Squatters: The latest real-estate menace (© LWA-Dann Tardif/Corbis)

When he moved in, David Dobbs did the same things most people would do when they set up in a new house. He unpacked his belongings, hooked up cable, transferred utilities, filled the swimming pool and watered the lawn, which was withering under the hot California sunshine.

"It was like he had just moved in and was a proud new owner," says Prudential California real-estate agent Tom Tennant, who listed the Corona, Calif., property.

The problem was, Dobbs had no right to move into the house: He was a squatter. The vacant house he occupied on affluent Star Canyon Drive was a foreclosed property owned by a bank, and it was in escrow to a new owner.

Dobbs is part of a troubling new breed of trespassers and con artists moving into vacant foreclosures across the country. Unlike most squatters, these people aren't derelict and living on the streets, and they don't move on once discovered by police or sheriff’s officers. It can take months to get them out, agents and attorneys say.

"Possession is nine-tenths of the law," says Michigan real-estate broker Ralph Roberts, author of "Protect Yourself from Real Estate and Mortgage Fraud." "You can call the police, but the police aren't necessarily going to move them out."

That's because some squatters successfully confuse police by claiming they have a right to be there, often showing bogus leases, as Dobbs did, to put off being evicted.

The scams
Squatting schemes can take a few different forms, police say. In some, individuals will gain access to a lockbox code on a property, open the door and start moving in. No breaking or entering is involved.

Or a con artist will hire an unscrupulous locksmith to change the locks on a property so he can place ads and rent it out to people.

What's your home worth?

In this scenario, the individual passing himself off as a landlord will collect first and last month's rent — sometimes from several unsuspecting people — before disappearing, says Detective Mike Wood of the Sacramento Police Department's real-estate fraud unit. Criminals also can lift information about a house off of legitimate real-estate listings and then put out their own ad on Craigslist to lure renters, he says.

But oftentimes, the squatters will knowingly produce phony leases or other documents that cloud the issue, and send the matter to the court system for a formal eviction, which can take as long as several months.

The woman accused of providing Dobbs with the bogus paperwork, Gwendolyn Johnson, is reported to have filed about a dozen deed transfers at the county recorder's office for houses where she planned to move squatters. She told the local newspaper that she seizes possession of these properties and leases them out to tenants for a one-time fee of several hundred dollars. (Johnson was recently arrested on a felony charge of falsifying documents and is out on bail awaiting her court date.)

But, attorneys say, even without legitimate-looking paperwork, it can be hard to evict squatting tenants once they've moved in and claim a verbal month-to-month agreement.

"A verbal agreement is just as binding" if it's real, says Los Angeles eviction attorney Dennis Block.

"They (the officials) have to decide who's telling the truth."

Squatters’ rights?
And that can be difficult. Police who are called out to a house don't want to arrest someone who has a legitimate right to be there, or was duped into renting a place from a bogus landlord. Most police and sheriff's officers don't want to face a lawsuit for acting too quickly.

"No one wants to get sued throwing someone out who's an actual victim" of a scam, Wood says.

Block says most police officers don't feel qualified to judge the merits of either side's arguments, so they simply tell real-estate asset managers to get an attorney to start the eviction process.

"The police are really there to keep the peace and make sure no laws are being violated," Block says. "They have to make a sure a crime existed before they make any arrest."

The eviction process, which starts with a five-day notice to vacate and ends with an order for the sheriff's department to remove the squatter, can take months if it is contested in court.

Real-estate agent Tennant, who was managing the Star Canyon property and had its utilities in his name, tried to get the squatter out himself, by persuading the city to cut off water to the property, a large Spanish-style home in a gated community, after Dobbs transferred it to his name along with electricity and gas.

In the weeks leading up to the order for his eviction, Dobbs broke the water meter repeatedly and even tried to tap into the water line illegally, sending water down the street and an officer to the house to arrest him on a misdemeanor charge of theft of utilities, Corona police confirmed.

Tennant says there is now an order for Dobbs to be evicted from the house. The one-time buyer of the property has since moved on, to look at other communities and other houses after a contractual clause let him out of the purchase because the house wasn't vacant.