This is Part I of our series on heirs’ property. See Part II, “Providing legal aid in rural South Carolina to build family wealth and prevent vacancy” here.
What happens to a property after its owner has passed on?
In many cases, if the owner doesn’t leave a will, the answer may be unclear, leaving the property with a clouded title and an uncertain path forward. If the title is not passed down for several generations, responsibility and ownership can become obscured, and the property can develop what’s called a “tangled title.”
In Philadelphia and many other cities, particularly in low-income communities and neighborhoods with a large number of senior households, this has become a major problem. With the help of Philadelphia VIP, a nonprofit offering pro-bono legal services, and their tangled title program, residents facing these issues have been able to secure clean title for their homes. Their aid also empowers elderly homeowners to prepare wills so that the title to their property remains clean after their passing, and their homes do not eventually become vacant or blighted.
We were lucky enough to ask Roxane Crowley, Supervising Attorney at Philadelphia VIP, and coordinator of its homeownership (tangled title) project, a few questions about her work. Here’s what she had to say:
What are heirs’ properties, and what challenges do they present to Philadelphia?
An heirs’ property is piece of real estate where the record owner of the property is deceased and the heirs assume ownership of the property without obtaining legal title (a deed) through the probate and administration of the estate. Most commonly these are homes occupied by families – Great-granddaughter is raising her children in a home titled in her great-grandmother’s name.
When title has not been transferred for several generations, we call it a tangled title because it can be difficult to determine the heirs of the record owner. Often great-granddaughter is one of several heirs with a legal right to the property. To make great-granddaughter the sole owner, the record owner’s estate has to be raised, and all heirs have to be located and convinced to sign over their interest in the property to great-granddaughter.
A 2007 study conducted by Philadelphia VIP and the University of Pennsylvania’s Cartographic Modeling Lab found that over 14,000 properties in Philadelphia were owned by a deceased person. The vast majority of these properties are not vacant. The heirs of the deceased record owners are living in them.
Heirs’ properties create serious consequences for low-income Philadelphians. Without legal title to their homes, heirs cannot:
- obtain a grant or loan to make urgently needed repairs;
- enter into a permanent payment plan for delinquent water/sewer or real estate tax bills, in order to avert a Sheriff’s sale of their home;
- negotiate with a mortgage company as to a delinquent mortgage;
- obtain homeowners’ insurance; or
- transfer or encumber title in the future
Consequently, heirs are often left with the nearly impossible choice of living in unsafe conditions or becoming homeless. Unresolved tangled titles may eventually lead to foreclosures and Sheriff’s sales, if delinquent bills relating to the property cannot be negotiated. Because of these consequences, tangled titles due to unprobated estates may ultimately deprive individuals of the only asset that could prevent them and their future generations of sinking more deeply into poverty.
See an example of Philadelphia VIP’s work below
How can heirs’ property lead to increased vacancy and abandonment in cities?
The impact of heirs’ properties reaches the broader Philadelphia community because of vacancy and abandonment. When an individual living in an heirs’ property is forced to leave a property due to her inability to repair it, for instance, the property is left abandoned and in significant disrepair. Vacant homes are prone to attracting criminal activity and also pose safety and fire dangers. The City may board up or demolish such homes largely at taxpayers’ expense due to the City’s inability to collect the costs through the sale of a valueless property. Abandoned properties also decrease the value of other properties on the block by an average of $7,000 and may prevent other homeowners who live within 50 feet from obtaining homeowners’ insurance due to the heightened risks. Heirs’ properties also contribute to the occurrence of homelessness in the City further straining very limited City resources.
What barriers do older homeowners in cities face to ensuring that their properties retain a clean title after their passing?
Senior homeowners with a clean title need estate plans, particularly wills, to ensure that their homes pass to beneficiaries of their choosing. Many seniors live on minimal, fixed incomes and cannot afford the significant cost of obtaining even a simple will. Senior Philadelphians have access to free wills though the public interest legal community, but due to staff and funding shortages, there are often waitlists for such services and/or only a limited number of “wills clinics” can be held annually. The health status of many seniors also makes it difficult for them to access resources. A significant number of older homeowners are homebound or have limited mobility. Such physical limitations make accessing free legal services even more challenging.
Even if a senior with clean title dies with a will, there is no guarantee there will be enough money in the estate to probate and administer it. The beneficiary may not have the funds to cover the costs either. As a result, the title become tangled due to a lack of financial resources.
How can local governments or nonprofits help clean “tangled titles” and prevent new cases from occurring?
Tangled title is a consequence of deep poverty over many generations. Nonprofits cannot help low-income clients resolve tangled titles without the support of local and even state governments. To resolve and prevent tangled titles, there must be education about the problem and its consequences, funding for legal services to create tangled-title programs, and financial support to cover the out-of-pocket costs of these cases.
Frequently our clients do not realize they have a tangled-title problem until they experience an emergency, such as a water shut-off or a Sheriff’s sale. Only then do they learn they need to be the record owners of their homes to have the standing to resolve the emergency. By educating the community about tangled title and where to get help, the problem can be resolved before people face losing their homes.
Next, people with tangled titles need access to free legal help. Many legal services agencies are running on fumes; there is not enough financial support to run programs to meet the client demand of any kind. Tangled title programs are time intensive and require expertise. This comes with a cost. State and local governments and grant-givers need to recognized the importance of tangled-title issues and fund these programs.
Finally, there are significant case-costs to resolving a tangled title. Such costs may include: probate and estate administration fees, inheritance tax, transfer taxes, recording fees, advertising fees, and delinquent utilities and real estate taxes. These costs are one of the primary reasons low-income Philadelphians have not resolved their tangled title cases; they cannot afford them. Nonprofits and City governments need to work together to waive or reduce these costs. Advocates in Philadelphia have received tremendous support from the City to this end.
For example, the Commissioner of the Philadelphia Department of Records has graciously waived the deed recording fees for clients of public interest law firms for nearly 10 years. (We are still advocating for the Register of Wills to waive the probate fee for low income petitioners by recognizing their in forma pauperis status.) In addition, the City’s Office of Housing and Community Developing (OHCD) funds the Tangled Title Fund (TTF), which is a grant program administered by Philadelphia VIP. Legal service attorneys and their clients apply to the fund for grants to cover the costs of their tangled title cases. The average TTF recipient receives $1,200 toward the costs of resolving her case. Without such financial support and fee waivers, the legal community would have no financial means to resolve their clients’ tangled title cases.
Untangling a title takes a tremendous amount of time and resources, but it is essential. A successful case helps an individual client, her future generations, and the entire community.