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Indiana Supreme Court Finds for Adverse Possessor Who Did Not Actually Pay Taxes on Parcel

In Celebration Worship Center, Inc. v. Patrick Tucker, et. al., the Indiana Supreme Court recently interpreted the actions of a property possessor as satisfying the statutory element of paying taxes and special assessments on real property in order to uphold an adverse possession claim, without actually having paid any taxes on the parcel in dispute.

Indiana Courts have long upheld the common law doctrine of adverse possession, which entitles a person without title to real estate to obtain title to the parcel.  Under this theory, a party in possession of a parcel must establish upon clear and convincing proof all of the common law elements.  In the 2005 case Fraley v. Minger, the Indiana Supreme Court “synthesized and rephrased” the varying expressions of the common law doctrine of adverse possession to a more simplified set of elements:

  1. Control:  The claimant must exercise a degree of use and control of the parcel that is normal and customary considering the characteristics of the land;
  2. Intent:  The claimant must demonstrate intent to claim full ownership of the parcel superior to the rights of all others, particularly the legal owner;
  3. Notice:  The claimant’s actions with respect to the land must be sufficient to give actual or constructive notice to the legal owner of the claimant’s intent and exclusive control; and
  4. Duration:  The claimant must satisfy each of these elements continuously for the require period of time (previously established to be 10 years).

In addition, Indiana maintains an adverse possession statute which requires the party in possession to show they have paid all taxes and special assessments that the party reasonably believes in good faith to be due on the real property.

Once the statutory requirement and common law elements of adverse possession are satisfied, title to the property is terminated in the original owner and granted in the possessor, by operation of law.

In Celebration Worship Center, Inc. v. Patrick Tucker, et. al., the Tuckers and the Church owned property next door to each other, which was separated by a grassy area and gravel driveway.  Although title to this grassy area and gravel drive was originally conveyed to the Church (and its predecessor), the Tuckers claimed ownership under the doctrine of adverse possession.

The Indiana Supreme Court held that the Tuckers established by clear and convincing proof that they and their predecessors met the common law elements for adverse possession, namely control, intent, notice and duration.

The Church’s argument then turned to the statutory element of adverse possession; claiming the Tuckers did not pay all taxes and special assessments reasonable and in good faith believed to be due on the grassy and gravel areas in dispute.  The Tuckers (and their predecessors) acknowledged they did not actually pay any taxes or special assessments on the disputed parcel.  However, the Tuckers contended to have satisfied this statutory element because they “believed” the disputed real estate to be a part of their own property (for which the Tuckers did pay the taxes).

In a 5-0 decision in favor of the Tuckers, the Court distinguished this case from earlier cases and held “[T]his reasonable and good faith belief substantially complies with the statutory tax payment requirement.”

The statutory tax payment requirement was generally a more challenging element for an adverse possessor claimant to satisfy.  This ruling, however, potentially elevates the burden for property owners in maintaining the boundaries of their property and defending a claim of adverse possession.  It also increases the level of due diligence necessary for purchasers of real estate, especially since most title insurance policies exclude coverage for parties in possession.

For additional information regarding this or any area of real estate law, please contact attorney Shannon Frank at sfrank@KDDK.com or (812) 423-3183, or contact any member of the KDDK Real Estate Law Practice Team.

About the Author

Shannon S. Frank

Shannon S. Frank, a Partner at Kahn, Dees, Donovan & Kahn, LLP (KDDK), in Evansville, Indiana, has more than 25 years’ experience in the practice of business law, construction law, estate planning and probate administration, health care law, and real estate law. Shannon takes prides in giving exceptional service to her clients, recognizing that relationships with clients play a significant and essential role in providing tailored and comprehensive legal advice.