In a place like Hong Kong where land is as valuable as gold, can you imagine that one could acquire someone’s land or property just by occupying it for a certain period of time without paying a penny?  Under the doctrine of adverse possession, it is possible.

In the recent case of Lam Che v Foung Sheu Kwun [2010] HKCU 1737, the Court declared that the tenant (“the Plaintiff”) has acquired the property from the landlord (“the Defendant”) by way of adverse possession after occupying the property for 26 years and has now become the owner of the property, which is valued at around $2.6 million. What a gift!

Background of the Case

The Plaintiff was the tenant of the Defendant under an oral tenancy agreement made in 1976 in respect of a flat in To Kwa Wan.  For the first 11 years, the Defendant has attended the flat and collected the rent personally but has since 1984 never appeared.

Having failed to locate the Defendant, the Plaintiff remained in the flat and started paying the rates and other fees related to the flat.  The Plaintiff even joined the owners’ management committee of the building.  In these circumstances, the Court was satisfied that the Plaintiff has treated the property as his own.  Having also satisfied that all reasonable steps have been taken to bring the legal proceedings to the Defendant’s attention, the Court declared that, by way of the principle of adverse possession and s.17 of the Limitation Ordinance, the Defendant’s title to the property is now extinguished and the Plaintiff shall become the owner of the property.

So, what constitutes an “adverse possession”?  This article explains briefly its principle and application in Hong Kong.

The Principle of Adverse Possession

Adverse possession is a process by which property/land can change ownership.  By the operation of the Limitation Ordinance, a possessor becomes entitled to the property/land by showing that he has been in continuous possession of the property/land in a manner that conflicts with the true owner's rights for a specified period.  There are three main elements to adverse possession:

1.            Continuous possession for a sufficient period of time

If the land is in continuous possession by the possessor for a sufficient period of time, the title and right of the owner will be extinguished by the operation of the Limitation Ordinance, which bars the right of an owner to take legal action for the recovery of possession from the possessor.

As against Government land, 60 years of continuous possession is required, while the time required for any private land/property is 12 years (Note: 20 years of continuous possession is required if the possession commenced prior to 1 July 1991).

2.            Exclusive and physical possession adverse to that of the owner

A factual possession of the land must be asserted by the acts of possessor, which means that the possessor must physically use the land as an owner would, in accordance with its nature, location and common uses.  Such use must be exclusive and also adverse to the owner, in the sense that the use is not permitted by the owner and it excludes all the possible enjoyment of the land by the owner.  As such, possession of the land with the permission of the owner or under a valid tenancy/licensing agreement would not be regarded as ‘adverse’.

Case law demonstrates that exclusive and adverse possession may be shown in various ways such as fencing, building on, cultivation of, parking on the land and locking the property.  The extent of possession required to assert ownership depends on the circumstances of each case, in particular the nature and the usual uses of the land.

3.            Intention to possess

The possessor must also establish an intention to possess the land to the exclusion of every other person in the world, including the owner.  Such intention can be inferred by the Court by the acts of the possessor.

An intention to possess would not be inferred if the possessor has done any act which expressly or impliedly acknowledged the title of the owner.  Such acts include, for example, using the land temporarily until prevented from doing so; taking any action on behalf of the owner and intending to pay rent if required by the landlord.

Adverse Possession and Tenancy

As mentioned, possession under a valid tenancy agreement is not “adverse” in nature.  The relevant period of “adverse” possession only starts to run when the tenancy is terminated but the tenant remains in possession of the property without the permission of the landlord.  Hence, in order to guard against the claim of adverse possession, landlords should prevent any use and occupation of their properties by the tenants after the tenancies are terminated.

Adverse Possession in Hong Kong

The doctrine of adverse possession not only applies to the typical squatter case in which a residence is taken up by the possessor, but also to cases involving boundary disputes and encroachment of adjoining land.  In fact, a lot of adverse possession claims are in respect of land in the New Territories such as Tai Po and Yuen Long where the boundaries of land were not clearly identified.

Conclusion

To succeed in an adverse possession claim, there are a lot more to satisfy other than simply occupying a piece of land for a certain period. Indeed, the Lam Che case is a rare example and the Plaintiff could regard herself as rather fortunate to be awarded with such “gift”.

On the other hand, property owners are strongly advised to guard against any unauthorized use or occupation of any part of their properties in order to prevent any loss of ownership by way of adverse possession claim.