Last week, the NSW Supreme Court handed down its decision in a case concerning a Sydney property developer, Bill Gertos, who had been in adverse possession of a property in Sydney’s Inner West since 1998. The property’s present day value is approximately $1.6 million.
The registered proprietor of the property was Henry Downie, who had died in 1947. He had died without a Will, and no one in his family had applied to administer his estate, being unaware that they were entitled to the property.
The Court heard that, in 1998, Mr Gertos noticed that the property appeared to be unoccupied. He remembered what a colleague of his had told him years ago about squatter’s rights. He remembered that you could obtain title to the property by adverse possession of it over a sufficiently long period of time.
He obtained legal advice from a solicitor, who advised that he would need to occupy the property, pay the bills for the property, and look after it as if it was his own for at least 12 years. The solicitor also said that if Mr Gertos could prove that he had been in possession of the property to the exclusion of others for the necessary period, he could request to be registered as the owner of the property.
Mr Gertos then went back to the property and found the rear door was off its hinges and placed to the side. He decided to enter and take possession of the property himself. He arranged for a builder to refit the rear door and change the locks on the front door to secure the property.
Mr Gertos then appointed a managing agent for the property and within weeks started renting out the property, receiving income as the landlord.
In early 2017, Mr Gertos made an application to be recorded as the registered proprietor, claiming that he had been in adverse possession of the whole parcel of land for over 12 years.
The family of Henry Downie, the deceased registered proprietor, applied to the Supreme Court for a declaration that Mr Gertos was not entitled to be registered on the title to the property. The family argued that Mr Gertos’ possession of the property did not constitute the “adverse possession” required for him to become the owner of the property.
Firstly, the family argued that Mr Gertos’ possession of the property did not constitute adverse possession because he only occupied the property for the limited purposes of obtaining rental income.
However, the Court disagreed and said:
“… the actions taken by Mr Gertos (in particular his engagement of a managing agent to arrange leases, and entry into leases as the landlord) clearly signify an intention to possess the property to the exclusion of all others, including the registered title holder... Mr Gertos has plainly acted as the person who has the possession of the land, able to confer leasehold interests upon tenants. Mr Gertos accepted rent from the tenants... He has made full use of the land in a way an owner would.”
Secondly, the family argued that Mr Gertos’ possession of the property did not constitute adverse possession because it did not meet the requirement that the possession be “open” and not “secret”.
But again, the Court disagreed and said:
“… Neighbours and other residents in Malleny Street may not have seen Mr Gertos personally, or had any dealings with him, but that is no different from what commonly occurs where a residential property is held by its owner as an investment and is made available for lease. Insofar as Mr Gertos acted (through his agent…) as the landlord by entering into leases, maintaining and repairing the property, and paying outgoings in respect of it, he was not acting in secret. It was obvious to many of the residents who gave evidence that the property was being rented out by an “owner” even if they did not know the identity of the “owner”.”
Ultimately, the Court refused the application of the family and, adding salt to the wound, ordered that the family pay Mr Gertos’ costs of the proceedings.
One of the key messages to take away from this case is that you should always seek legal advice following the death of a family member, even if you are confident that the person died without any assets. A solicitor can take steps to track down assets that may have been overlooked by the family. If the family of Henry Downie had engaged a solicitor and applied to administer the deceased estate in a timely manner, they may have been $1.6 million richer.
Seeing a solicitor, although sometimes inconvenient, can save you a lot of heartache and a lot of money, and can often make you better off financially. Just ask Mr Gertos.
To speak to our expert team, call our office on 1800 650 656 to obtain detailed legal advice for your individual situation.
Aaron Strickland | Solicitor