Addressing Vacant Properties and Tangled Titles

Scott Mooneyham, NCLM Director of Political Communication & Coordination

Earlier this year, a pending court case in Charlotte garnered plenty of public attention.

It didn’t involve a highly-publicized violent crime or a celebrity defendant. In fact, it wasn’t a criminal case at all.

Instead, the civil case involved what are referred to as heirs properties or “tangled titles.”

The family of a well-known African-American homebuilder from Charlotte, who had built dozens of homes in one of the city’s historically black neighborhoods in the post-World War II housing boom, was being taken to court. Mangie McQueen had left no will when he died in 2003, and now a developer who had acquired a one-third interest in a family-owned property from one heir was taking other family heirs to court to try to force a sale of the land, according to an article published in April in The Charlotte Observer.

Under North Carolina law, such court-partitioned land sales are not rare, but the McQueen family’s prominence in the city’s history and the developer’s maneuvering had caught the public’s eye.

In fact, according to one estimate, there is nearly $2 billion in so-called heirs property in North Carolina.

Heirs property is created when land is passed down to family heirs without a will, typically through more than one generation and involving many descendants whose collective interest in the property has not been divided. Often, the property’s original owners were poor or African-American, with limited access to legal help and the ability to establish a will, or even distrust of the process for fear that they could be dispossessed of the property.

Under current North Carolina law, those family heirs can potentially be forced to sell their interest in the property if someone purchases even a small interest in the property from a single heir.

“What this scheme does, if you will, is target people who are in dire financial straits,” said Rick Su, a professor at the UNC-Chapel Hill School of Law who specializes in land-use issues. “If there is no (family) buyout—and often the family members don’t have the resources—then it can often be bought at below market prices.”

That is because current law, in those circumstances, can then lead to a court-ordered partition-in-kind sale, with the house or property being sold at auction.

As many municipal officials are aware, the problems associated with heirs property do not stop with legal maneuvering that can cause families to lose long-held homes and property at below market prices. These tangled titles, with multiple heirs, can also cause properties to sit vacant for years or even decades, as resolving the various interests and even finding all living heirs can be difficult. Blighted property is one result. Another is that property which could have been useful for new housing or commercial development, sparking needed economic development, instead goes unused.

Finally, for properties with homes that are being lived in, when disaster strikes, it stays. Without clear title by the resident, a hurricane, flood or other natural disaster can mean that the family fails to qualify for FEMA or other disaster assistance.

Su said that, even as the problems associated with heirs property have existed for decades, the recent increase in housing prices seems to have caused an escalation in abuse of the current law. Properties that might not have seemed attractive a few years ago are no longer seen that way, leading to anecdotal evidence of an increase in people acquiring property interests and forcing the court-partitioned auction sales.

There is a solution, even if won’t solve every problem in every community for every family.

Twenty states—including Virginia, South Carolina, Georgia, Mississippi, and Alabama—have passed model legislation called the Uniform Partition of Heirs Property Act.

These laws create a fairer disposition process, allowing all heirs an opportunity to buy property before an outside party. They also create an orderly and easier-to-navigate process for families to clear up titles to heirs proper, meaning that vacant properties can be put back on the market. Also, the legislation makes it more likely that families could qualify for mortgages, home improvement loans and disaster assistance.

A key protection included in the bill is that an appraisal is required if there is a court disposition process, and then house must be placed on the open market at that appraised price. “So at least the family will get a fair price, even if they are forced to sell,” Su said. “This is not anti-development. Developers can still make their money.”

Similar legislation was introduced on a bipartisan basis in North Carolina in 2021. While the bill cleared the state House, it was not taken up in the state Senate.

The legislation is also supported by a range of advocacy groups. NCLM’s support was shown when members approved a legislative goal for the 2021–22 biennium reading, “Revitalize vacant and abandoned properties with enhanced legal tools and funding.”

As noted earlier, the legislation is not a panacea.

It still relies on the good faith of judges to follow the law’s intent to ensure that homes are sold in a true open market and to properly oversee any court special masters who are tasked with doing the same. It won’t fix the problem of individuals failing to create wills in the first place. And, local governments themselves may be able to help address some aspects of the problem, regardless of the passage of the law, as they influence the process in cases where tax liens are involved.

But there is a clear need for reform.

As the League of Municipalities’ policy process for the next biennium is taking place, municipal officials from around the state are again raising the issue of “tangled titles” and vacant properties.

It is highly likely that a significant push for passage of the model legislation to create better outcomes—for individuals, families, and cities, and towns—will place again take in North Carolina in 2023. This time, the legislation may cross the finish line, and become law.