Nashville, Tenn- The Tennessee Supreme Court recently held that a person who bought property near downtown Nashville, but failed to record the deed, could not gain full ownership of the property under a rule of law known as “adverse possession.” Under adverse possession, someone who may not own property but possesses it for a certain number of years may gain full ownership of it.
In 1991, Ora Eads, Jr., obtained the deed to 99 Hermitage Avenue in Nashville, Tennessee, after completing a series of installment payments to the property’s owner, Raymond Whiteaker, Jr. The deed conveyed title to the property from Mr. Whiteaker to Mr. Eads. However, Mr. Eads did not “record” his deed, that is, file it with county officials, so public records still showed Mr. Whiteaker as the owner of the property.
While Mr. Eads was in possession of the property, Mr. Whiteaker took out a loan in connection with a real-estate transaction in Florida. SPCP Group, LLC, held the loan. When Mr. Whiteaker defaulted on the loan, SPCP obtained a Florida judgment against him, and eventually got a lien against all real property that public records showed Mr. Whiteaker owned in Davidson County. Because Mr. Eads had never recorded his deed, the lien included 99 Hermitage Avenue.
In June 2016, after Mr. Whiteaker died, SPCP sued the administrator of his estate, Matt Potempa, to enforce the judgment lien and sell 99 Hermitage Avenue. In November 2016, Mr. Potempa took possession of the property. The court ordered the sale of the property, and an entity named 99 Hermitage, LLC, purchased it.
Mr. Eads and his wife, Eleanor Eads, sued 99 Hermitage, LLC, in Davidson County Chancery Court seeking to establish themselves as the owners of the property under Tennessee law on adverse possession. The defendant counter-sued Mr. and Mrs. Eads for trespass and ejectment. After Mr. and Mrs. Eads passed away, administrators for their estates were substituted as plaintiffs.
Following a bench trial, the chancery court rejected the plaintiffs’ adverse possession arguments and ruled in favor of 99 Hermitage, LLC. The plaintiffs appealed, and the Court of Appeals reversed the chancery court’s judgment after holding that Mr. Eads had acquired title to the property by adverse possession.
The Tennessee Supreme Court granted 99 Hermitage, LLC’s application for permission to appeal. The Court explained that a party seeking to establish adverse possession must prove possession for the required time period that is exclusive, actual, adverse, continuous, open, and notorious. After reviewing its precedents regarding the adversity requirement, the Court held that adversity requires either a conflict of title or controversy regarding the right of possession. The Court concluded that Mr. Eads’s possession of 99 Hermitage Avenue was not adverse to Mr. Whiteaker—the individual who sold him the property—because there was no conflict of title between Mr. Eads and Mr. Whiteaker and no controversy between them about Mr. Eads’s right of possession. Because an unrecorded deed is effective between the grantor and grantee, title passed from Mr. Whiteaker to Mr. Eads. Although Mr. Whiteaker remained the record owner of the property, he had no interest that could be asserted against Mr. Eads. And even assuming that Mr. Eads’s possession was adverse to SPCP or 99 Hermitage, LLC, that adversity did not exist for long enough to satisfy the requirements for adverse possession. The Tennessee Supreme Court therefore reversed the Court of Appeals and reinstated the chancery court’s judgment in favor of 99 Hermitage, LLC.
Chief Justice Kirby dissented. She argued that, under longstanding property law, a purchaser such as Mr. Eads holds the land he bought adversely to all the world, including the person who sold it to him. In her view, the Court should allow Mr. Eads to claim full ownership of the property under Tennessee law, through adverse possession.
To read the majority opinion, authored by Justice Sarah K. Campbell, and the dissenting opinion, authored by Chief Justice Holly Kirby, visit the opinions section of TNCourts.gov.
