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South Fulton cops busted the squatters at 4300 Caveat Court and recovered the stolen vehicle on Saturday - after they had been illegally lodging in the home for five months.
Video shows cops putting the intruders in handcuffs and sitting them on the sidewalk out side of the home.
Mel Keyton, president of Hampton Oaks Homeowners Association, told Atlanta News First the neighbor whose car was stolen was out of town.
'Squatters stole her car and they brought it back over here to drive it in the driveway,' said Keyton.
According to police the home at 4300 Caveat Court, which has a Zillow estimated worth of $518,400, is supposed to be vacant.
Hampton Oaks Homeowners Association Vice President Kendra Snorton told FOX 5 Atlanta the squatters moved into the vacant house on Christmas Day.
'The ringleader, we see him walking his dog all the time. He's very courteous and polite when he interacts with the community,' Snorton said.
The squatters had been living in the community for months but were finally arrested after they stole the car.
'When the police showed up, the car was behind us in the yard. That's how we put two and two together,' Keyton said.
'We don't know who these people are and what they are doing.'
The South Fulton Police Department told DailyMail.com the stolen vehicle was returned to its rightful owner.
'We sincerely appreciate the vigilance of our community members, who play a vital role in our ongoing efforts to reduce crime in our city,' police said.