The Problem with Heirs' Property

February 27, 2022 | Jennifer Harrington

“Heirs’ Property” generally refers to family owned property inherited by multiple generations without the formal legal proceedings necessary to prove ownership. Without probate proceedings at an owner’s death, heirs may possess the property, but they lack the clear title necessary to prove their ownership status. This means they may not be able to sell the property, use the property as collateral for financing, or receive USDA benefits for farming activities conducted on the property. It also means they may be at a greater risk of losing the property through a partition action or because they fail to pay their property taxes.

This type of heirs’ property arises in higher rates among black, indigenous, and people of color (BIPOC) communities.[i] Many systemic factors have led to this problem, including a lack of access to the local legal community[ii] and unfavorable laws that do not honor traditional ways of transferring land at death.[iii]   

Sometimes, “heirs' property” refers simply to any property owned primarily by relatives as tenants in common. This type of ownership is common, but can present difficult issues when owners do not agree about how to use the property and whether to sell it. Many states have partition laws with special provisions for “heirs’ property.” These laws attempt to ensure that, when practicable, family members who do not wish to sell their land can retain ownership of their shares.

This article addresses the difficulties associated with the first type of heirs’ property, property passed through the generations without good title. It also reviews steps owners can take to attempt to obtain clear and marketable title.

Legal Issue

As noted above, heirs’ property generally arises when no probate process occurs at the death of an owner of real property. Without this legal process, land records never reflect the next generation of owners. In many cases, this lack of legal process continues through multiple generations, resulting in a situation where formal land title records show that the property is owned by someone who may have passed away decades earlier.[iv] After several generations pass, the number of informal owners can climb into the hundreds. Many “owners” do not even realize they have an interest in the property. The U.S. Department of Agriculture has recognized that heirs’ property has been the leading cause of Black involuntary land loss in the United States.

Typical Probate

The land records office is usually at the county level and is sometimes called the “Recorder’s Office” or the “Clerk of Deeds,” depending on the state. The records are updated only when specific steps are taken to transfer the property to the legal heirs. In most cases, a probate case is opened (with or without a will) and a court oversees the transfer of the real property. At the conclusion of the probate process, the executor or administrator files a deed in the land records office, formally documenting the transfer of title to the new owner(s).

Failure to Finalize an Estate

Failing to complete the probate process means that the formal land record does not match the legal ownership of the land. This creates a number of issues. First, all legal owners may not be recognized. Second, the owners will generally be unable to obtain financing because the lender cannot look to the land as collateral. Another problem is that the county will continue to send key documents to the owner of record. At some point, no one will receive these key documents, including property tax statements, assessment notices, rezoning proposals for the land and nearby land, and other legal notices. Lack of access to important legal notices increases the likelihood that the land will be lost for failure to pay property taxes or other assessments.

The probate process also facilitates the smooth transition of property to the heirs by seeking to clear the property of liens and debts before transfer. Without this process, heirs do not receive clear title. Creditors have extra time to make claims against the original owner’s assets, and heirs have little protection against unscrupulous creditor claims. Every state differs, but usually a creditor has anywhere from 3 to 10 years to file a lawsuit after a missed payment. The probate process shortens this time significantly, depending on how the creditor received notice of the person’s death.[v]  The shortened timeframe for creditors to file claims increases the likelihood that the new owners will be able to acquire a clean title to the property. If there is no probate, the burdens and risks to the title remain.

Finally, for those owners who die without a will (called intestate succession), state law determines the next owners of the assets. Many times, this means the property of the estate is divided evenly among the children of the decedent.[vi] Depending upon the size and composition of the family at the time of the owner’s death, however, determining legal heirs can be complicated. Without probate, there is no formal determination of heirs under the applicable intestacy distributive scheme. Probate provides a shortened timeframe within which those claiming to be legal heirs must make their claims. After that time expires, no further purported heirs can seek to inherit the property. This leaves the known heirs with clean title. If there is no probate process, the possibility of additional heirs continues to cloud the title.

Resolving Problems Associated with Heirs’ Property

Those who have inherited heirs’ property will need the help of an attorney to correct an outdated land record, determine the legal heirs, and seek to obtain clear and marketable title to the property. Attempting to correct the problem without skilled assistance could create even more problems. This section provides an educational overview of the typical tools used to resolve heirs’ property issues.

Identify Titled Owners

The first step in obtaining clear title to heirs’ property is to identify the “titled owner(s).” This information can be found through an “abstract update,” “title opinion,” “evidence of title,” “title report,” “title search,” or “title examination.” The names differ by state, but the process involves paying a professional to determine the current legal status of the title. The professional will seek to determine who is/are the owner(s) of record, and what defects or burdens impact the title the land record says they hold?

Still Time for Probate?

Once the titled owners are identified, the process to clear title and correct the land record can begin. If the original owner died within the period during which a probate action can still be brought, the person seeking to correct the title should initiate a proceeding in the probate court. This is usually not possible, however, since the typical limitations period for these actions will likely have passed.

Determining Heirs and Seeking a Resolution

In many cases, decades have passed since the original owner died. It may be very challenging to determine all of the heirs of that decedent. Many times, some family members remained on the property after the death of the original owner. They then passed the land to other family members who continued to live on the property. Many other heirs, however, have no connection to the land. They may not realize they have a legal interest in the property. It does not take long before the process to identify potential heirs is unwieldy.

Settlement Agreements and Quiet Title Actions

Nonetheless, those seeking to clear title to heirs’ property may attempt to determine all of the heirs with an interest in the property. Public records (such as birth, death, and marriage records) and ancestry records can help with this process. Depending upon the number of heirs, the size of the parcel of land, and the respective interests of those involved, an agreement may be reached under which those with small fractional interests may be willing to gift them to those with an attachment to the land. For example, if one family has lived on the land and farmed it through the generations, other heirs unattached to the land may be willing to relinquish their limited interests to allow the farming family to obtain clear title. In this case, a quiet title action may correct the land record. A quiet title action is a type of lawsuit that establishes the ownership of real property. It takes at least a few months if all heirs have been located and agree; it takes much longer if there are missing heirs or disagreements. 

Other times, distant heirs may request payment to sign off their legal rights. In these cases, it may be more difficult to resolve the title issues without a source of funding. As noted below, a new USDA program may assist with this issue.

State Laws

Different states have different laws that may make clearing title easier or more difficult. Many states have a “Marketable Title Act” which automatically removes stale burdens and liens on property after a certain number of years.[vii] Other states allow ownership to change hands under legal doctrines such as adverse possession after a certain number of years. In most cases, the longer the land’s title has been in a state of flux, the more difficult the process to fix it.[viii] Those with an interest in heirs’ property should seek the assistance of legal counsel skilled in helping resolve these issues as soon as possible.

Legal Counsel and Other Forms of Assistance

If the cost of a lawyer is an obstacle, many Legal Aid organizations and state bar associations offer resources to assist those with heirs’ property issues. The USDA’s “Heirs’ Property Relending Program” may also be an option. The program is designed to allow heirs to obtain funds to resolve title issues by financing the purchase or consolidation of property interests and financing costs associated with a succession plan.

Farm Programs

Having a clouded title usually prevents the heirs from using the land as collateral to obtain financing. This can prevent the land from being used productively because there is no credit line for farming inputs or financing to build livestock housing.  

Recognizing that heirs’ property is a big problem for some farmers,Congress (with guidance from the USDA) addressed this issue in the 2018 Farm Bill.[ix] For example, if the farm has a title problem because of an heirs’ property issue, the law allows the farmer to obtain a farm number through alternative means.[x] A farm number is necessary to register for many programs available at the Farm Service Agency office, including lending, disaster relief programs, participation in county committees, price support, and other programs. Different states require different documentation for a farm operator to obtain a farm number. Impacted farmers should consult their local FSA agent for more information.[xi]  More information on USDA efforts to address heirs' property issues can be found at farmers.gov.

Prevention

As with many things, the most cost-effective solution to the title issues associated with heirs’ property is prevention. Creating a will prior to death will help facilitate clear title. Additionally, heirs should understand the need to probate the will after death.If there was no will, they should file an inestacy action. When these steps have not been followed, those discovering the problem should seek legal counsel to help resolve the title concerns as soon as possible. The longer the problem is ignored, the larger it will grow.

Additional Resources

Native Lands – Indian Land Tenure Foundation - https://iltf.org/resources/red-tape/

Florida – Three Rivers Legal Services, Inc. - https://www.trls.org/Home-Ownership-Probate/

Georgia – Georgia Heirs Property Law Center - https://www.gaheirsproperty.org/

Mississippi – Mississippi Center for Justice - https://mscenterforjustice.org/heirs/

North Carolina – Heirs’ Property Retention Coalition - http://hprc.southerncoalition.org/?q=node/8

South Carolina – Center for Heirs Property Preservation - https://www.heirsproperty.org/protect-your-land/


[i] For more in-depth resources about the history of heirs’ property and its origin in BIPOC communities, these resources may be useful: Center for Agriculture & Food Systems. Farmland Access Legal Toolkit - Heir’s Property. https://farmlandaccess.org/heirs-property/; and Johnson Gaither, C. 2016. “Have not our weary feet come to the place for which our fathers sighed?”: heirs’ property in the Southern United States. e-Gen Tech. Rep. SRS-216. Asheville, NC: U.S. Department of Agriculture Forest Service, Southern Research Station. https://www.srs.fs.usda.gov/pubs/gtr/gtr_srs216.pdf.

[ii] See id., p. 11.

[iii] See id, p. 63.

[iv] Deaton, B.J.; Baxter, J.; Bratt, C. 2009. Examining the consequences and character of “heirs’ property.” Ecological Economics. 68(8): 2344– 2346.

[v] Creditors notified by newspaper/publication usually have a longer time to file a claim than one notified by letter.

[vi] This is not the only scenario where this issue occurs. In certain states that are traditionally more heavily affected by heirs property, the default results in the assets being split among the spouse and children, even if there were no extramarital children.

[vii] Walter E. Barnett, Marketable Title Acts Panacea or Pandemonium, 53 CORNELL L. REV. 45 (1967-1968).

[viii] This is because title is established through adverse possession or uncooperative quiet title actions.

[x] 7 U.S.C. §6622b.

[xi] Ag Decision Maker, Farm Bill – Terms to Know, https://www.extension.iastate.edu/
agdm/crops/pdf/a1-30.pdf

 

The Center for Agricultural Law and Taxation is a partner of the National Agricultural Law Center (NALC) at the University of Arkansas System Division of Agriculture, which serves as the nation’s leading source of agricultural and food law research and information. This material is provided as part of that partnership and is based upon work supported by the National Agricultural Library, Agricultural Research Service, U.S. Department of Agriculture.