Sen. Koch has introduced SB 121 regarding adverse possession. Adverse possession is a somewhat odd but venerable concept in real estate law that essentially says that if you use someone else’s real estate long enough and they let you, it becomes yours. One can imagine, in days of yore, an absentee landowner with vast tracts of land who was so inattentive that someone else farmed it for a decade or two without noticing. In that case, maybe it’s best that someone doing something productive with the land becomes the owner. I don’t know if that’s exactly how the concept became enshrined in our law, but I think it’s probably pretty close.
In any case, there is now a formula of elements that have to be present before land can be adversely possessed. The elements are sometimes framed in different ways, but they include the fact that the possession must be open, actual, continuous for ten years or more, and adverse to the person who holds title to the land. There is another requirement that the legislature added to the common law element in the 1920s: a person claiming possession has to pay taxes on the land for that period. Often this element gets fudged a bit — in that, a fair amount of adverse possession takes place around the edges: say, you put up a fence that goes over your property line into the neighbor’s real estate. You don’t pay any more for the extra land, but you (and the government) think you’re paying what you owe. In that case, the taxation element will be satisfied. But, if you squat on a random tract of land, don’t get kicked off but don’t pay taxes, you won’t acquire the land.
There is an exception to the taxation element currently in place for governmental entities – presumably on the assumption that they wouldn’t normally have to pay real estate taxes in any case, so it shouldn’t be an element of adverse possession for those entities. SB 121 extends that logic to “501” entities who wouldn’t be required to pay taxes to enjoy adverse possession. (The number “501” comes from section 501 of the Internal Revenue Code where you’ll find various types of tax-exempt organizations, such as the 501(c)(3) charitable organizations.)
This certainly isn’t my area of expertise, but I think this goes a little too far. I understand the logic, but I think the 501 entities still generally have to pay taxes on real estate if it isn’t being used for an exempt purpose. (Maybe a generally charitable organization has property that it’s using for straight up profiteering. Maybe a church opens a gym and makes money off of membership fees.) So, I’d be inclined to recommend an exempt purpose requirement to get the 501 entity out from under the tax payment requirements.