Federal Reserve Bank of Atlanta. "Special Edition Podcast : Transcript : Heirs' Property," Economy Matters : Podcast (July 6, 2017). https://fraser.stlouisfed.org/title/8587/item/657299/content/pdf/frbatl_econMat_20170706-heirs-property, accessed on May 10, 2025.

Title: Special Edition Podcast : Heirs' Property

Author: Carpenter, Ann
Date: July 6, 2017
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image-container-0 ECONOMY MATTERS PODCAST SERIES Special Edition Podcast: Heirs' Property  00:00 24:47 7/6/2017 Ann Carpenter: Welcome to another Federal Reserve Bank of Atlanta's Economy Matters podcast. I'm Ann Carpenter, with the Atlanta Fed's community and economic development team. Heirs' properties are parcels of residential, agricultural, commercial, or even vacant land that are inherited by the descendants of a previous owner. Without a properly administered will, property is passed on to the owner's children, and then to their children, and then to other successive generations of children, and this default ownership structure is known as “tenancy in common." It can cause a number of issues for both families and communities, which we will discuss today. I'm talking with Thomas Mitchell , a professor at Texas A&M University School of Law, and with Cassandra Johnson Gaither , a research social scientist at the U.S. Department of Agriculture Forest Service's Southern Research Station. Thomas was the principal drafter of the 2010 Uniform Partition of Heirs Property Act, which is the most substantial legal reform effort in modern times to stabilize ownership of heirs' properties. Cassandra focuses her research on the intersection of heirs' property ownership and social vulnerability in the South, and its implications for national forest management. Cassandra and the USDA Forest Service cohosted a gathering of heirs' property experts on June 15th, 2017, with the Federal Reserve Bank of Atlanta. Thomas served as the keynote speaker of the event. This podcast will explore the problems associated with heirs' property in the South, and other issues raised at the event. Thomas and Cassandra, thank you for joining me today. Cassandra Johnson Gaither: Thank you for having me. Thomas Mitchell: Thank you for inviting me. Cassandra Johnson Gaither (left), a research social scientist at the U.S. Department of Agriculture Forest Service's Southern Research Station, and Ann Carpenter, a senior community and economic development adviser at the Atlanta Fed, with a concentration in affordable housing and neighborhood revitalization, at the recording of a podcast episode. Carpenter: First of all, can you both explain why property owned by multiple heirs is problematic? One might argue that it is fair to distribute your property equally among your kids.
image-container-1 Gaither: From my perspective, it's not a problem really to pass on property, real property, to subsequent generations. That's an ideal. That's what we're expected to do as Americans. But the problems come in in how that property is transferred. If that property is transferred in such a way that it's not very clear who the subsequent owners are, that's when the problems come in because one of the fundamental issues with heirs' property is the problem of actually identifying who the actual owners of these properties are. When that's unclear, lending institutions—for example, banks—are either reluctant to, or they absolutely will not deal with people who have property where the titles are quote-unquote clouded or unclear. So that's a huge problem when it comes to heirs' property. Mitchell: Right. And I'd say that, in addition to the problem with clear title, which is certainly a huge problem with heirs' property ownership, heirs' property ownership assumes in most cases that the property is transferred without a will—we call that “by intestacy." So as Cassandra has indicated, there are all kinds of problems when you cannot identify who each of the members are in a group who collectively owns a property. In addition to that, when one compares that to property that passes down when there is a will, in the absence of a will, property tends to get passed down to many more people over the generations. One of the problems with tenancy-in-common ownership, under the rules that the state will give you, if you don't make provision otherwise—in a will or some other type of document—the property can be incredibly unstable in terms of its ownership because state law allows just one of the common owners to file a legal action called a partition action and request a court to order a forced sale of the property. Even if all of the other common owners do not want the property forcibly sold, the property still can be sold. So that's the problem of unstable ownership, and heirs' property is widely recognized to be the most unstable form of common ownership of real property that the law recognizes in the United States. The third problem, in addition to unstable ownership—lack of clear title—is that tenancy in common ownership under these rules that the state will give you—we call those the default rules—does not do anything to allocate rights and responsibilities among the common owners, which frequently leads to disputes among those heirs or common owners, or it results in the property being paralyzed so that it's often just sitting idly and not working in any kind of economic sense, or other sense, for the family. Gaither: I think what Thomas and I are both really referring to—we haven't said it explicitly—is that when property is classified as heirs' property, it really has a negative impact on people's ability, families' ability, to generate wealth, to increase their wealth base. I mentioned earlier that banks are reluctant to accept property, real property, that's classed as heirs' as collateral for home improvement loans, for example. Also, public agencies—the federal government—will not offer home improvement loans or agricultural loans, for example, to homeowners or land owners that have property classed as heirs' property. For example, the Natural Resources Conservation Service (NRCS)— it offers a category of—not loans but grants, if you will—with the acronym EQIP (E-Q-I-P), which stands for Environmental Quality Incentives Program . This funding is available for conservation purposes, but again, if these rural land owners do not have clear title to the properties, then that assistance is off limits. So those kinds of things, those situations, really have an impact then on people's ability to maintain their property, to just use their property to generate further wealth. Carpenter: So moving on: I've noticed that in the research, much of the focus has been on heirs' property in the rural South. Could you explain why this is, and what some of those major findings are? Gaither: Most of the research I might even say almost exclusively has focused on the problem of heirs' property as it affects rural African Americans, primarily in the Black Belt South, and the reason for this focus is likely the fact that, because of the predominance of African Americans in this part of the country, in this part of the South, because of their numbers and their history, and their embeddedness in this place, a lot of attention then is focused on the financial situation, the wealth situation, the social situation, of these populations. And because of decreasing property ownership, the decline in the amount of real property or land that African Americans have held since the beginning of the 20th century, people are looking around to try to find out what are some of the reasons for this decline, and heirs' property has been identified as a potential, or a possible, culprit, a factor that has contributed to land loss among African Americans. So I guess from that very high-profile situation—the land loss among African Americans in the South, and the reasons for it related to heirs' property—a lot of the research has focused on African Americans. There's also been some work that has looked at this issue for folks in Central Appalachia, but to a much lesser extent. Mitchell: Yes, and I would say, in addition to what Cassandra indicated, that with respect to African Americans generally: African Americans disproportionately own heirs' property, and that comes back to what is a racial differential in rates of intestacy in this country. The overall rate of intestacy in this country is something about 40 percent. However, in the African American community, their rates of intestacy are in the low 80s. So African Americans are just differently situated in terms of their passing property by intestacy at twice the rate of the national average—which makes their ownership, given some of the legal rules, much more unstable. The problem with heirs' property certainly includes African American rural land ownership, but that's not the complete universe of people who have had problems with heirs' property. Carpenter: Could you describe some of those other contexts, other regions of the country (or even urban neighborhoods), that are also experiencing heirs' property issues? Mitchell: As Cassandra has noted, there are heirs' property problems in different parts of Appalachia. I think in some ways that problem has played out a little differently than it has with African Americans because there is not the evidence that the heirs' property problem in Appalachia has been as much of a source of land loss as it has been in the African American community—but the other problems of heirs' property ownership certainly apply in that particular context. And then, in urban neighborhoods, you're going to have heirs' property because it's a function of people being poor, being relatively unsophisticated, and often having a lack of access to legal services. And that is not along an urban rule or suburban-urban divide. That's going to impact people who own property who are poor, unsophisticated, and often have a lack of access to legal services. Carpenter: So we've really established that heirs' properties are a major issue, particularly here in the South. Can you talk about what's currently being done to manage existing heirs' property, and limit this land loss that you're talking about? Mitchell: Sure. I think in terms of legal reform—I was the principal drafter of the Uniform Partition of Heirs Property Act, which is a uniform act that I
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Date: July 6, 2017

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When grandma dies without a will, property is passed on to her children, and then to each successive generation. Listen to experts discuss the complications of heirs' property in a special edition episode.
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