Dunedin couple’s nightmare battle to evict squatter after mortgagee sale

Tracy Neal, Open Justice reporter of

By Tracy Neal, Open Justice reporter of

A couple who bought a new home are warning others of the potential pitfalls of mortgagee sales, after struggling to get the former owner to leave.

Stacey Kirby and his partner bought the Dunedin property in April after it was sold by the bank when former owner Jennifer Scott defaulted on her mortgage repayments.

Kirby said they were forewarned by their lawyer, who was handling the purchase of the two-bedroom property, that there could be catches with a mortgagee sale.

And there were.

It turned out Scott didn't want to leave her home so the couple ended up having to have her forcibly removed as a squatter - a process that took four months and involved police and legal action, and some counteraction from the previous owner.

Kirby told NZME on Friday that despite the state of emergency Dunedin was under because of flooding, he and his partner were now happily settled in the home, but they have learned a lot from their experience.

He said part of the home's appeal was its affordability, but the couple had not bargained on the roughly $16,000 extra it had cost to sort the matter legally.

He said the figure was initially higher, but Scott had since reimbursed some of the costs incurred for the transporting and storage of all her belongings after she was evicted.

"There was a lot of stress involved and just heaps of unknowns that neither of us could ever imagine was going to happen."

The title was transferred to the couple at the end of April.

When Scott refused to leave, Kirby began the process of having her evicted.

About six weeks after possession, they had all the locks changed with help from the police, who assisted them in entering the property to make sure no one was in there.

But later that night, Kirby claims, police called him down to the station and asked him to hand over the new keys so Scott and her partner could return to the property.

He said it was too late at night to contact his lawyer and rather than resist the request he handed over the keys - but found out the next day that was not the best move.

"When I finally got in contact with my lawyer, he's like, 'No, you shouldn't have done that because everything you've done to get those locks changed was completely right and completely legal'."

It took two more months before Scott was evicted by a bailiff and the police. By then, the Tenancy Tribunal had granted Kirby a possession order, which Scott appealed unsuccessfully to the district court.

Days later she lodged wide-ranging claims with the tribunal in which she alleged assault, unlawful entry, breaches around storage, withholding of goods and breach of privacy. That also failed.

The tribunal said that was because Scott was never a tenant, but a "squatter" according to the law, and neither was Kirby her landlord.

The tribunal said in a recently published decision that it initially did not have jurisdiction to consider Scott's claim, but the matter did test a rule provision around "squatters".

Kirby said that when they first bought the property they contacted the Tenancy Tribunal to get an eviction notice, but were told it had no jurisdiction to handle that. It instructed them to go to the Disputes Tribunal.

He said that tribunal told them the same thing, and advised them to go to the Tenancy Tribunal.

"So that's when we had to get our lawyer involved."

Kirby said their lawyer came upon a section of the Residential Tenancies Act which in 2010 granted the Tenancy Tribunal the power to evict a squatter.

A squatter is defined as a person in possession of premises without any lawful right, particularly when they are not tenants.

Senior tribunal adjudicator Rex Woodhouse ruled Scott did not have a right to occupy the premises, nor did she pay rent, so there was no "tenancy".

When she failed to hand over the premises to the new owners, she became a squatter as the law knew it.

Katherine Mexted, a director at Wellington commercial and property law firm Convex Legal, said that in New Zealand squatting was given the legal term "adverse possession".

In rare instances, a person defined as a squatter could occupy a building or land and even take formal ownership, except in certain instances, including if it involved Crown or Māori land.

But first, they had to occupy the land continuously for at least 20 years and be fairly visible in doing so.

They would then need to apply to Land Information New Zealand to have possession converted to ownership.

"So, if Great Aunty Agatha left you a little paddock in remote Northland a few years ago, it might be time to finally go and check it out."

NZME has been unable to reach Scott for comment. She applied for but was refused name suppression by the tribunal.

* This story originally appeared in the New Zealand Herald.