An Early Sullivan Wright Gizer & McRae LLP trial team of Scott Gizer, Padideh Zargari and Brett Moore successfully defended firm client AVTWO Homes LLC against an adverse possession claim in a bench trial before Judge Hammock in Los Angeles Superior Court.
Plaintiffs claimed to be the owners of certain real property in Los Angeles County through adverse possession based on a grant deed they received from Fannie Mae purporting to convey fee title to the property. However, Fannie Mae did not own fee title to the property, but only owned a leasehold interest in the land. Fannie Mae had made a loan to AVTWO Homes’ tenant to purchase a leasehold interest in the property and the loan was secured against that leasehold interest. The tenant’s leasehold interest was documented through a recorded 40-year Ground Lease. Fannie Mae ultimately foreclosed on its deed of trust and its borrowers’ leasehold interest, but then sold the property to Plaintiffs as if Fannie Mae owned fee title.
The Early Sullivan team presented evidence and argued that due to the recorded Ground Lease, Plaintiffs became tenants under the Ground Lease by operation of law and, thus, were precluded from claiming adverse possession under Code of Civil Procedure section 326. Plaintiffs argued that they could not be deemed tenants unless they had actual knowledge of the Ground Lease and consented to its terms. The trial court ruled in favor of AVTOW Homes finding that Plaintiffs took title subject to the Ground Lease and, thus, were in privity of estate with AVTWO Homes under the Ground Lease. Accordingly, under CCP section 326, Plaintiffs could not assert a claim for adverse possession.