Heirs Property: What is it and how do we fix it?
Authored by: Natalie King, staff editor
“Heirs property” is noted as “one of the worst problem[s] you [have] never heard of.”[1] Lately it has been given significant attention from the Black Lives Matter movement.[2]
Specifically, the term is used to describe when heirs lack title to property that has been passed down from generation to generation “without a will or estate plan.”[3] Furthermore, each heir shares a portion of the property’s title, but due to lapses in the chain of title, (because the decedent did not leave a will or estate plan,) oftentimes real estate developers buy the entire property well below market value.[4]
This is because if there are multiple heirs to the property and one heir wants to sell her share, sometimes dividing the land into separate portions is not feasible; thus, one heir may cause the entire property to a forced partition sale, which more likely than not is sold at a rich discount, amounting to less than the property’s fair market value.[5] This process causes heirs to be divested of their property due to a forced partition sale, which would not otherwise occur if there was a clear chain of title, such as property passed down via will or other estate plan.[6]
This process has definite racial impacts. Because African Americans have low rates of estate planning compared to White Americans, African Americans are less likely to evade the problems associated with heirs property.[7] As a result, the laws of intestate succession are quick to systematically disenfranchise and divest African Americans of their inheritances that otherwise would be protected had they adopted an estate plan.[8] For that reason, many states have begun to notice this issue and have adopted the Uniform Partition of Heirs Property Act in an effort repair the consequences attributed to heirs property.
The Uniform Partition of Heirs Property Act (“UPHPA”) or (“the Act”) aims to modify partition law to address the problem that many African Americans—in particular—have experienced with property loss.[9]
The UPHPA is grounded in three major reforms to provide more equity when property is subject to partition.[10] First, if the court finds that the property is subject to partition, the cotenants have a right of first refusal, which grants the cotenant(s) that did not seek to have the property partitioned the first opportunity to buyout the partitioning cotenant’s interest.[11] This is a significant shift in partition law, because now real estate developers do not have the first opportunity to buy the property subject to partition. Heirs to the property are first in line, which gives them greater protections to keep the property in the family tree and prevents forced sales at the outset.[12]
Secondly, the Act calls for a clear preference to partition in kind rather than partition in sale.[13] The Act requires the court to consider economic and non-economic factors before partition such as: (1) whether the property has “sentimental, cultural, or historical value;” (2) whether one of the cotenants to the property would be homeless; and (3) whether the property has economic value that would make it worth more if sold by parcels or sold as a whole.[14] Because these factors weigh in favor for the court to partition the property in kind rather than by sale, heirs property owners can rest assured that the court will consider more than the mere economic value of the property before making its determination.[15]
Lastly, the Act revamped partition procedures.[16] The preferred method of partition is now an “open market” sale instead of an auction sale.[17] These sales aim to maximize the amount of wealth the heir can maintain from the property should the court order partition.[18]
To date, 18 states have enacted the UPHPA—including Virginia.[19] However, these protections are not enough. Due to the heightened risks of partition in the South where heirs property is most commonly found, nonprofits and law firm pro-bono initiatives play a crucial role in the fight against heirs property and forced partition.[20] Some suggest that policy makers should consider statutory protections that lower or waive legal fees to allow low-income families to have access to estate planning resources.[21] Nevertheless, the inequality gap perpetuates the problem of heirs property, and if adequate access to estate planning resources were available to those most vulnerable to partition—notably, African Americans—it can help property owners avoid these problems all-together.
In conclusion, the Black Lives Matter movement and states adoption of the UPHPA has provided national attention to the “Black Lands Matter” movement, which highlights that Black inequalities stem far greater than what one may naturally think.
Heirs property, while unstable, is a force that can be reckoned with. State legislatures, nonprofits, and law firm pro-bono services hold the power to expand property protections provided by the UPHPA, and if done, I argue that this has the potential to lower the inequality gap, and add even more validity, reliability, and accountability within the partition process.
[1] See Lizzie Presser, The Reels Brothers Spent Eight Years in Jail for Refusing to Leave It, ProPublica (July 15, 2019), https://features.propublica.org/black-land-loss/heirs-property-rights-why-black-families-lose-land-south/ [hereinafter Presser].
[2] Michelle Chen, Black Lands Matter: The Movement to Transform Heirs’ Property Laws, The nation, https://www.thenation.com/article/archive/heirs-property-reform/ (last visited Feb. 17, 2020).
[3] What is Heirs Property?, Heirs’ Prop. Retention Coalition, http://hprc.southerncoalition.org/?q=node/5 (last visited Jan. 28, 2021).
[4] See April Simpson, New Laws Help Rural Black Families Fight for Their Land, Pew Res. Ctr., (June 18, 2019) https://www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2019/06/18/new-laws-help-rural-black-families-fight-for-their-land.
[5] Id.
[6] See Lizzie Presser, How to Close Heirs Property Loopholes, Propublica, (July 15, 2019), https://www.propublica.org/article/what-can-heirs-property-owners-do-to-protect-their-land-loss.
[7] Id.
[8] Id.
[9] Restoring Hopes for Heirs Property Owners: The Uniform Partition of Heirs Property Act, a.b.a., (Oct. 1, 2016), https://www.americanbar.org/groups/state_local_government/publications/state_local_law_news/2016-17/fall/restoring_hope_heirs_property_owners_uniform_partition_heirs_property_act/ [hereinafter Restoring Hopes].
[10] Id.
[11] Id.
[12] Preserving wealth with Uniform Partition Heirs’ Property Act, Jacksonville Bar Association, (Sept. 3, 2020), https://www.jaxdailyrecord.com/article/preserving-wealth-with-uniform-partition-heirs-property-act.
[13] See Restoring Hopes, supra note 9.
[14] See Restoring Hopes, supra note 9.
[15] See Restoring Hopes, supra note 9.
[16] See Restoring Hopes, supra note 9.
[17] See Restoring Hopes, supra note 9.
[18] See Restoring Hopes, supra note 9.
[19] 2010 Partition of Heirs Property Act, Uniform L. Commission https://www.uniformlaws.org/committees/community-home?CommunityKey=50724584-e808-4255-bc5d-8ea4e588371d (last visited Feb. 6, 2020).
[20] See Carey L. Biron, Will power: Could property inheritance help close U.S. ‘wealth gap’?, Reuters (Nov. 12, 2019), https://www.reuters.com/article/us-usa-homes-inheritance/will-power-could-property-inheritance-help-close-u-s-wealth-gap-idUSKBN1XM17S (noting that more is needed to avoid heirs property problems entirely, and although not directly stated, one of these solutions could be increasing firm pro-bono initiatives for owners of heirs property to have better access to estate planning legal services).
[21] Id.