Q: We enjoy reading your column and would appreciate your comments on the following situation. You helped us with excellent advice in the past so we decided to seek your opinion on the following issue.
My husband and I have owned our home since 1973. At the time we purchased the home, there was an existing fence between our neighbor’s house and ours that we assumed was on the property line. Our current neighbors recently moved into their house and had a “topographic survey” of their property performed for a proposed landscaping project. The survey shows that the fence is not on the property line, but that it extends in the range of approximately 2- 4 feet at various points onto their side of the property line. In response to this information, we searched our old records and found a “topographic site” map that was prepared for us in 1988 when we replaced a deck near that property line. According to the 1988 map, the fence extends approximately 2 feet onto their side of the property line in places. Frankly we didn’t notice the discrepancy in 1988, probably because our 1988 project was contained well within the property line and the fence and property line were not an issue. Both maps have the statement that “this is not a boundary survey” written on them. Now the neighbors want some of their property back. The length of the fence is approximately 200 feet. They want to move a 50-foot portion in the middle of the fence, but near our house, back to the property line and leave the remainder of the fence as is. They also want us to sign a document acknowledging that the 150 or so feet of the remaining fence is on their property and they will in turn grant us an easement to use that 2-4 feet portion. Our question is what are their rights and what are our rights? Due to the length of time involved, do we own the extra 2-4 feet by virtue of adverse possession?
A: Dear JoAnna. Adverse possession is an interesting legal concept. Oversimplified, if someone camps on your property for the period of time established by your State law, that person can go into court and have the Judge rule that the person now owns your property. There are many definitions of adverse possession but the one I like best is that someone continuously, hastily, openly and actually used your property for the statutory period of time.
Keep in mind that State law differs, so you really have to consult a real estate attorney in your area for specific advice. For example, some states follow what is known as the “Connecticut doctrine”, namely that the trespasser can still claim adverse possession even if he/she does not know that the land belongs to someone else.
Conversely, the so-called “Maine doctrine” requires knowledge on the part of the trespasser that the land on which he/she is squatting actually belongs to someone else.
From my research – and from a case I won several years ago – the existence of a fence that has been on the next door property for more than the statutory time period is often considered conclusive proof by the court that the land inside the fence has been acquired by adverse possession. But again, I am not providing specific legal advice – only general guidance and information.
Litigation is time consuming, expensive and always uncertain. You should try to reach an amicable resolution with your neighbor before any court action is started. Retain local counsel, and get an opinion as to whether you have a good case for adverse possession. Then discuss the situation with your neighbor.
I cannot recommend that you sign anything until you know your legal position.
Q: I read your column about paying capital gains on the profit from the difference between the sales price of an inherited house and value of the property at the time of death. Does the same hold true on a loss; i.e., if the inherited property (now an asset) loses value in the following year, can one take a capital loss?
A: James. Let me begin this answer by a disclaimer: I am not an accountant nor a tax attorney. Accordingly, I can only answer based on my research; you must talk with your own tax and financial advisors about your specific situation.,
You can claim a loss on inherited property, if you meet a number of conditions: (1) you did not use the property for personal purposes; (2) you did not intend to convert the property to personal use before you sell; and (3), you sold the property to an unrelated person – i.e. not a relative. If you meet these tests, you can claim a capital loss. This is limited to $3000 per year.
However, if you rent the property, you may be subsequently eligible to claim an ordinary loss (as compared to a capital loss). There is no dollar limit and it is one hundred percent deductible. Of course, the numbers have to be legitimate.
But please consult your own professionals on this issue.
Q: I am the President of a small condominium association (18 units). We always attempt to hire independent contractors that have workers comp. coverage when working on our Common Elements. On occasion, our members will hire contractors that do not have such coverage to perform work on their Limited Common Element (Our association requires the Unit Owner to be responsible for and to pay for all work in/on their LCE). My understanding is that the Unit Owner takes on the liability for any injury to the contractor while working at the direction of the Unit Owner on their LCE. The Unit Owner must look to their own individual insurance coverage. Please comment. Jim.
A: Jim. You should discuss your specific situation with the attorney who represents your association. If you don’t have a lawyer, go to the Community Association Institute’s website (caionline.org) where you should be able to locate a lawyer in your area who understands community association law.
Ovcrsimplified, in a condominium, there are three components: (1) common elements – the lobby, the roof, the elevator; (2) units – the “box” in which owners live, and (3) limited common elements – areas that are not within a unit but are restricted to less than all owners – such as a balcony, or a mailbox.
While your documents impose responsibility on the owner who does work on his/her limited common element, the fact remains that it is still a part of the common elements. Accordingly, should a worker be injured, the unit owner AND your association can be sued..\
Here’s a suggestion: whether a unit owner is doing work in the unit itself or in a limited common element, the Board should insist on the following: (1) use licensed contractors; (2) obtain all required insurance – including workmen’s comp; (3) indemnify the association against any and all claims or lawsuits stemming as a result of the work, and (4) first submit the proposed scope of work to the board for its approval.
Q: You had a question about inherited property, taxes and basis. In the last sentence of your answer you said, “if you have owned and used the property for two out of the five years before it is sold” you could avoid tax on $500,000 or $250,000 of gain.
However, shouldn’t you have said “used and owned the property as your personal residence for two …” Owning and using as a rental property or a home for a relative, for example, will not work. Joe.
A: Joe. Thanks for writing and you are technically correct. Under current tax law, if you have owned and used the property as your personal residence for two our of the five years before it is sold, if you file a joint tax return you can exclude up to $500,000 of your gain from taxation (or up to $250,000 if you file a single tax return).