Who Owns It? Heirs’ Property in North Carolina

Tweet

Josephine Wright and the Hilton Head Property

Ms. Josephine Wright was a 93-year-old great-great-grandmother who lived on a 1.8-acre plot in Hilton Head, South Carolina.  The homestead had been in her family for nearly 200 years, given to her ancestors after the end of the Civil War.  The homestead was originally a sugar cane plantation owned and operated by an African American farmer in the 1860s.  Ms. Wright had lived in New York for most of her life, where she was a schoolteacher, and then retired to the family homestead with her husband in the 1980s.  Mr. Wright passed away in 1998, but Ms. Wright continued to live on the land with frequent visits from her grandchildren and their grandchildren, who cared for her in her old age and Parkinson’s disease.

By 2023, all the land surrounding Ms. Wright’s 1.8-acre plot had been purchased by Bailey Point Investments, a developer planning to build subdivisions in the popular vacation destination.  Bailey Point Investments had on several occasions attempted to purchase Ms. Wright’s homestead from her, but she had always refused.  Despite the persistent construction in her backyard, Ms. Wright was unwavering in her desire to remain in her family home.  Tensions escalated between Ms. Wright and Bailey Point as the developer continued to insist on purchasing the property, and the great-great-grandmother unquestionably refused.  Then, on February 16, 2023, Bailey Point Investments filed a complaint against Josephine Wright in state court seeking damages and an injunction against her under a theory of nuisance.

In Bailey Point Investment’s complaint, they alleged that Ms. Wright was not the legal owner of the property, even though her family had lived on the 1.8 acres for over 100 years.  It is not uncommon for people in Ms. Wright’s situation to have their ownership interest in their land challenged, especially when it is a large tract or significantly valuable.  This is also a common occurrence when the land was purchased or given to a family a long time ago, and the legal documents evidencing the subsequent transfers are incomplete.  The lawsuit sparked public attention, with several news outlets and social media platforms reporting on the situation and garnering support for Ms. Wright.

The History of the Homestead Acts

Ms. Wright is not alone in owning a homestead that traces back to the end of the Civil War; nearly 10% of American land can be traced back to transfers occurring in the 1860s.  During the Civil War, the American government realized that most of the agricultural production was still coming from southern plantation owners, a difficult reality for the Union, which depended on these products for food and supplies.  The North found it necessary to incentivize Union sympathizers to start up new farms and homesteads to provide resources to the Union army.  To do so, Abraham Lincoln signed the Homestead Act of 1862.  This Act provided that any eligible person could claim 160 acres of federally owned land for themselves so long as they met the eligibility requirements, paid a filing fee, and committed to use the homestead for farming.  During the first half of the 19^th century, the American government purchased millions of acres of land, which largely remained undeveloped until the 1860s.  Thus, the Homestead Act allowed members of the Union to claim large areas of land west of the Mississippi as homesteads and develop and cultivate the plots for the good of the Union.

While the Homestead Act benefitted the Union and northern homesteaders, it also provided severe challenges.  The land proved difficult to farm, leading the farmers to years of difficult work and poverty.  After the Civil War ended, another Homestead Act was passed in 1866, allowing land in the American South to be claimed as homesteads as a part of the “reconstruction” effort.  This Act, coupled with the ratification of the 14^th Amendment in 1868, caused a significant progression in American history.  While the former Homestead Act only applied to white Union Members, the subsequent developments gave African Americans the right to claim land in the Midwest and South for agricultural development and homesteads.  In total, farmers claimed 270 million acres of land through the Homestead Acts, roughly 10% of the United States.  Further, the NPS estimates that African Americans and formerly enslaved people claimed 650,000 acres of that land.  Another study showed that there are between 100,000 and 250,000 surviving descendants of the original African American homesteaders who claimed land under the Homestead Act.

While nearly 10% of America was given away as farmland in the 1860s, it has become increasingly rare to see situations where a single family has retained the land for the past two centuries.  In fact, one organization showed that African American landowners had lost 80% of their land from 1907 to 2007.  Land retention seems to be a problem at a national level, with the number of farms decreasing by 7% in the past six years alone.  A 2013 study conducted by Ohio State showed that only 10% of farms have been owned by a family for more than four generations.

What are the threats to generationally owned land, and how does the legal system aid in retention?

One significant issue addressed by the USDA and several other organizations is “heirs’ property.”  Heirs’ property is real property that has passed through intestate succession.  Intestate succession is a legal process that comes into play when someone passes away without leaving behind a valid will or other legally binding document dictating how their assets and property should be distributed.  This transfer can often happen successively, leaving (1) a deed showing an owner who died several generations ago and (2) numerous decedents holding a shared interest in the land through tenancy in common.  A deed is a legal document that transfers the ownership of a property from the seller to the buyer.  Tenancy in common is a legal term describing land that has several owners who own the property in equal parts.  The commonality of heirs’ property has not been measured nationally; however, some organizations have conducted more localized research.  The Center for Agricultural and Food Systems and NCAT conducted research that showed that 1.9 billion dollars worth of land in North Carolina alone is heirs’ property.  The USDA suggests that heir’s property is particularly prevalent in rural communities, including African American-owned land in the South.

A study conducted by the USDA showed that leaving farmland as heirs’ property has become a common practice among African American farmers in the South.  The study further suggested that such practices are just as common in impoverished communities, though further research is needed to make a conclusive statement.  Often, the practice of heirs’ property can continue for decades, leaving hundreds of descendants with ties to the original owner of the real property.  After the original owner has died without executing a will, the law views these relatives as tenants in common or owners of equal shares in the land.  While the law recognizes the property interests of the relatives, the deed may still have a previous person listed as the owner, which can cause several practical problems.  The law uses the term “clouded title” to reflect situations where the deed does not accurately reflect all of the interests in the land.

The most significant issue surrounding heirs’ property is that it devalues the land, which creates a cyclical problem since heirs’ property is most common in impoverished areas.

First, unpaid property taxes can devalue the land.  When there are numerous tenants in common with shared interests in the land, and not all of them occupy the land, tenants may encounter confusion surrounding who bears the responsibility for property taxes.  The USDA confirmed this fact in a report saying that property tax on heirs’ property is sometimes paid by individuals residing outside the state or, in some situations, not paid at all, resulting in a public auction of the land.

Second, partition actions can be brought by one or several tenants, which can lead to a physical division of the land or a forced sale.  If any of the tenants wish to separate their interests from those of their co-tenants, the land may be physically divided based on the tenant’s share.  In the context of farmland, land division can result in further devaluation.

Further, heirs’ property usually may not be used for collateral, which can lead to unproductivity and further devaluation.  Since the title to the land is “clouded,” it can be difficult for a tenant to obtain a mortgage or other loan on the property.  The law requires that all tenants in common sign on to a mortgage, which is nearly impossible if there are numerous tenants.  For this reason, many occupants elect to put mobile homes on the property because mobile homes can be financed with unsecured loans or are cheaper to buy outright.  However, mobile homes can be a difficult investment due to their depreciation over time.

These are only a few of the most significant issues surrounding heirs’ property.  Legal solutions are available for many of these issues, but the predominately poor recipients of heirs’ property have little access or financial ability to engage in legal representation.  However, recent legislation and pro bono work have created avenues for underprivileged owners of heirs’ property to find legal solutions.

Potential Solutions for Heirs’ Property Owners

Twenty-three states have adopted the Uniform Partition of Heirs’ Property Act, which has been introduced to the North Carolina legislature.  The Act seeks to make three changes in the way that courts approach heirs’ property.  First, the Act outlines a preference for partition in kind (a physical division of the land) when a tenant seeks to divide the land according to each tenant’s share.  The intent behind this suggestion is to prevent the land from being sold in situations where a total sale might leave one or more tenants homeless.  Second, if a court does elect to partition the land through a sale, the Act gives any tenant the option to buy the other tenants’ shares and prevent the sale.   Third, if a partition by sale is elected and no tenant wishes to purchase every share of the land, the Act advocates for the highest sale price possible.

Organizations, such as the NC Heirs’ Property Program, have been instituted to raise awareness for the issues surrounding heirs’ property.  The NC Heirs’ Property Program holds regular summits and workshops attended by attorneys to learn about the needs and solutions for heirs’ property in North Carolina.  Also, the North Carolina Bar Association has partnered with other law firms to form the Heir Property Pro Bono Project, encouraging local attorneys to engage in heirs’ property-related issues during their pro bono work.

The End of the Story

In June of 2023, after significant public pressure, Bailey Point Investments settled its case against Ms. Wright.  A group created a GoFundMe page after the initial report, and Ms. Wright received $350,000 to pay for legal fees and expenses.  Ms. Wright received the news that her family would be allowed to remain on the homestead six months prior to her death in January 2024.  However, organizations committed to resolving heirs’ property issues realize that not every case receives the same public attention, so they continue to advocate for policy changes at the legislative level.