The squatter has left the building.

A SQUATTER who took over a dilapidated terrace in inner-city Sydney has abandoned his bid for adverse possession.

The man, who went by the name Andrew James, has moved out of the $1 million Redfern property, which remains the centre of a legal dispute between the local council, its mysterious owner and next-door neighbour.

The Supreme Court of NSW formally removed Mr James as a defendant in the proceedings during a directions hearing on Friday morning, after the court heard that the property had been vacated.

In a bizarre neighbourhood dispute that has captured imaginations, next-door neighbour Gerard Knapp was forced to take legal action after Mr James reportedly moved into the abandoned house in a bid to take adverse possession.

Also known as “squatters rights”, the legal term refers to a rule that provides that when someone occupies a property for 12 years or more, the owners lose their rights over it.

One problem for Mr Knapp is that the run-down property could be a structural risk to his own, which shares a boundary wall.

“It’s an extraordinary situation. Someone described it to me as ‘legalised theft’ and, with thousands of properties in Sydney bought by overseas investors, it could lead to real lawlessness,” he told Fairfax Media.

The property’s owner, a Chinese-born man named Paul Fuh who paid $143,000 for the terrace back in 1991, has not been seen for years and is believed to have returned to China.

With Mr James out of the picture, the court will next month hear a claim for damages by Mr Knapp against Mr Fuh in absentia, while negotiations between Mr Knapp’s lawyer and the City of Sydney continue.

So much for the plans of self-proclaimed banker Andrew James, also known as Andy Robert, who reportedly told neighbours he wanted to renovate the terrace and rent it out.

dana.mccauley@news.com.au