Farm Bill, new state laws may ease burdens and pitfalls for owners of property left by ancestors who didn't write a will

New laws are making it easier for heirs of undivided property to hold onto it and make something of it, April Simpson reports for Stateline. The campaign has mainly been pushed by African Americans, many of whose ancestors died without wills, but the issue affects "a range of people and communities, from whites in Appalachia, to Native Hawaiians in Hawaii, to Latinos along the New Mexico-Texas border, to middle-income white families with poor estate planning, according to Thomas Mitchell, a law professor at Texas A&M University in College Station."

Simpson explains the background: "When property owners die without a will, their descendants, or heirs, share a claim to the estate — a situation known as heirs' property. But it takes only one heir who wants out of the arrangement to sell their share. They may need the money or no longer want to share in the responsibility of property ownership. Sometimes, there are so many heirs, dividing up the property into separate tracts isn’t feasible. An heir may force a partition sale, which means the entire property is sold. Oftentimes, a predatory developer scoops it up at a deep discount. Poor and disadvantaged communities have been the primary victims of partition sales," the “most unstable form of common, real property ownership,” according to the American Bar Association.

The 2018 Farm Bill made it easier for heirs' farmland to be returned to production, with "provisions for heirs to qualify for a USDA Farm Service Agency farm number — akin to a driver’s license for agriculture — which unlocks key programs and enables participation in local FSA elections," Simpson reports. But to make full use of those provision in a state, it must have enacted a Uniform Partition of Heirs Property Act, which "gives co-owners the opportunity to buy out heirs who want to sell their share. ... If a buyout doesn’t resolve the issue, a court may consider dividing the property between the owners or selling the property and dividing the proceeds equitably between the owners. . . . Open market sales, rather than auctions, are preferred to ensure a higher sale price."

The laws are not a panacea. In Mississippi, where a bill failed this year, Rep. Mark Baker, chair of the state House Judiciary Committee, told Simpson, “You’d always bring yourself back full circle to, what is the state of title? And, in whom are we going to confirm ownership so that we can begin the process in making a partition determination in kind or by sale?" He said few people want to buy an interest in undivided property unless they’re related to other owners.

But in some cases, the new laws have resolved untenable situations created by old laws, Simson reports: "Iowa had one of the country’s worst partition laws because these laws made a partition sale the preferred remedy even when the court could have ordered property physically divided, Mitchell said. But a dispute between two siblings who had inherited a nearly 500-acre family farm prompted a public outcry. The case went to the state Supreme Court, which affirmed a lower court decision that upheld the law by forcing a partition sale."

The laws come too late for most African Americans. "The changes came after roughly 85 percent of black-owned land with active farm operations already had been lost, in part because of laws negatively affecting owners of heirs' property," Simpson reports.