Posted by By Andrew Balaban, Staff Writer
On December 6, 2019, Governor Andrew Cuomo signed the Uniform Partition of Heirs’ Property Act (UPHPA) into law. New York is among the 18 jurisdictions to have adopted the act. Its widespread implementation, among other measures, will be crucial to the future of landownership, specifically African American landownership in the United States.
In the decades succeeding the Civil War, African Americans obtained vast amounts of farmland. 45 years after the thirteenth amendment was passed, 925,000 American farms were owned by African Americans. However, this accumulation of land did not last. By 1975, only 45,000 black-owned farms remained in the United States. Over the last 15 years, black homeownership rates have remained lower than white, and overall homeownership rates. While varying legal and extralegal practices led to such immense, involuntary losses of land, a major culprit is a category of ownership known as heirs’ property.
“Heirs’ property is properly thought of as a subset of the largest category of what we call common real property ownership in the United States,” says Thomas Mitchell, a law professor at Texas A&M University, and national expert of black landownership in the US. “Common real property ownership is where a group of people own property collectively.”
Heirs’ property falls into the category of undivided ownership, meaning tenants own a share of interest in a property. Everyone with interest in the property has access to the entire property and is supposed to pay a share of the property taxes. According to Mitchell, “It’s kind of like owning shares in a corporation.”
What differentiates heirs’ property from other forms of common real property ownership is how the owners come to acquire it. When an owner of a property dies without a will, each state’s law of intestacy determines who inherits the property. For example, in the state of New York, if an intestate spouse dies without children, their spouse will inherit the entire estate. If that original owner had a spouse and children, the spouse would receive the first $50,000 worth of the property and 50% of the remaining interest in the estate, and the children would receive everything else. This intestate succession is what makes heirs’ property distinct.
“What tends to happen with heirs’ property is it’s not just from the initial owner to their descendants, their descendants tend not to have wills,” says Mitchell, “and so over the course of multiple generations, what you end up having is oftentimes a lot of people in the ownership group.”
This form of ownership is incredibly unstable. This is because any tenant (co-owner of a property), no matter the size of their share can file a partition action if they wish to leave the ownership group. A tenant can request a “partition by sale” wherein the entire property is sold and the proceeds of the sale are distributed proportionately according to the size of each tenant’s share. If the land is used for agriculture, an owner might lose their primary asset; if it is residential, a tenant may be rendered homeless.
A partition action doesn’t need to be filed by a family member. In some cases, it will be perpetrated by predatory real estate investors. An investor can buy a share in a property from a distant heir, then file a partition action to purchase the property well below the market value.
“All of a sudden you have, sometimes a family member, but sometimes a real estate investor [or] developer who bought out a very small fractional interest of some distant family member…file this action, court orders the forced sale, says Mitchell.”
There is another option, apart from partition by sale. A property, especially large agricultural land could be divided physically, through partition in kind. However, Mitchell stated, “The problem is, in a lot of states…if we’re dealing with bigger land, like agricultural land or rural land, even in the cases where a court easily could’ve physically divided the property, and even though the physical division in those cases was supposed to be the preferred remedy, courts started routinely ordering the forced sale.”
- In The South
Heirs’ property is frequently thought of as a rural, Southern phenomenon. While this is not exactly the case, heirs’ property is prevalent in the South, as it comprises roughly one-third of Southern black-owned land.
Southern heirs’ property typically came into possession after the Civil War, after efforts were made to give former Confederate land to emancipated slaves. Much of this Southern heirs’ property is farmland, so land is often the primary asset of many heirs’ property owners. This land also bears cultural value to many of the families with land in heirs, as it has been in their families for centuries.
“You have families who had owned properties for multiple generations, sometimes African American families who literally acquired ownership within just a few years of the end of the civil war, [and] had owned the property say from 1870,” Mitchell says.
Loss of land is not the only threat facing these owners. Heirs’ property lacks a clear title, a term that means the owner(s) of a property can prove they are the current owners of the land (they have their name(s) on the deed). Since heirs’ property has been improperly probated, often, the original owner has their name on the deed.
In the absence of a clear title, substantial restrictions are placed on what owners can do with their land. They are limited in their ability to apply for loans from federal agencies, such as the United States Department of Agriculture, and the Federal Emergency Management Agency. For decisions about the property (including measures like constructing a building, which would improve property value) to be made, every living heir needs to be tracked down and agree to the measure. This could be extremely difficult, depending on the number of co-owners a property has. Because the property has usually been in a family for generations, heirs’ properties can have hundreds of tenants, who each own minuscule shares in the land. These restrictions make it challenging for property owners to increase property value.
“To actually do something meaningful with your tenancy in common property, that’s the broader form of ownership, you have to get 100% agreement from your fellow owners,” Mitchell affirms, “that basically makes it nearly impossible for a lot of these families to come to proceed with using their property in a more productive way.”
The act of clearing a title is possible, but also requires tracing down every living heir, and can be a costly endeavor.
- In Urban Areas
While most attention around heirs’ property focuses on rural land in the south, heirs’ property is also a major issue in cities.
“Heirs’ property is not just a rural phenomenon, it’s also an urban phenomenon,” says Mitchell, “I’ve been saying that for years…but because so little had been written about it by academics, there had been so little media attention, really the only academics who wrote about it… always focused on African American families, who had property in the rural South.”
The differences between urban and rural heirs’ properties mostly have to do with their sizes and values.
“In the South we’re really talking about undeveloped land and large tracts,” says Scott Kohanowski, the Director of Homeowner Stability for the City Justice Bar Center. “So, it might be farmland or coastal land or timberland, and you know, could be 50 acres or 100 acres, and there might be…an old house on it or a farm or something like that…but we’re really talking about a lot of land. Whereas [in] a place like New York City or the suburbs in New York City, there aren’t large tracts of undeveloped land like that, and it’s really just homes sitting on these small parcels, and a lot of times these parcels are not even an acre.”
Property values in cities, such as New York City are also much greater than in Southern areas.
An article, published by NY1 in 2019, documented a case involving a co-tenant named Ahmasi Lloyd, who jointly owned a house in Queens with his two brothers. When a real estate investment company, the Jai Group, discovered Lloyd’s brothers, who lived in Pennsylvania, they swooped in and bought their shares.
“Because you know, the home was probably worth…between $800,000 and $1,000,000 and there’s no mortgage on it, which means that there’s a ton of equity,” says Kohanowski, “because of that…all these people out there who are trying to make a quick buck…targeted this property and…found the two brothers that lived in Pennsylvania and they approached them, and…purchased their interest for far less than what they’re really worth.”
The Jai Group ended up buying out the property for $525,000 and it was sold in 2017 for $900,000.
NY1 found that in 2018, eight partition actions were filed against these types of homeowners in the Bronx and Queens, but as Kohanowski points out, these numbers might not be fully representative.
“There’s a ton of heirs’ property. We know that for a fact,” Kohanowski says. “…How much of that heirs’ property is being targeted by these kinds of predatory investors, we don’t really have a good idea.”
As of now, courts in New York City don’t have a way of categorizing partition actions the way they would categorize other property issues like foreclosures or contract disputes. Because of this, courts can’t keep an accurate record of how many owners of heirs’ property are impacted by partition actions. Kohanowski is currently working with courts to revise this insufficient record-keeping. Until then, we do not know exactly how many people are impacted by heirs’ property in New York City.
“I know that it happens quite a bit, but I don’t know if we’re talking about 50 properties a year or 1,000 properties a year,” says Kohanowski.
- Solutions
Until recently, heirs’ property wasn’t focused on by legislators or the press. Apart from a few exceptions, such as the Associated Press’ expose on black land loss in 2001, heirs’ property had been largely ignored.
As Mitchell says, “Studying the issues that socially, economically disadvantaged African American families in the rural South face was just not considered a prominent property issue to be focusing on.”
In recent years, that has started to change. Black land loss and heirs’ property have been covered by major media outlets, such as the New York Times and The Nation. The issue is also starting to pick up steam with legislators.
Currently, the most important piece of legislation regarding heirs’ property is the UPHPA. This act was the result of the American Bar Association’s Property Preservation Task Force. The task force, headed by Mitchell, submitted a proposal for a law dealing with heirs’ property to the Uniform Law Commission (a non-profit that aims to provide states with “non-partisan, well-conceived and well-drafted legislation”). The Uniform Law Commission accepted the proposal, and appointed Mitchell as the primary drafter of the proposed law, and in 2010, the UPHPA was finalized.
The UPHPA contains three “pillars”. The first pillar helps prevent forced sales by allowing heirs to buy the interest of whoever filed a partition action. When someone orders a forced sale, it indicates that they want money, so the first pillar would let that co-owner make money off their interest and leave the ownership group without forcing the sale of the property.
“Under the Uniform Partition Act, the other owners who want to maintain ownership of the property have a right to purchase the fractional interest of the party that is asking for the forced sale,” Mitchell says of the first pillar.
An important thing to keep in mind about the nature of these partition sales is how courts come to decide whether to force the sale of property. Mitchell describes the process as an “economics-only approach.” Basically, if the value of an entire piece of land is greater than the summative value of each section of land were the property to be physically divided, the court will favor the forced sale over the physical partition. The second pillar would increase the likelihood of a physical partition.
“The second pillar of the Uniform Partition of Heirs’ Property Act rejects this economics only approach and what we substitute that with is what we call a totality of circumstances,” asserts Mitchell. “So, it’s a multipart test that a court has to consider. And it includes factors that are both economic factors but also factors that are not economic, like longstanding ownership in the family, does the property have some independent cultural or historical significance?”
The third pillar of the UPHPA deals with heirs’ property in urban areas, where, due to the size of residential housing, physical partition is unviable.
“The third pillar does recognize that in a subset of these partition actions that the most appropriate remedy actually is the forced sale,” Mitchell says.
In accordance with the UPHPA, buyers who seek to file a partition action must go through a sales procedure most likely to produce a sale nearer to market value. This means the sale should take place through open market biddings, rather than through auctions. This pillar is designed to deter predatory investors from buying up heirs’ property for well below market value and flipping it for a profit. It also would make it so that if heirs’ property is forcibly sold, heirs would still retain a substantial portion of their real estate wealth.
The mere fact that the UPHPA exists as a piece of legislation is a massive step forward in regard to property rights in the United States.
The UPHPA has also had vast legislative success. It has been passed in 18 states and the U.S. Virgin Islands and has been introduced in seven states. Many of the states that have passed the UPHPA are in the South, including Mississippi, Alabama and Georgia.
“The fact that Mississippi passed it last year, I still find stunning,” Mitchell says.
The Uniform Law Commission is currently working on legislation to allow heirs’ property owners to make major decisions about their property without requiring the consent of 100% of the heirs.
“So far it’s [had] mixed results, because the law has been in effect for about a year and a half, and during most of this time…we’ve been in this lockdown for COVID,” says Kohanowski, regarding the effects of the UPHPA in New York City. He indicates that court practices have not yet caught up to the law, but it has increased the bargaining power of heirs.
On top of legislative measures, other factors are necessary in reducing the devastating impact of heirs’ property. One of these is the availability of free legal services and education. One South Carolina-based nonprofit, the Center for Heirs Property Preservation, does just that.
“Our services are broken down into…what we call 3 buckets of work”, says Alexa Stephens, Director of Outreach for the Center for Heirs’ Property Preservation. “The first bucket is prevention, our second bucket is resolution, and our third is land utilization.”
Services provided by the Center for Heirs Property Preservation have helped resolve 285 title issues since 2005.
“We have attorneys on staff that provide legal education, seminars, and presentations,” says Stephens. “We also have what we call wills and heirs property clinics. So that’s really…helping to provide community members with information on the importance of wills to prevent the development of heirs’ property. But also providing the community at large with education on…responsibility and risks that are associated with owning heirs’ property. Both from the perspective of trying to resolve the heirs’ property, (convince people to come to our center…to resolve the heirs’ property) but also so that they understand the importance of not creating heirs’ property. So really, doing that proper estate planning and having the will so that that land does not end up as heirs’ property in the future.”
Heirs’ property has had a considerable impact on African American landowners. Census data indicates that since 1910, about 80% of black owned land has been lost due to heirs’ property.
“It’s kind of a present manifestation of Jim Crow,” Mitchell says. “It’s like they fell into this ownership often because of Jim Crow and now they’re stuck in this ownership—the same type of ownership that they would have been relegated to under Jim Crow.”
While legislators are starting to take the problem seriously, more efforts need to be taken on state and federal levels to resolve existing title issues, which have led to widespread land loss and legal struggles for African Americans. More efforts also need to be taken on a local level to prevent the continuation of this cycle of intestacy.
“I do think that it is an important issue that we need to continue to look at,” Stephens adds, “…and continue to build policies that will protect people, protect heirs and will also prevent the development of more heirs’ property because from my perspective, [it] is entirely preventable with…education and…knowledge.”
Featured Photo: USDA
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