If so, you can deduct his share of maintenance and taxes from the income generated by the property. If not, it’s fair for you to pay these expenses (such as repainting or replacing appliances) out of the resulting rent.

When it comes to long-term improvements to a property, these may fall into a different category. Let’s say you had a new roof, new heating and cooling system, new bathrooms, and a new kitchen in the last two years and now you’re selling the house. You can claim that you and the other owner should receive compensation for the improvements you made to the home from the proceeds of the sale.

This line of thinking explains how you and the second owner can be reimbursed for your expenses over time.

Let’s say you and the second owner never rented the property and probably never used it. I just paid expenses for 30 years. We don’t think it’s fair for the third owner to benefit from the money you put into the home when you sell the home. You’ll likely need to determine what you put into the home and how those improvements increased the value of the home so that you can get reimbursed for one-third of the expenses over time when the home and second owner sell. They can receive compensation for their one-third share.

If you and the second owner have used the property exclusively for 30 years, and you are on friendly terms with the third owner, you will probably share the profit equally. If there is an outstanding mortgage, you will share the profits after it is paid. Of course, we realize that there may be other complicating factors that can change these parameters.

But it doesn’t seem like a friendly situation. The third owner wants to force the sale of the house by going to court. Given this situation, you will need to sit down with your attorney and find out whether or not you qualify for adverse possession. If you don’t, you need to find out how much money you and the second owner have invested in the home over the years. You also need to look at the value you received and determine what will make you complete. After that, you can propose a division with the third owner.

One final thought: If the property in question is vacant land and you did not rent the land or get any benefit from owning it, you have a good argument to claim that the taxes you paid over those years were your investment in the land and you are entitled to a return on that investment before the owner who did not Invest absolutely no money. Hopefully, the court will allow you to recover the money you invested in the property as well as a fair return on that money. Then, if there is a profit, decide how to split that profit between the three of you.

Good luck and let us know what happens.

(Ellis Jelinek is the author of “100 Questions Every First-Time Home Buyer Should Ask” (4th Edition). She is also the CEO of the company Best money moves, a financial wellness technology company. Samuel J. Tamkin is a Chicago-based real estate attorney. Connect with Ilyce and Sam via her website, ThinkGlink.com.)

©2023 Ellis R. Glink and Samuel J. Enable. Distributed by Tribune Content Agency, LLC.