Excerpted From: Kendall B. Bargeman, The Heirs' Property Dilemma: How Stronger Federal Policies Can Help Narrow the Racial Wealth Gap, 27 North Carolina Banking Institute 320 (March, 2023) (196 Footnotes) (Full Document)


KendallBBargemanWithout the proper knowledge and preparation, a family that owns heirs' property could lose all of the resources they have invested for generations in their home. Heirs' property ownership is a complex social justice issue and financial burden for Black communities that inhibits homeowners from receiving assistance after their homes and land have been damaged due to an environmental disaster such as flooding. An accurate account of the amount of heirs property is difficult to determine because data on heirs' property is incomplete and only the onerous efforts of acquiring and processing county-level documents and directly engaging with landowners would disclose its real scope. In a 2017 land use policy article, Gaither and Zarnoch estimated that heirs' property accounts for approximately 30-40 percent of Black-owned land in the South. Heirs' property owners often have difficulty providing proof of ownership because property is typically passed down from generation to generation without a will or other legal document proving ownership. Consequently, the lack of a clear title for heirs' property limits Black landowners' ability to access bank loans and federal aid, such as aid provided by the Federal Emergency Management Agency (FEMA).

FEMA's Individuals and Households Program provides financial and direct services to eligible individuals and households affected by natural disasters. The program requires verification that the house listed on the individual's application is their primary residence, and that the home was owned prior to the disaster before they are eligible for either Home Repair or Replacement Assistance. To mitigate the obstacle that heirs' property brings, FEMA implemented several changes to its policy, such as expanding the forms of documentation that can be used to prove ownership or occupancy for homeowners and renters, which includes a self-certification statement. However, these changes are inadequate and present the owners of heirs' property with the same problems that had existed before the changes were implemented.

This Note argues that FEMA's solution to the aforementioned problem is inadequate. Part II explores the disparate impact of flood damage on various communities and the history and current implications of heirs' property. Part III assesses the obstacles that owners of heirs' property encounter with meeting FEMA's proof-of-ownership requirement when trying to obtain assistance after a flood. Part IV analyzes FEMA's policy changes and solution to the problem. Part V discusses why FEMA's policy change does not solve the problem that it is intended to address. Part VI provides proposals for resolving heirs' property documentation issues before disasters occur. Lastly, Part VII summarizes the argument and concludes this Note.

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Flooding devastates communities and causes damages to homes and property. FEMA provides financial and direct assistance to eligible individuals and households after floods and other natural disasters occur. One of the requirements is to prove ownership. This requirement can be particularly difficult to meet for heirs' property owners who lack clear title. Although FEMA has made changes to its ownership requirements, these changes are not substantial enough. Heirs' property owners must race to the finish line to provide additional documents if other heirs choose to submit a self-declaration of ownership. Owners also risk becoming victims of fraudulent schemes by bad actors who wish to make a profit from others' misfortune. When victims of natural disasters who own heirs' property are denied assistance and cannot afford repairs, their homes are at risk of condemnation and demolition, thereby further increasing the wealth gap.

FEMA can use disaster legal services to clear the titles of those with heirs' property and educate community members about resolving and preventing heirs' property. In addition to FEMA's initiative, CRA could potentially provide CRA credit to banks to educate the community on heirs' property. Also, the USDA offers funds to buy out fractional interests of other heirs in jointly owned property, but only to agricultural property.

It will likely take a variety of efforts from multiple federal agencies to tackle the complex and pervasive problem of heirs' property, which contributes to the racial wealth gap that persists in our country. However, the pre-existing federal mandates of FEMA, USDA, and the CRA provide authority and incentive for both public and private actors to get involved.