A squatter, or someone who is living without permission on the property of another, is known as an adverse possessor under the law. If the adverse possessor can fulfil legal requirements, he may acquire title to and ownership of the property. (Reference 1)
Adverse possession comes to American law from English law. In England, the Limitation Law of 1623 codified the right of a trespasser, after 20 years, to take ownership of the property of another. English courts developed the concept more fully over the next 200 years and tended to favour the adverse possessor over the property owner. American courts, on the other hand, favoured the interests of the property owner.
There are four requirements of adverse possession: (1) There must be an actual entry into the land and the adverse possessor must be in exclusive possession of the land. (2) The owner must know of the encroachment onto her land. (3) The use of the land must be against the interests of the owner and the adverse possessor must act with intent to be on land not belonging to him. (4) The encroachment must be continuous for the statutory period.
An adverse possessor must have possession for a specified period called the statute of limitations, or the statutory period. This can be found in state statutes and may vary by state. The normal statutory period is five to 20 years.
While the popular image of an adverse possessor is a squatter, most cases are boundary disputes between neighbours. Many older cases involve mistakes in the transfer of title where the property owner and the adverse possessor both thought they owned the disputed land.
All adverse possessors start out as trespassers upon the property owner's land. To prevent adverse possession, a property owner must oust (legally remove) a trespasser. This can be as simple as asking the trespasser to leave, calling the police or consulting the municipality.
There are three main purposes for allowing adverse possession. First, adverse possession lawsuits help determine the true ownership of property and decrease uncertainty about property rights. Second, by penalising an owner who is not using his land, adverse possession discourages an owner from "sleeping on his property rights." Finally, it rewards the party better utilising the land, usually by developing it.