USDA puts $67 million to new program for heirs’ property owners

The Department of Agriculture on Thursday will announce $67 million in funding for owners of heirs’ property, aiming to address a leading cause of land loss among Black and low-income farmers. The money will be distributed through the agency’s new Heirs’ Property Relending Program (HPRP) that Congress directed the USDA to create in the 2018 farm bill.

African American, Indigenous and Appalachian families have often been owners of heirs’ property, which occurs when a landowner dies without a will. The heirs jointly inherit the land without a clear title, but any heir has an equal right to force a sale of the land. These families have often faced financial obstacles in attempting to clear their land titles and were taken advantage of by predatory developers who would buy out one heir to force a sale. In the South, according to one estimate, more than 50 percent of heirs’-property owners are African-American, many of them the descendants of slaves and sharecroppers.

With the new USDA funds, heirs’ property owners can use money received through the HPRP to clear their titles by buying out other heirs’ shares of the land, or for legal, appraisal, and other fees associated with title reconciliation. The money can’t be used to improve or develop the land or for operating costs.

USDA’s Farm Service Agency will select community development financial institutions (CDFIs) to distribute the money in the form of loans to heirs’ property owners to resolve ownership, title, and succession issues. The agency will require that the selected CDFIs have at least 10 years of experience working with farmers of color and beginning farmers.

“Our belief and hope is that these organizations will be able to create a revolving loan fund, where, over time, fractionated interests will be consolidated,” Secretary of Agriculture Tom Vilsack told FERN’s Ag Insider in an exclusive interview.

If the program is successful and there is high demand, Vilsack said the agency hopes to renew it, perhaps at a higher level of funding.

“The key here is for it to work,” he said. “When it works, we can go back to Congress to appropriate more money… it’s trying something, learning from it, and perfecting it.”

Dãnia Davy, director of land retention and advocacy at the Federation of Southern Cooperatives, said the organization is “confident many Heir Property-owning families will be able to secure affordable, low interest loans from the Heir Property Relending Program to keep their land in their family, consolidate ownership interests, prevent unwanted partition sales and improve their land’s productivity in order to promote and protect rural wealth for generations to come.”

In a press conference announcing the program Thursday morning, Georgia Sen. Raphael Warnock said the HPRP, which he called a “critical step,” would have a real impact for Georgia farming families that have struggled to keep their land and build generational wealth because of title and ownership issues.

“For too many farmers in Georgia, a lack of proper legal documentation threatens their ability to keep the farm in the family and then to securely pass that land on to their children,” he said. “Heirs’ property is a real and direct threat to land ownership and the ability of these farmers to build intergenerational wealth for their families.”

“This is certainly a step forward,” says Josh Walden, an attorney with the South Carolina-based Center for Heirs Property Preservation. “If the primary issue [for landowners] is the immediate availability of funds, this will certainly help.”

Walden expressed concern, though, that the program’s use of loans — which typically require collateral and accrue interest — could present a financial obstacle to the historically underserved communities that most often own heirs’ property.

“It may be a better allocation if it was a grant of some kind, or that money was going to organizations who provide direct services,” says Walden. “You don’t want to quell the desire to solve the problem, but there are some practical considerations that needs to be addressed.”

Vilsack said that the program relied on loans because that was what Congress authorized in the 2018 farm bill, and because “if you do this, in theory, you ought to be able to relend [the funds] multiple times.”

He also noted that community-based CDFIs could more successfully reach heirs’ property owners than USDA, especially given the historic distrust of the agency among Black and other marginalized farmers.

“We need at USDA to reestablish trust, and it’s not something that can be done overnight,” he said. “The hope and belief is that over time, [HPRP] will create stronger bonds [and marginalized farmers] will see the benefit of doing business with USDA.”

Lenders will set the terms and rates of loans, with more information on the lending programs coming later this summer, USDA said.

The program will also aid heirs’ property owners who have been blocked from participating in USDA programs because of difficulty obtaining a farm number, which has historically required clear documentation of land ownership, said Georgia Rep. Sanford Bishop at Thursday’s press conference.

“A farm number is fundamental to those operating farms and it makes them eligible for a wide range of USDA programs from lending to disaster relief, which are crucial to their success,” he said. The 2018 farm bill made it easier for heirs’ property owners to get a farm number, “but resolving succession questions can remain an obstacle for heirs’ property operators, many of whom may not have the financial means proper legal services.”

While heirs’ property often affects Black landowners, the issue is most closely tied to a family’s wealth and whether they can afford an attorney to draw up a will and land succession plan. Experts say heirs’ property has been common in many Native American and Appalachian communities over the past century.

“What we’re looking at [with HPRP] is a program that recognized that this issue of heirs’ property cuts across geography and race,” Vilsack said.

Though USDA’s program will not have an explicit geographic focus, Vilsack said that it’s possible more lenders will apply in regions of the country that have a higher concentration of heirs’ property, like the Southwest and Southeast.

Nineteen states have enacted a law, called the Uniform Partition of Heirs Property Act, that helps to protect heirs’ property owners from a forced sale. Six other states and the District of Columbia have introduced the bill.

FERN investigated the issues facing heirs’ property owners in a 2017 feature for the Nation, and covered the inclusion of heirs’ property issues in the 2018 farm bill.

This story has been updated with material from Thursday’s press conference.