I know we've moved on to a much more light-hearted approach to this, but I'm still astounded by the number of MNers who think you're in the wrong.
It's like buying a house where someone lives in your back garden. They buggered off for the viewings (as who would buy a house with someone living in the garden), but on moving day there they are with their tent erected, camp stove on and washing out.
Is the consensus as they have no where else to pitch their tent and they've been doing it there for years that they 'morally own' the garden and you just get on with your life around the now-irked garden dweller!?
Or a pub is converted to flats. But Old Jimmy met his now deceased wife in that pub and has every week for 40 years had a pint at the bar in her memory. Now someone lives there, he still turns up (now bringing his own can of beer) and sits at their dining room table to have a drink 8pm every Friday, and the new owners should be buying pork scratchings to make sure he's suitably comfortable - because morally he's be patronising that spot for years, so it's his for between 8 and 9 on a Friday night.
Yes, you should've checked for vacant possession. You didn't, and the consequence is you now have this headache. How could the rational consequence possibly be that you just let Babs have the land!?
Barbara should be angry at the seller for selling the land without having the courtesy to tell her.