Ed Mullins (left), commissioner for the South Carolina delegation of the Uniform Law Commission, Professor Thomas Mitchell, and South Carolina Rep. James E. Smith, Jr., primary sponsor of the UPHPA in the South Carolina House of Representatives, with South Carolina Gov. Nikki Haley for the ceremonial signing of the Clementa C. Pinckney Uniform Partition of Heirs’ Property Act in Sept. 2016.
When a forced sale does occur, it often yields a sales price far below market value because the properties do not go through the traditional open market sale process. The listings for the properties are difficult to find; the partition sales are advertised for a very short period of time, often just once or twice in a two week period; and the advertisements of the sales are often in small print in the back pages of local newspapers in the legal section or even in the legal section of newspapers that are only available online.
“What usually happens is that very few people participate as bidders at these public auctions and the sale is often at 50 percent or less of market value,” Mitchell said. “So the heirs’ property owners walk away with their property rights extinguished and their real estate wealth stripped away in the process.”
Mitchell’s research shows these exploitive practices disproportionately affect African-American families across the country, as well as Hispanic and Latino families in the southwest, white families in many different regions of the country, and others including some Native American families.
The UPHPA offers three significant reforms to defend families against the exploitive real property practices that are playing out across the country:
- The cotenants who did not seek a forced sale must be given an opportunity to buy out the cotenant who petitioned to force the sale at a fair price.
- If a buyout does not resolve the issue, then a court can decide whether to order partition in kind or partition by sale. Before deciding, a court must take into account any evidence of the sentimental, cultural and historical value of the property, evidence of any cotenant’s special need to use the property, including if one or more cotenants will be rendered homeless by the sale, as well as various economic factors. In short, the UPHPA rejects an economics-only test in favor of a totality of the circumstances test.
- For those instances in which partition by sale is the appropriate remedy, a revamped sales procedure. Instead of continuing the use of the traditional forced sale procedures, which usually yield below market value and even fire sale prices, a court will appoint a disinterested real estate broker to list the property for at least the value determined by the court. This greatly increases the chances that heirs’ property owners, as a group, will receive compensation at or near the full value of their property.
Nevada, Montana, Arkansas, Alabama, Georgia, South Carolina, Connecticut, Hawaii, New Mexico and now Texas have passed UPHPA legislation since 2011. In addition to Texas, in 2017, Missouri, Mississippi and Washington D.C. have all introduced UPHPA legislation this year, and the law stands a good chance of being enacted in the District of Columbia. In June, Mitchell will deliver a keynote address in Atlanta at a conference co-sponsored by the Federal Reserve Bank of Atlanta and the U.S. Forest Service. He will address various heirs’ property issues, giving his bill even more attention and momentum. It also will provide new opportunities to address other areas of heirs’ property law and policy that his bill does not address.
“I’ve been working with a number of people and organizations to look at the problem of heirs’ property holistically and to highlight the various problematic manifestations of such ownership, many of which have not been adequately addressed,” Mitchell said. “I’m hoping to be able to leverage what I have been able to do on the policy and legal reform front and to work with many other important stakeholders to develop a white paper providing an action plan and setting forth possible solutions to address some of these other, heretofore intractable, heirs’ property problems.”
Media contact: Rebecca Walden, firstname.lastname@example.org, 817-212-3933
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