Creating and signing a rental agreement with an individual who is occupying a part of your land is an important strategy for preventing that person from eventually claiming ownership by adverse possession. It’s useful for situations where, for example, the neighbor’s vegetable garden extends over your property line; the neighbor built a fence that encloses a piece of your property (and you’d rather live with the missing piece of land than fight over having the fence removed); or your neighbor’s new hot tub encroaches multiple feet onto your land.
For an individual to acquire title to land through adverse possession, his or her use of the land must be “hostile,” which essentially means “without permission.” A lease or rental agreement, of course, constitutes documented permission by the owner to the possessor, and would thus defeat any future claim that the individual “owns” your land. Read more about this strategy on Nolo’s article, "Avoiding Adverse Possession Claims by Renting Portion of Your Property to Neighbor."
While you should certainly work with an attorney to draft the lease appropriate for your situation, a sample lease with some of the key terms you should consider including is below: