In Louisiana, a person can acquire ownership of immovable property (generally, land and its component parts) by simply possessing the property for a period of time.  This is known as “acquisitive prescription.”  The periods of time for Louisiana’s acquisitive prescription statutes are ten years and thirty years.

The Louisiana Civil Code requires good faith, just title, and possession of ten years for ten-year acquisitive prescription (also, the property must be susceptible of acquisitive prescription).  The Civil Code does not require good faith or just title for thirty-year acquisitive prescription.  But a recent Louisiana Supreme Court opinion, 1026 Conti Holding, LLC v. 1025 Bienville, LLC, 2022-01288 (La. 03/17/23), illustrates how difficult it is to acquire ownership of property by thirty-year acquisitive prescription.

In 1026 Conti Holding, LLC v. 1025 Bienville, LLC, the Holzer Brothers purchased several properties in New Orleans’ French Quarter.  The deed included only a “right of use” of a parking lot. This parking lot became the subject of years of litigation.

From 1944 to 2000 (56 years), the Holzers exclusively used the parking lot for access, parking, deliveries, storage, and other uses incidental to the operation of their businesses.  The Supreme Court noted the following acts of possession by the Holzers:

• Payment of property taxes on the parking lot,
• Not allowing anyone else use the parking lot,
• Placing a gate on the parking lot so no one else could get to it, and
• Placement of a gas tank and pump on the property.

A Holzer representative testified that while the Holzers did not have “paper title” to the parking lot, “We think we own [it].  We used it.  It was ours.”

The Louisiana Supreme Court disagreed.  The Court stated: “A person enjoying the use of a servitude is a precarious possessor . . .  Acquisitive prescription does not run in favor of a precarious possessor or his universal successor . . .  However, by undertaking certain actions, a precarious possessor can change his type of possession and begin to prescribe. . .  While the Holzers also prevented others from using the lot, there is no evidence they prevented Saxton (the parking lot owner) or his heirs from using the lot.  Absent that evidence, the act of excluding third parties could reasonably be construed as an exercise of the Holzers’ right to use the property, which is not sufficient to ‘give the owner some notice that his property is in jeopardy.’”

The Court noted that the owners of the parking lot, the Saxton family, apparently abandoned the property.  There was no evidence the Saxtons had any involvement of the parking lot since 1938, and the Saxton heirs were not aware they owned the lot, and that this obliviousness lasted three generations.  Nonetheless, the Holzers’ failure to communicate their adverse intentions to the Saxton was fatal to the Holzers’ claim for thirty year acquisitive prescription.

But the case did not end there.  In 2000, almost sixty years after they first began using the parking lot, the Holzers conveyed title to certain properties, including the parking lot, to Bruno Properties, L.L.C.  Bruno Properties believed the Holzers had acquired the lot by acquisitive prescription (not by just title), and the Court said the mistake was reasonable and that Bruno Properties was not in bad faith.  “To understand the effect of this right on the Holzers’ ownership, Bruno Properties would have to surmise (1) the right is a servitude, (2) the servitude made the Holzers precarious possessors, (3) precarious possessors cannot prescribe, and (4) the precarious possession was never converted to adverse possession.  Imputing this degree of knowledge to Bruno Properties is inconsistent with the status of that law in the community at large.”

Then, Bruno Properties sold the property to 1025 Bienville, LLC, who obtained a title opinion certifying Bruno had valid title to the parking lot.  1025 Bienville, LLC was able to tack Bruno Properties’ possession to establish ten years of possession.  The Court held 1025 Bienville, LLC was in good faith and thus had acquired ownership of the parking lot by acquisitive prescription.  In ruling that 1025 Bienville, LLC was in good faith, the Court noted, “If the belief by the possessor results from a title opinion of a reputable attorney, the issue should simply be whether a reasonable person would act on such an opinion.  Current practice would seem to indicate that having a good title opinion would be the ultimate in reasonableness.”

Legal disputes of this nature remind us of the importance of conducting reasonable due diligence before consummating an acquisition of property or property rights.  As stated by Louisiana’s Supreme Court, “a good title opinion would be the ultimate in reasonableness.”

Contact Gordon Arata Montgomery Barnett with any questions or assistance with commercial title opinions, acquiring property or property rights.