Whose Land Is It Anyway? Heirs’ Property and Its Impact on Underserved Communities

By: Brenda Ezell, Esq., Jacksonville, Member of The Fund

By now we have all heard the term “heirs’ property,” particularly since Florida’s enactment of the Uniform Partition of Heirs Property Act (the “Act”) which became effective on July 1, 2020. This article is not a discussion of the Act, as a very thorough analysis was authored by Jalinda Davis, Senior Fund Underwriting Counsel at Attorneys’ Title Fund Services, LLC, and can be located in the November 2021 edition of The Fund Concept. Rather, this article is meant to serve as an analysis of the issues compelling passage of the Act and my own practical introduction to these issues.

Many title agents have seen the dreaded requirements in a title commitment:

“Completion of a proper probate of the Estate of XYZ, decedent;” together with: “Record order determining heirs in the Estate of the decedent.”

Some attorney agents are able to clear these requirements. However, title companies often need to refer these matters to an attorney for help. This is the exact scenario my firm faced several years ago when a title company contacted me for assistance in clearing a probate requirement. The title company had investor clients who wanted a regular referral source for the property owners. Not being particularly skilled in probate practice, but curious about the process (and with some great RPPTL Section probate attorneys to guide me), I agreed to handle a few “simple” homestead cases that could be resolved in summary proceedings.

After dealing with several of these matters, it was clear to me that there is no such thing as a simple homestead case. I also noticed a disturbing trend. The majority of the cases were driven by investors looking to purchase the property through one or more of the heirs; and most of the properties involved were located in historically African American neighborhoods. This was my introduction to the world of heirs’ property.

The term “heirs’ property” refers to land that has been passed down informally from generation to generation. Some people refer to it as half-jokingly as “air” property because title to the property is “up in the air,” but this issue is actually nothing to joke about. Heirs’ property is real property owned “in common” by all of the decedent’s legal heirs, regardless of whether they live on the land, pay the taxes, or have ever even set foot on it. And its disposition is a matter of significant economic consequence to families, especially in African American communities where commonly-held beliefs and practices around property distribution and wills have negatively affected the personal wealth of generations.

When a landowner dies without a will, Florida Statutes Chapter 732 dictates who inherits the land. After the land has passed down through several generations, however, distant relatives who do not know each other often become co-owners of the same property.  According to the United States Department of Agriculture, that situation (heirs’ property) is the leading cause of involuntary land loss among African Americans.

That is particularly unfortunate because home ownership remains an elusive goal for many black Americans. Census Bureau figures show that only 44 percent of black families in the nation owned their home in the first quarter of 2020, compared with 73.7 percent of white families. The gap is even wider in many communities. In Minneapolis, for example, only 25 percent of black families own a home, while 76 percent of white families are homeowners – the widest gap in homeownership among cities of more than a million residents.

When black families do become homeowners, it is all too common for their hard work and sacrifice in acquiring the property to end up being for naught. Census Bureau records show that since 1910, 80 percent of land owned by African Americans in the U.S. has been lost due to heirs’ property. Further, according to recent data compiled by the Atlanta Federal Reserve and the University of Georgia’s Carl Vinson Institute of Government, as many as 11 percent of residential lots in counties throughout the Southeast are known to be jointly owned by heirs. With full and accurate data hard to come by, the actual share may be much higher.

Let’s run through a not uncommon scenario:  Johnny Jones has signed a contract to sell the Jones family home to ABC Home Investors, LLC, for $25,000.  Despite the fact that the property appraiser’s online record shows that the property is owned by Estate of John Jones, has a “market value” of $99,800, and the date of the last vesting deed is 1/1/1899 (which is unobtainable in the online search records), Johnny has assured the buyer that he is the only person required to sign the contract.  The buyer orders the title commitment, which shows that the property was owned by John and Julia Jones, husband and wife, conveyed by warranty deed on May 5, 1945. The buyer is advised of the probate requirement and told to contact the attorney who will assist with probate.

During Johnny’s initial interview, it is determined that John and Julia were Johnny’s grandparents.  John died in 1950 and Julia died a few years later.  They had seven children together, one of whom was Johnny’s father John, Jr., and all of whom are now deceased. Johnny is the only child of John Jr., who resided in the home from the time of Johnny’s birth, however, John Jr. had 20 nieces and nephews, all of whom live in other parts of the country, and none of whom has ever visited the property. Johnny states that he does not know how to contact many of these relatives.

In this scenario, probate may not the best option due to the sheer number of parties needed to quit-claim their interest to the buyer. This is where the Act can be an important tool to help family members resolve these matters without having to completely abandon their ownership interests.

Many cases such as the above hypothetical go unresolved for a number of reasons: (i) heirs are unknown and no one is willing to pay the cost to search for them; (ii) known heirs refuse to cooperate and some heirs are simply unwilling to “sue” their siblings or other heirs; and/or (iii) the cost of legal action is disproportionately high compared to the actual value of the property. Also, and understandably, some heirs feel a sentimental attachment to the property and want to keep it in the family.

In many instances, the family is fractured and some of the heirs cannot be located. Any or all of these factors being present can result in the interested heirs simply walking away from the property and leaving it to be sold in a partition sale, or worse, by tax deed sale. Further exacerbating this issue is the fact that there are few African American probate and real estate attorneys in this state, and even fewer who litigate these types of matters. This leaves a knowledge gap in underserved communities with regard to probate and estate planning and preventing more property from becoming heirs’ property.

Here are some of the common problems with heirs’ property ownership:

  • Decisions regarding use of the property must be agreed upon by everyone entitled to it;
  • Some owners may want to sell the property, while others want to live in it;
  • Some will pay their share of taxes and maintenance, while others will not;
  • It is hard to get loans based on property ownership because there is no clear title;
  • Lack of clear title means that the property is less marketable for sale or lease.

The uniform act – now adopted by 19 states and pending in 8 – was created in 2010 to help preserve family wealth passed to the next generation in the form of real property. If a landowner dies intestate, the real estate passes to the landowner’s heirs as tenants-in-common under state law. The tenants-in-common form of ownership is the most unstable form of ownership, particularly because any individual tenant can force a partition of the property. In many instances, real estate investors acquire one heir’s small share of the property in order to file a partition action and force a sale in the hopes that they may then acquire the property for a price well below its fair market value. While legal under existing law in many states, this tactic is increasingly viewed as undesirable, since it leads to the diminishment of the family’s inherited wealth. The uniform act provides for notice, appraisal, right of first refusal, and if the other co-tenants choose not to exercise their right and a sale is required, a court-supervised sale to ensure all parties receive their fair share of the proceeds.

Across the country, many states are identifying heirs’ property and some are taking action to ensure that property owners can retain their land and its value. Thirty states and the District of Columbia have adopted other measures to protect property upon the original owner’s death. Through transfer-on-death laws, these jurisdictions have made it possible for owners to designate someone who will acquire the deed to their property when they die. While these laws do not address the land partitioning process as the uniform act does, they do create a way to ensure a deed does not die with the owner of a property, eliminating the need for a formal will and probate process.

In addition, national organizations are being formed and forums being held to both address and raise awareness of the thorny issue of heirs’ property. For example, on December 2, 2021, an Heirs’ Property Prevention and Resolution Funders’ Forum was held in Atlanta, Georgia, providing an opportunity for potential funders, including philanthropic organizations, law firms, financial institutions, and builder and realtor trade groups, to learn about potential solutions to the heirs’ property challenge and discuss possible funding support. The forum’s intended outcome was to establish capital, human, and organizational support for heirs’ property resolution and create prevention pilot initiatives in the following areas: education and awareness; pro bono legal services; academic research; local government innovation; and developer/contractor-driven affordable housing initiatives.

One of several national non-profit agencies dealing with the issue is the Heirs’ Property Retention Coalition, formed in the summer of 2006 as an organization of lawyers, advocates, and academics heavily involved in litigation, legislative reform, and/or scholarly study related to heirs’ property, and in particular to the preservation of heirs’ property within low income African-American communities, so that these families can retain their ancestral land and maintain it as a sustainable asset for future generations. In addition, the Center for Heirs’ Property Preservation in South Carolina is a 501(c)(3) created to protect heirs’ property and promote its sustainable use for the economic benefit of historically under-served families.

In Georgia, Georgia Appleseed released a report identifying the prevalence of heirs’ property in 5 counties and wrote a manual for attorneys looking to take on heirs’ property cases in the state. The manual also has an heirs’ property guide for Georgia families. In Louisiana, Louisiana Appleseed has authored a helpful brochure called "Protect Your Property: Heirs’ Property in Louisiana". Additionally, the University of Wisconsin Law School has originated a brochure for heirs’ property owners in North Carolina that focuses on how to retain the property. Also in North Carolina, the Land Loss Prevention Project has created a locally-focused manual for residents called Ten Ways to Save Your Land.

In Alabama, the Alabama Cooperative Extension System provides a brochure about Heirs’ Property, and an Alabama-based guide was developed with assistance from the ABA’s Section of Real Property, Trusts and Estates to help heirs’ property owners consider different options for use of their land. The Lawyers’ Committee for Civil Rights offers a brochure for heirs’ property owners in Mississippi. Finally, the United States Department of Agriculture has published a paper on GIS methodologies for identifying heirs’ property.

In Florida, many local initiatives are being created to address this issue.  “Clear title is the nucleus of this whole issue,” said LaTonya Smith, staff attorney with Three Rivers Legal Services in Jacksonville, Florida. Ms.  Smith and her colleague Rachel Rall work primarily with low-income families who have heirs’ property issues through the Home Sweet Home project, which covers 17 counties in North Florida, including Alachua. Smith said that “without a clear title, owners cannot use land held as heirs’ property as collateral to access bank loans, receive federal assistance from FEMA after a hurricane, take advantage of USDA farming programs or claim homestead exemptions.”

Conclusion: Real property generally makes up the bulk of a person’s or family’s wealth. Heirs’ property ownership is widespread in many urban and rural communities in the Southeast and is disproportionately found in low-income ethnic and racial minority families, who are less likely to have a will or transfer their property prior to death. This informal path to landownership often results in clouded titles, instability associated with multiple owners, and potential forced sales by real estate speculators. On the other side of the economic spectrum, families with higher wealth generally have access to the financial or other resources necessary to prepare a will (or trust), allowing them to pass along a marketable title to an inherited property, preserving the wealth realized by the property for future generations. The Act, while it is a good start towards stemming the tide of land loss in the black community, is not sufficient to fully resolve this issue in the State of Florida. A more focused, intentional, structured and scaled solution to the heirs’ property challenge will need to be developed with funding support. Communities and states nationwide have demonstrated that progress can occur with these types of efforts.

Resources:

Heirs’ Property in the Southeast: A Community Development Perspective Raphael Bostic, President and CEO, Federal Reserve Bank of Atlanta, Atlanta, GA 30309 Citing Carpenter, A.; Jones, S.; Pippin, J.S. 2016. Understanding heirs’ properties in the Southeast. Partners update.

https://www.atlantafed.org/community-development/publications/partners-update/2016/02/160419-understanding-heirs-properties-in-southeast.aspx

https://www.uniformlaws.org/committees/community-home?communitykey=50724584-e808-4255-bc5d-8ea4e588371d&tab=groupdetails

https://www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2015/07/15/heirs-property-challenges-families-states

https://www.rhha.org/whats-new-view?id=58

http://hprc.southerncoalition.org

https://www.wuft.org/news/2021/09/27/gainesville-city-leaders-make-a-push-to-help-black-families-hold-onto-their-property/?preview_id=302722

The opinions of any particular author are not necessarily the opinions of Attorneys' Real Estate Councils of Florida, Inc., any of the local Real Estate Councils or Attorneys’ Title Fund Services, LLC.