As wealth inequality remains stark, fueled in part by racial differences in homeownership rates, attention is increasingly turning to a lesser-known area of property ownership - heirs' property.

Heirs’ property refers to land that’s been passed down by inheritance, with no formal will or other legal documentation proving ownership.

Without any clear way to prove ownership, those who inherit heirs’ property may lose it to predatory investors or the government. Or it may become divided into such small parcels as it passes through the generations that it becomes essentially worthless.

Heirs’ property is an issue that disproportionately afflicts Black households, particularly in southern states. Because of the lack of documentation, it's impossible to quantify how much land is considered heirs' properties, but a 2023 analysis from Fannie Mae suggests at least $32 billion.

Recent efforts, including Congressional legislation, are attempting to make right some of the past property losses that families have suffered, and to make sure more families are protected against such situations in the future.

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In counties that have a “very high prevalence of identified heirs’ property,” 75% of residents are Black, the Fannie Mae analysis shows. According to earlier research, in the 45 years after the abolition of slavery, Black Americans acquired 15 million acres of land. By 2001, an estimated 80% of that land had been lost.

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Meanwhile, decades of booming growth in the South has lifted many households financially, said Kirk Malmberg, CEO of the Federal Home Loan Bank of Atlanta. “But then there are property owners who should benefit from it,” Malmberg told USA TODAY. “And they can't because of the lack of the clear title and it not being easily passed to the heir. So a huge amount of wealth that has been created is not passing down to the people who should get that benefit."

Federal home loan banks are regional financial institutions that provide liquidity to their counterparts in order to support mortgage lending and community investing. FHLBank-Atlanta has just launched what it calls the 2024 Heirs’ Property Family Wealth Protection Fund (FWP), which will allocate $5 million to assist organizations with the prevention and resolution of heirs’ property issues.

An earlier initiative from FHLBank-Atlanta, which set aside $1 million, resulted in 157 titles being cleared, releasing approximately $16,000,000 in equity. In addition, wills were executed for 516 individuals. The bank is now accepting applications from community organizations and municipal and government entities for funds to help address heirs’ property concerns.

See also:Residential real estate was confronting a racist past. Then came the commission lawsuits

Also earlier this year, Congresswoman Nikema Williams, a Democrat from Georgia, along with two other Democratic colleagues, introduced legislation aiming to incentivize states to support legal efforts to clear titles and ensure current property owners have legal protections.

The Heirs’ Estate Inheritance Resolution and Succession (HEIRS) Act is endorsed by the American Land Title Association, National Fair Housing Alliance, National Association of Real Estate Brokers, National Low Income Housing Coalition, National Consumer Law Center, National Housing Resource Center, National Association of Realtors, and the Urban League of Greater Atlanta.