Why Squatters are Hurting the Real Estate Market

Why Squatters are Hurting the Real Estate Market
As if the 2008 to 2010 mortgage foreclosure crisis hadn’t been enough, a new kind of crisis has hit the real estate market which is almost unimaginable. Better said, it is the legal structure’s response to what is taking place still five years later that makes this crisis so extraordinary. What is it? Simply put, it’s how the real estate market is being assaulted even further by what are commonly known as “squatters.”

What Constitutes A Squatting Situation

A squatter basically is someone who is occupying a privately owned property, legally or illegally, without an owner’s consent. Our article below covers several different scenarios to better understand how serious this situation really is.

Due legal process must take place before physical or forced action can be taken. Neither can an owner, manager, bank or mortgage holder simply walk in and order the utilities to be cut, locks changed or put belongings on the curb.
A squatter basically is someone who is occupying a privately owned property, legally or illegally, without an owner’s consent.
If occupants were one’s guests who have overstayed their visit, nothing can be initiated until the law says so–even if the owner is living in his own house. Perhaps one of the most unpleasant scenarios is having a tenant evicted from a rented room. Not a good experience.

Various Squatter Scenarios

Who is affected? Just about anyone involved in some facet of the real estate market: rental property owners, career listing agents, banks, mortgage companies, innocent homeowners or renters and entire families.

That said, depending on the municipality and state of the occurrence, squatting is known by a variety of names. Typically known as “adverse possession,” this is the quasi-legal occupancy of a property, home or apartment simply by claiming ownership through possession–whether they own it or not.

In Colorado especially, adverse possession requires an 18–year vacancy to be declared legal. Should homeowners finally get back possession, there may not be property enough left to warrant a repossession of the property as squatters have by now typically gutted the property of any worth-while components or fixtures. Many times, the entire infrastructure is gone.

A real savvy squatter or “squatter broker” knows the law better than the property owner and may turn around and slap the owner with a bankruptcy filing to stall off an eviction.

In Detroit, an attempt is being made to stabilize the housing market as literally tens of thousands of abandoned, dilapidated houses occupied by squatters are preventing the bulldozing of homes. As of last year, more than 40,000 homes were in need of demolition–a health department’s nightmare.

Incredible but true: Miami now has more squatters than homeowner occupied houses. Moreover, the Miami-Dade police department has designated a division to investigate renters who have been sold a bill of goods by “squatter brokers” who many times pose as the legitimate home owner with a strange rental agreement.

Sometimes these “brokers” get a renter’s money and deposit in exchange for moving a legitimate renter into a property. The only trouble is that there is only a scam, illegitimate owner and the recently typed lease has been bought at any one of several local stationary stores in the area.

Possible Proactive Strategies

1- Many times, depending on the situation and locality, an “unlawful detainer” may have to be initiated before getting any police action.
2- If you let someone stay over for more than a few days, have a written lease agreement. Also, because it can take weeks to get the court eviction done, it’s best to act at the first sign of trouble.
3- Another viable and time-honored solution is to agree to pay toward the person’s moving expenses. While it goes against the grain, so to speak, it many times works well in getting rid of undesirable occupants. Definitely, it is less expensive than filing a lawsuit and waiting it out.
4- Real estate agents and managers need to keep an eye out for common squatter indicators such as empty beer cans, cigarette butts and permanently parked cars.
5- Neighbors also need due vigilance as the next house to be illegally occupied may be their own.

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