Can You Lawfully Steal Your Own Inheritance? A Trust Beneficiary’s Bold Claim

An interesting fact pattern came across my desk last week. I’ve changed the facts slightly to preserve the confidence of the people involved and obtained permission to publish this post.

Typically, adverse possession claims regard an adverse possessor that is unrelated and unconnected to the realty owner. The occupant is using California law to lawfully steal real estate from an owner who is not paying attention to their real estate or their rights. What is unusual about the present case is that the occupant of the home is a future owner, and the owner holds the property in trust for the occupant. Can a trust beneficiary adversely possess against the trustee?

The situation (using fake names)

Tom, as Trustee of the Foley Family Trust, owns real estate in Bakersfield, California. Tom is busy dealing with creditors and other litigation. Once all claims against the trust are settled, the real estate will be transferred to Barry, Brenda, Belinda, and Alvin.

While Tom is dealing with the courts and the creditors, Alvin moves into the property and starts helping out. He doesn’t pay rent, but he does keep the utilities on and pays the tax bills. Barry, Brenda, Belinda, and Alvin will someday be co-owners, but Tom cannot transfer the title to them until the trust litigation is complete.

Tom was under the impression that Alvin was helping out and that this was a mutually beneficial relationship, so Tom did not execute a lease agreement or provide a written license. In other words, there was no clear indication of the agreement between Tom and Alvin that could be verified by a third person.

Alvin wishes now to take the whole house and is claiming that he successfully took the title from Tom (and from Barry, Brenda, and Belinda) by occupying the property for five continuous years and paying the taxes.

I think that Alvin’s claim fails, but let’s look at why.

Adverse Possession

Under California law, it is possible to lawfully steal real estate from owners who are not paying attention to their realty or not otherwise putting it to use. The adverse possessor must establish continuous occupation of the land, pay the taxes for five years, and establish that their possession was open, notorious, and hostile to the interests of the true owners. Like all things in law, each element is more complex than the words might imply. “Continuous occupation,” for example, can be accomplished without ever stepping on the land, which is a topic for another blog article. Today, we will look more closely at hostile possession. Alvin probably failed to establish that he had a hostile possession, and if his possession was hostile, he failed to perform acts that made his hostility clearly known to the true interest holders: in other words, he was not sufficiently open or notorious about his intentions.

The occupant likely had either a license or an implied license.

Alvin will not likely be able to establish hostile possession because Alvin had permission to occupy the property. Tom knew that he was there and allowed him to continue the occupation. Alvin’s claim might fail because he had either implied or actual license to occupy the property.

Whether the owner gave a license or an implied license was inferred is a question of fact. (Franz v. Mendonca (1900) 131 Cal. 205, 208–209; Crawford v. Lambert (1934) 136 Cal.App. 617, 620; Brandon v. Umpqua Lumber & Timber Co. (1914) 26 Cal.App. 96, 99.)

In cases where the adverse possessor claimed adverse possession by use (also known as prescriptive easements), the law presumed that the owner gave permission to use the land to avoid a ridiculous scenario where all of a person’s neighbors became his co-owners. (Clarke v. Clarke (1901) 133 Cal. 667, 670; Franz v. Mendonca (1900) 131 Cal. 205, 208–209; Richmond Ramblers Motorcycle Club v. Western Title Guaranty Co. (1975) 47 Cal.App.3d 747, 754; Case v. Uridge (1960) 180 Cal.App.2d 1, 6; Kaler v. Brown (1951) 101 Cal.App.2d 716, 719–720; Jones v. Tierney-Sinclair (1945) 71 Cal.App.2d 366, 369–370.) Per the Jones court:

The fact that the owner knew of the travel and occasional use of the property does not even raise a presumption that such use was hostile or under claim of right. . . . [¶] It is thoroughly established that where the use of a way by a neighbor is by the express or implied permission of the owner, the continued use is not adverse and cannot ripen into a prescriptive right.

(Jones v. Tierney-Sinclair (1945) 71 Cal.App.2d 366, 369–370.)

The present case does not regard prescriptive easement. Still, a person claiming title to a parcel of land by adverse possession must establish hostile possession, which is destroyed by permissive use. The possessor must be able to show that the land was used without the owner’s permission. (Felgenhauer v. Soni (2004) 121 Cal.App.4th 445, 450.) Alvin will not be able to establish that he did not have Tom’s permission to occupy the property.

The occupant likely will fail to establish hostile possession against co-owners.

Alvin may have a duty to Tom, Barry, Brenda, and Belinda. Alvin is not a stranger to the family. He was a beneficial interest holder and thus shared a future interest with three other beneficiaries. He also had a fiduciary relationship with Tom. Tom was Alvin’s fiduciary and held title for Alvin. Alvin will have to show how he established hostile possession against his fiduciary and his future co-owners.

In a quiet title action, the plaintiff has an uphill battle. The plaintiff must establish the strength of his own title and cannot merely point out the weak claim to title held by other owners. (Klumpke v. Henley (1914) 24 Cal.App. 35, 36; Schroder v. Aden Gold Mining Co. (1904) 144 Cal. 628.) This means that if the court is not satisfied with the plaintiff’s case, it will not matter what the defendant did or did not do. (Ibid.)

When it comes to people who have a combined interest, the law requires a higher standard of communication between the adverse possessor and the other interest holders. (Klumpke, supra, 24 Cal.App. 35, 37.) This is most typically reported in the form of co-tenancy but could just as easily apply in situations where people have equal beneficial interests or where a person holds a future interest. To protect the other owners, the law presumes that the occupant holds the property for all other interest holders:

The possession of one cotenant is presumed to be the possession of all, and this presumption can be overcome only by showing that the hostile intent of one is clearly manifested and is brought home to all. The presumption is not overcome by a showing merely that one tenant has failed to recognize the rights of his cotenant. To accomplish this result the possession of the tenant must be with the intent to hold adversely, and it must appear that such intent has been “indicated by acts calculated to exclude the complainants from all participation as tenants in common.”

(Klumpke , supra, 24 Cal.App. 35, 37, emphasis added, quoting Colman v. Clements (1863) 23 Cal. 245; Hoppe v. Hoppe (1894) 104 Cal. 94; Brown v. McKay (1899) 125 Cal. 291.)

In Klumpke, the plaintiff believed he had established a claim of right by obtaining title from Francisco Moreno. (Klumpke , supra, 24 Cal.App. 35, 38.) The title appeared to transfer complete interest in the realty but could only transfer one-third of the interest owned by Francisco Moreno. (Ibid.)

Klumpke attempted to claim that he adversely possessed against all prior owners. (Klumpke , supra, 24 Cal.App. 35, 39.) On its face, this claim makes sense because his title purported to transfer all title and there is no evidence that Klumpke had any knowledge of the other owners until the quiet title action. The court did not, however, find that Klumpke acted hostility toward the other co-tenants and thus was held to the standard of a one-third owner:

[T]he only evidence of any hostility to the claim of his cotenants was the declaration of appellant that he claimed the whole property, made to Judge Fox while the latter was collecting the rents. There is no evidence that this was brought home to any of the other cotenants. That it did not constitute an ouster requires no argument. Its insufficiency to satisfy the exaction of adverse possession and to overcome the presumption in favor of the cotenancy is entirely clear.

(Ibid.)

I’ve studied adverse possession for years, and establishing a claim to title on an improperly formed deed always appeared to be a cornerstone for plaintiffs. Frequently, the title purporting to transfer full title was in the form of a wild deed, which may be why it worked. Jesus Aguoya and Sofia Aguayo created a small empire based upon this strategy in the late 2010s. (People ex rel. Harris v. Aguayo (2017) 11 Cal.App.5th 1150; “Deed Scam Leaves Residents in Limbo.” (November 12, 2006, updated August 30, 2017.) San Gabriel Valley Tribune. https://www.sgvtribune.com/2006/11/12/deed-scam-leaves-residents-in-limbo/.)

Klumpke, supra, 24 Cal.App. 35 is the first time I’ve seen an adverse possessor accidentally become a co-tenant. The reason why Klumpke is critical to our case analysis is that our adverse possessor in our hypothetical finds himself in a position where he likely has the same responsibilities to his co-owners as Klumpke had to his.

Alvin did nothing to exclude or otherwise oust Tom as the owner or to oust the other beneficiaries. Like Klumpke, even though there was no clear record of his co-ownership, he was a co-owner and only held a partial interest in the property. As a partial interest holder, he owed a duty to all the other owners, and it will be presumed that he held title for them rather than against them.

Alvin will likely fail in his attempt to possess the real property adversely.

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