Advisors: Spot heirs’ property risks to $243B in land wealth

A report from the Urban Institute estimates about $243 billion in U.S. land and home value is at risk because of heirs’ property, where land or homes are owned by multiple relatives without clear title documents. The study says unclear ownership can allow a single co-owner to sell an interest to an investor and trigger a court-ordered sale of the entire parcel.

Researchers estimate 3.8% of property owners show tangled titles or early indicators of them, a share that translates into the $243 billion figure. Heirs’ property appears more often in low-income neighborhoods and among Black and Hispanic homeowners, and it is present at elevated rates in some low-income white areas, including parts of Appalachia.

Investors who purchase a small interest in a tenants-in-common arrangement can file a partition action seeking sale of the whole property. Thomas Mitchell, director of the Initiative on Land, Housing & Property Rights at Boston College Law School and author of the Uniform Partition of Heirs’ Property Act (UPHPA), told an Urban Institute event that courts have shifted toward forced sales as the common remedy. He said those sales can occur at steep discounts, producing results 30% to 60% below market value in many cases.

At least two dozen states, plus the District of Columbia and the U.S. Virgin Islands, have adopted versions of UPHPA. The law limits third-party sales and offers alternatives such as buyouts or partition-in-kind, which favor keeping land within families. Georgia adopted the law in 2012; the Urban Institute paper examines outcomes in Atlanta, where heirs’ property clusters in neighborhoods with rising incomes and gentrification.

The report lists ongoing barriers for heirs’ property owners. Tangled titles can block access to loans and grants for repairs. Many families cannot afford to buy out other heirs or to hire attorneys to clear titles and represent them in court. Interviewees described cases of so-called probate fraud, in which investors allegedly submit documents on behalf of a single heir and then claim no other heirs exist, enabling the investor to obtain clear title. The researchers recommend more data collection and comparative studies across states that have and have not adopted UPHPA.

The report calls on financial advisors to recognize common red flags, such as sudden unsolicited offers for a property, conversations revealing land held by multiple family members, chains of title with missing probate documents, or clients denied loans because ownership is unclear. Advisors are advised to refer clients to lawyers who specialize in heirs’ property and to avoid practicing law beyond their licenses.

Whitney Knox Lee, founder of Wills for the People, said many clients believe a simple will that leaves land ‘to my five children’ is sufficient. She warned that such language often creates heirs’ property and can lead to conflict when an owner dies.

Olivia Barrow Strauss, vice president of neighborhood development at JPMorgan Chase, noted the bank has donated $16 million since 2023 to community groups, legal service providers and researchers working on heirs’ property awareness and assistance. She linked secure homeownership to financial stability and said the bank has supported passage of UPHPA in several states.

The Urban Institute recommends more legal training for practitioners and better outreach to affected families. The report states that UPHPA provisions provide protections for heirs’ property owners, but their effectiveness depends on access to affordable legal services and clear information about ownership and estate planning.