Legal Certainty is Yesterday’s Justification for Acquisitions of Land by Prescription. What is Today’s?

2. Acquisitive and Extinctive Prescription under Dutch Law

Prescription is a mode of acquiring land (and other things or assets) under the Dutch Civil Code (Burgerlijk wetboek; BW).^[3] The Dutch Civil Code recognises two types of acquisitions by prescription. The first type of an acquisition by prescription is acquisitive prescription under Art. 3:99 BW. The second type is an acquisition by extinctive prescription under Art. 3:105 BW.

2.1 Acquisitions by Acquisitive Prescription

Art. 3:99(1) BW poses three requirements for an acquisition by acquisitive prescription:

(I) Possession;

(II) uninterrupted for 10 years; and

(III) in good faith.

2.2 Acquisitions by Extinctive Prescription

Art. 3:105(1) BW links the extinctive prescription of the owner’s rei vindicatio to the loss of ownership to the possessor of the thing or asset at the moment that the owner’s action prescribes. It does not play a role whether or not the possessor acts in good faith. An acquisition of land by extinctive prescription is thus subject to two requirements:

(I) possession; and

(II) the owner’s rei vindication has prescribed.

4.1 The Failure to Monitor and Control the Use

Jansen introduced the first type as a form of forfeiture of ownership to the scholarly debate in the Netherlands,^[57] and the European Court of Human Rights used it to substantiate its conclusion that the Grahams’ acquisition by adverse possession in the Pye case served a public interest and reflected an equitable balance between the involved interests.^[58] However, neither Jansen nor the European Court pinpoints the public interest in punishing owners for not monitoring and controlling the use of their land. This is problematic because at least at first glance, the additional value of this justification compared to the legal certainty-related justification seems rather limited. It is said that the user’s possession reduces legal certainty and an acquisition by prescription is needed to restore it. However, as land cannot be moved and the use of land is generally easy to monitor, the user’s possession pre-supposes the owner’s choice to be inactive.^[59] With respect to land, the legal certainty-related justification thus already incorporates the owner’s failure to act. To the extent that the owner’s inactivity does not jeopardise legal certainty, as has been set out in the previous section, it therefore seems that the owner’s failure to monitor and control the use of the land shares the fate of legal certainty and does not constitute an adequate justification of acquisitions by prescription.

That said, there may be a public interest in owners monitoring and controlling the use of their property that is distinct from the public interest in legal certainty. As land is a valuable and limited resource, wasteful conflicts over land use should be avoided. Continuous illegal land use encourages users to develop an economic, social or emotional bond with the land and make investments, which may be irrecoverable if the owner claims the land back.^[60] Such a reliance interest is almost certain to lead to heavy conflicts where the owner seeks to evict the user. By threatening to make the user owner after a certain period of time, the law encourages the owner to monitor the use of the land and, if so desired, lay down the rights and obligations of non-owners in an agreement.^[61] Another public interest, it is said, is that regular monitoring may reduce transaction costs because the owners are more easily identifiable.^[62] However, this reduction would only occur where there is no reliable land register or where the identification of the owner is otherwise impeded.

The public interest in averting unjustified reliance interests and land conflicts also withstand the reasons against the owner’s obligation to monitor the use of land. Some scholars argue that ownership includes the right to neglect one’s property, which makes that acquisitions by prescription cannot be based upon an obligation to monitor.^[63] However, as ownership is subject to limitations in the public interest, and it is primarily for the legislator to define these limitations within constitutional and international boundaries,^[64] the public interest in averting land conflicts may justify acquisitions by prescription.

Scholars from the United States and elsewhere point to the historical roots of the justification that owners who sleep on their rights need to be punished, and argue that these roots can no longer justify acquisitions by prescription. In the 19^th century, settlers in the United States did not have legal access to vast plots of land west of New England because the owners from New England did not care about the land and lived far away. Acquisitions by prescription were thus a welcome instrument to ensure access to land for the landless and discourage land speculation. Those scholars argue that the problem of landlessness, possibly caused by land speculation, is no longer a major issue and that society no longer views it as desirable to punish owners who sleep on their rights.^[65] It is doubtful whether this is really an accurate observation. Landlessness, whether or not caused by land speculation, is still a major problem in the Global South.^[66] In the Global North, a shortage of housing in densely developed and populated urban areas, whether or not in the aftermath of a financial crisis and many foreclosure proceedings, also poses considerable challenges today. Moreover, even if the original argument in favour of punishing the owner were (entirely or partially) outdated, other public interests, such as the one presented here, could still justify punishing the owner.

Another concern is that acquisitions by prescription would drive up monitoring costs. This argument is not persuasive because the costs of monitoring the use of land once every few years is not excessive,^[67] particularly when compared to the privilege of having land at one’s disposal. Another argument against this justification of acquisitions by prescription is that an acquisition by prescription is unnecessary to encourage monitoring. Extinctive prescription would be sufficient.^[68] This argument, however, is not persuasive because it would bring back the situation under the old Dutch Civil Code and threaten the marketability of land.

An objection of considerable weight to this justification is that the owner’s negligence and the public interest in averting wasteful land conflicts do not outweigh the public interest in not rewarding land theft and preventing an incentive to occupy land.^[69] The owner’s negligence itself may justify the loss of ownership by the owner, but cannot justify the acquisition of ownership by a bad faith user. Moreover, allowing bad faith users to acquire land by prescription may create an incentive to occupy land and, thereby, lays the foundation for the wasteful conflicts over land that acquisitions by prescription are supposed to avoid. The public interest in averting wasteful land conflicts thus rather militates against bad faith acquisitions by prescription. For this reason, it is submitted that the justification discussed in this sub-section is insufficient to justify bad faith acquisitions by prescription. It should be examined whether there are normative grounds supporting the bad faith user’s claim to the land. This inquiry is conducted in section 5.

Current Dutch law reflects the owner’s obligation to monitor the use of the land. The possession of the user implies that the owner does not enforce his/her ownership. All that is needed to prevent the user from acquiring the ownership is to send a written notice followed by a legal action.^[70] In light of the Supreme Court’s judgment of 24 February 2017, Dutch law also seems to reflect the opinion that the owner’s negligence does not necessarily justify bad faith acquisitions by prescription. Dutch law gives the former owner the opportunity of reclaiming his land back from a bad faith acquirer.

4.2 The Failure to Make Productive Use

The second type of the negligence justification is that acquisitions by prescription punish the owner for not using the land and encourage the effective use of land. It is submitted that this justification is generally not adequate to justify acquisitions by prescription and at most only partially reflected by current Dutch law. The decisive reservation against this justification is that it indiscriminately favours use over non-use. However, non-use may be socially more valuable than use.^[71] For instance, environmental protection dictates that not all land should be developed, in particular important habitats.^[72] Another concern is that the prospect of an acquisition by prescription would not encourage effective use during the prescription period because the user, unless s/he is in good faith, is unlikely to make major investments because s/he may be evicted.^[73] In sum, encouraging effective land use would not only be a questionable aim, but acquisitions by prescription would be an inadequate means to achieve the aim.

Current Dutch law does not incorporate this justification. As has already been concluded, it does not punish the owner for not using the land, but for not monitoring and controlling its use. Acquisitions by prescription are also an ineffective means to encourage an effective use of the land by the user under Dutch law. In addition to the incentive not to invest during the prescription period, the requirement of ‘possession’ mainly requires putting up a kind of boundary, but not an effective use of the land.

5.1 Good Use of the Land

If the user makes good use of the land, s/he will arguably over time acquire a moral claim to the land that may justify a reallocation of ownership from the negligent owner to the user. Cobb & Fox and Marais have put forward this argument on the basis of Locke’s Labour Theory.^[77] Under Locke’s theory, the person who mixes his/her labour with unclaimed land acquires ownership to the land.^[78] This rule, however, does not apply to land that already has an owner.^[79] It thus seems that acquisitions by prescription could not be justified on the basis of this theory. Scholars have proposed two ways to overcome this obstacle. Marais has pointed out that Locke assumed an abundance of available land and considered that owners should only acquire as much land as they actually needed and not neglect their land.^[80]Marais argued that there is a scarcity of land nowadays and that owners do neglect their land. For this reason, Locke’s theory would arguably permit that effective users of the land acquire it by prescription.^[81]Cobb & Fox have linked the owner’s neglect to the user’s good use to argue that the labour theory provides a justification for acquisitions by prescription. The owner’s neglect of the land constitutes in their view quasi-abandonment of the land. The land could thus be viewed as unclaimed again, and the user could claim ownership of the land on the basis of his/her good use.^[82]Marais also subscribes to this argument.^[83]

It is submitted that the combination of the owner’s neglect and the user’s good use of the land (over a long period of time) should in most cases be sufficient to justify a reallocation of the ownership to the user. This justification provides a valid reason for why the user should become owner and, at the same time, relies upon the owner’s failure to monitor and control the use of the land. The burden imposed upon the owner, which is to monitor the use of the land and interfere where necessary, is not too cumbersome, not even for public bodies owning land;^[84] in particular, this justification does not introduce an obligation for the owner to make good use of the land and allows them to leave the land unused so as to put to a desirable use in the future.^[85]

What is problematic about this justification, however, is that it creates an incentive to make use of any kind of land, regardless of whether the land should be left undeveloped.^[86] In particular to protect the environment better, one should consider excluding certain sensitive areas from the scope of applicability of legislation on acquisitions by prescription.^[87]

Dutch law and legal practice do not reflect this newly formed justification. Users who make good use of the land may acquire the land by prescription, but do not necessarily meet the requirements for an acquisition. A user who makes good use of the land, but does not fence in the land will not be possessor of the land and fail to meet the requirements of either Art. 3:99 or Art. 3:105 BW. Also, good use is not a requirement for acquisitions by prescription. Art. 3:105 BW does not require long-term use of the land; it is rather sufficient to be the possessor at the moment the owner’s rei vindicatio prescribes. It is, moreover, sufficient to close off the land to become possessor under Dutch law; good use is not required. To adopt this justification, Dutch law would thus have to adjust the requirements for an acquisition by prescription.

5.2 The Land’s Contribution to the User’s Human Development

Personality theories lay bare the connection between property rights in material resources and a person’s development. They are based upon the Hegelian personality theory, which is aimed at the promotion of personal autonomy and state that personal autonomy requires a material foundation in the form of secure property.^[88] Personality theories thereby indicate the importance of the illegally used land to the user’s life and may provide a justification for a reallocation of land ownership to the user. In this sub-section I discuss the implications of Radin’s personhood theory and Alexander’s human flourishing theory for the justification for acquisitions by prescription.

Radin’s personhood theory says that a human being needs material resources at their disposal to develop and realise their potential.^[89] Things become bound up with who we are as a person to a varying extent. Radin distinguishes between personal property and fungible property on opposite extremes of a continuum.^[90] The qualification of a thing as personal or fungible property depends upon how much pain the person would suffer if the object were taken away.^[91] Personal property, for example, includes a home and a wedding ring. In Radin’s view, personal property has a stronger moral claim to protection by the legal system than fungible property.^[92]

The importance of the land to the user’s personhood, in the form of a home or otherwise, may justify an acquisition by prescription.^[93] There is, however, some debate about the conditions under which this reallocation should take place. Radin herself states that personhood-related considerations would mainly justify a reallocation to good faith users. She raises the question of how a bad faith user could get bound up with the land.^[94] It is submitted that by using the land and, for instance, living on the land with one’s family, a person gets automatically bound up with the land and that the issue of whether the person has a recognised right to use the land fades into the background. So, even to a bad faith user, the land may be personal property. The other issue is to what extent the owner’s attachment to the land must have diminished so that the user’s attachment to the land sufficiently outweighs it to justify a reallocation of ownership. Several scholars have indicated that the owner would have to have no personal attachment to the land whatsoever.^[95] It is submitted that in cases other than boundary disputes, the fact that an owner fails to monitor and control the use of his land for a long period of time should be regarded as a form of quasi-abandonment and sufficient evidence for a lack of personal attachment.^[96]

The land’s importance to the user’s personhood and the lack of attachment to the land on the part of the owner nicely combine the justification based upon the land’s contribution to the user’s human development and the ‘punish the neglectful owner’-rationale. One problem with this justification is that it is difficult to imagine that it applies to acquisitions by legal persons.^[97] However, the legal person could have an attachment to the land through its members or shareholders. Supposing that the members of a football club occupy green space, turn it into a pitch, and play on it for decades, why should there not be a justification for the football club to acquire the land on the basis of the members’ attachment to the land?

That said, Dutch law would have to be substantially changed to incorporate this justification. Users with great personal attachment may acquire by prescription, but they do not necessarily acquire it. Specifically, the Dutch requirement of possession does not distinguish between owners or users on the basis of how attached the user or owner is to the land respectively. Instead, Dutch case law differentiates on the basis of the function of the land and whether the land is publicly or privately owned. Also, personal attachment is no necessary requirement for an acquisition. The user does not even need to use the land to acquire by prescription; fencing in the land is sufficient.

A similar argument could be made on the basis of Alexander’s human flourishing theory. Human flourishing is an objective standard by which the ability of a person to participate in human activities is measured. The more people are able to participate in human activities, the more a society guarantees human flourishing.^[98] Property may contribute to human flourishing because property fosters personal autonomy, security, and wealth.^[99]Marais has argued that a reallocation to the user and secure ownership would foster the user’s capabilities to live a well-lived life. As the owner has a societal obligation to look after the land, but failed to honour this obligation, it is then justified in Marais’ opinion to deprive the owner of the land.^[100] This approach is persuasive. This justification, again, nicely combines the issue of why the user should become owner with the question of why the owner should lose the land. The long-term use of the land for human flourishing-enhancing purposes, as a home for example, explain why the land is important to the user; the failure to monitor and control the use of the land suggests that the land no longer bears any importance to the owner’s human flourishing.

Dutch law, however, would have to be substantially changed to incorporate this justification. The reasons are the same mentioned with respect to the personhood theory. In short, the requirements for acquisition by prescription do not distinguish between users and owners on the basis of whether the land contributes to their human flourishing.

5.3 The User’s Net Contribution to Aggregated Utility

Utilitarian theories seek to maximise the aggregated utility within society.^[101] In the literature, various authors have pointed out that land should be allocated to the person who accords the highest subjective value to it.^[102] As time proceeds, the value that the user attaches to the land increases, while the owner accords less and less value to the land. There might indeed be a point in time when the aggregated utility within society would be higher if the ownership were allocated to the user. This may constitute a justification of acquisitions by prescription.

Law and economics theory, aimed at maximising the economic efficiency of the use of resources, provides a useful instrument to measure overall utility. Several scholars have conducted economic analyses of acquisitions by prescription.^[103] This contribution cannot examine all their analyses in depth. Instead, this contribution briefly discusses a recent (theoretical) analysis conducted by Marais.^[104]

Marais measured the costs incurred by the owner, the costs incurred by the user, the costs incurred by third parties, and litigations costs caused by legislation on acquisitions by prescription. These costs add to the loss caused to the owner by the acquisition by prescription itself. At a societal level, however, the loss sustained by the owner is (assumed to be) offset by the higher value that the user attaches to the land. Marais analysed how these costs relate to the length of the prescription period. He argues that the owner’s costs, caused by uncertainty, monitoring of the land, and demoralisation linked to the loss of property to the user, decrease as the prescription period becomes longer.^[105] This is plausible because the longer the prescription period is, the less the owner will worry about their property. Also, if the owner does not monitor their property for a longer period of time and then loses the land, s/he will be more likely to suffer less pain (or ‘demoralisation’). According to Marais, the user incurs costs for uncertainty, obtaining evidence for a succeeding prescription claim, and demoralisation (due to eviction).^[106] One should, possibly, add lost investments that may occur if the owner successfully reclaims the land. Marais argues that these costs are highest if the prescription period is very short, then gradually decrease, and then increase again as the prescription period becomes longer than 10 years.^[107] This conclusion seems plausible in that uncertainty is highest at the beginning (that is, for bad faith acquirers) and in that the demoralisation costs and the value of investments increase as the user lives longer on the land.

Third party acquirers may incur (prescription-related) costs for the title search (conducted by the civil law notary in the Netherlands), an inspection of the site, and uncertainty about the acquisition. Marais points out that on the one hand, (registered or unregistered) acquisitions by prescription may correct flawed information in the register, which enhances certainty, and on the other hand, they may introduce wrong information because the acquirer by prescription does not need to register the acquisition.^[108] In the Dutch context, inspections will only be useful and acquisitions by prescription will only correct (or, rather, complement) the land register if there is a boundary dispute and the boundary cannot be ascertained from the available information. In all other cases, acquisitions by prescription that remain unregistered will make site inspections necessary that would otherwise not have been required, and thereby increase transaction costs. A regime that does not allow for acquisitions for prescription in those cases would thus bring down transaction costs. Marais argues that the costs incurred by the third party acquirer are highest if the prescription period is very short, then decrease, and later slowly, but steadily increase as the prescription period becomes longer.^[109] This seems plausible because if the prescription period were shorter, third parties who try to acquire from the owner would feel very uncertain about their acquisitions and undertake (possibly unnecessary) additional inspections. If the prescription period were longer, third parties would, at least in boundary disputes, incur more costs for title search and inspections because the information becomes less reliable.

Litigation costs caused by legislation on acquisitions by prescription are composed of the number of litigated cases and the costs of flawed judicial decisions.^[110]Marais argues that the shorter the prescription period is, the more litigated case there will be and the higher the litigation costs will be. If the prescription period is higher, however, there will be more flawed decision due to information of worse quality.^[111] In the Dutch context, the latter is only true where the land register does not provide reliable information, i.e. in boundary disputes or where an inheritance has remained unregistered.^[112]

Based upon this analysis, it is submitted that at the moment the (demoralisation and investment) costs linked to evicting the user are higher than the combined additional costs caused to the owner, third party acquirers, and the general public, there is an economic justification for an acquisition by prescription. It depends upon a country’s system of land registration, judicial system, and culture at which point this line is crossed.

Dutch law currently does not incorporate this justification for essentially the same reason why it does not reflect the other alternative justifications for acquisitions by prescription. High demoralisation costs on the part of the user are neither required nor sufficient to acquire the land by prescription. A user could develop a strong link to the land by using it, but would only acquire it if he had fenced it in. By contrast, a user who does not have any strong link with the land, but has fenced in the land may become owner.