Weather |  Futures Markets |  Market News |  Headline News |  DTN Ag Headlines |  AgBizDir.com |  Portfolio |  Crops 
     
  Home  
  Real Time Quotes  
  LDP Rates  
  Admin Login  
- DTN Headline News
Fix for Heirs Property
Wednesday, January 16, 2019 2:30PM CST
By Elizabeth Williams
DTN Special Correspondent

INDIANOLA, Iowa (DTN) -- Dying without a will or without properly structured farmland ownership can make life messy for heirs.

In many of those situations, the next generation owns the land as tenants-in-common, and if the owners can't agree on how to split the property, they can go to court for a judgment allowing partition by sale, the preferred settlement method in 39 states. This forced sale obligates the family members who want to keep the farm to have the winning bid at a public auction on land they partially own.

Eleven states have created an alternative to this process by passing the Uniform Partition of Heirs Property Act (UPHPA), which allows the tenants-in-common to cash out an owner who wants to sell at an appraised value without having to put the entire property up for sale. It establishes a clear preference for a physical division of heirs property, as opposed to partition by sale, and allows the court to consider factors such as heritage, historical or culture value of the property in deciding how to partition the land.

The new farm bill gives states with UPHPA an additional boost. Frequently, land inherited this way lacks a clear title because not all the fractional interest owners have been identified or legally established, said Thomas Mitchell, a professor at Texas A&M University School of Law that drafted the UPHPA law.

The new farm bill now allows the owners of "heirs property" as defined under the UPHPA to qualify for a Farm Services Agency farm number and to be eligible for many different USDA programs, including lending and disaster relief programs.

The definition of "heirs property" includes property that passes with or without a will. The main criteria is it must be family-owned and the ownership must be as tenants in common, not joint tenancy. Family-owned is defined as 20% of the ownership interest owned by family or 20% of the co-tenants are family.

The farm bill also gives farmers and ranchers who own heirs property in these 11 states priority consideration for legal assistance to help them restructure their legal ownership for greater stability and obtain clear title to their property.

Iowa is the only Midwest state with this law, which passed in 2018. Other states that have passed the UPHPA are Alabama, Arkansas, Connecticut, Georgia, Hawaii, Montana, Nevada, New Mexico, Texas and South Carolina.

"The two provisions in the farm bill that reference and draw upon the UPHPA may well encourage more states to enact the UPHPA into law in order to enable disadvantaged farmers and ranchers in those states to have the maximum benefits of the new farm bill provisions," Mitchell said.

Mitchell said he's worked on this issue for 20 years.

"It didn't make sense to me. If the property can be physically divided, why are we forcing sales?" he said.

In theory, the court would order a sale so all owners could maximize their wealth, Mitchell continued. "However, forced sales often resulted in a lower sales price and sometimes they put the family farm out of business."

Court-ordered, forced sales come into play when the tenant-in-common owners cannot agree on how to divide the property. Landowners who have worked with an estate planning attorney are generally not affected.

"Anybody who is wealthy or sophisticated about the law would know you would want to own real property as a group, what we call common property ownership, under an LLC or some other different ownership forms or agreements that are stable and secure," Mitchell said. "The people who tended to be negatively impacted because they did not own their family property under ownership forms that were stable and equitable were relatively disadvantaged."

He said there are a lot of farmland owners who could benefit from the UPHPA.

Iowa attorney Jim Nervig, who spearheaded the change in that state's law, said he was motivated to get the law changed because it didn't make sense that a minority interest could force a land sale and give the other owners no other recourse.

Property law is established by each state. It's also tradition-based and generally hard to change. But when Iowa's bill became referred to as "Save the Family Farm" bill, it sailed through the state legislature, said Nervig, an attorney with Brick Gentry law firm in Des Moines.

State legislatures in Indiana, Virginia and West Virginia have already introduced UPHPA bills so far this year.

In Illinois, "It is something that we are looking into," said Zach Schmidt, assistant director of state legislation with the Illinois Farm Bureau.

For more information on the Uniform Partition of Heirs Property Act (UPHPA), you can go to:

https://my.uniformlaws.org/…

Elizabeth Williams can be reached at Elizabeth.williams@dtn.com

(KD/ES)


blog iconDTN Blogs & Forums
DTN Market Matters Blog
Editorial Staff
Monday, January 14, 2019 11:24AM CST
Friday, January 11, 2019 1:10PM CST
Monday, January 7, 2019 11:48AM CST
Technically Speaking
Editorial Staff
Monday, January 7, 2019 8:15AM CST
Monday, December 31, 2018 1:46PM CST
Monday, December 24, 2018 8:54AM CST
Fundamentally Speaking
Joel Karlin
DTN Contributing Analyst
Wednesday, January 16, 2019 12:47PM CST
Monday, January 14, 2019 1:56PM CST
Thursday, January 10, 2019 12:53PM CST
DTN Ag Policy Blog
Chris Clayton
DTN Ag Policy Editor
Thursday, January 17, 2019 9:54AM CST
Wednesday, January 16, 2019 1:03PM CST
Monday, January 14, 2019 9:43AM CST
Minding Ag's Business
Katie Behlinger
Farm Business Editor
Monday, January 7, 2019 4:47PM CST
Tuesday, December 18, 2018 4:55PM CST
Monday, December 10, 2018 2:16PM CST
DTN Ag Weather Forum
Bryce Anderson
DTN Ag Meteorologist and DTN Analyst
Friday, January 11, 2019 12:18PM CST
Wednesday, January 9, 2019 2:11PM CST
Monday, January 7, 2019 9:03AM CST
DTN Ethanol Blog
Editorial Staff
Wednesday, January 16, 2019 3:24PM CST
Tuesday, January 15, 2019 1:01PM CST
Tuesday, January 15, 2019 8:11AM CST
DTN Production Blog
Pam Smith
Crops Technology Editor
Thursday, December 20, 2018 3:57PM CST
Friday, November 16, 2018 4:00PM CST
Thursday, November 1, 2018 6:46PM CST
Harrington's Sort & Cull
John Harrington
DTN Livestock Analyst
Thursday, December 20, 2018 3:01PM CST
Friday, December 7, 2018 4:51PM CST
Thursday, November 29, 2018 5:04PM CST
South America Calling
Editorial Staff
Wednesday, January 16, 2019 3:16PM CST
Wednesday, January 9, 2019 5:38PM CST
Wednesday, January 2, 2019 5:15PM CST
An Urban’s Rural View
Urban Lehner
Editor Emeritus
Friday, January 11, 2019 1:35PM CST
Wednesday, January 2, 2019 6:30AM CST
Monday, December 24, 2018 10:56AM CST
Machinery Chatter
Dan Miller
Progressive Farmer Senior Editor
Friday, January 11, 2019 2:00PM CST
Wednesday, January 2, 2019 4:28PM CST
Tuesday, November 20, 2018 11:58AM CST
Canadian Markets
Cliff Jamieson
Canadian Grains Analyst
Wednesday, January 16, 2019 4:42PM CST
Monday, January 14, 2019 3:51PM CST
Friday, January 11, 2019 3:02PM CST
Editor’s Notebook
Greg D. Horstmeier
DTN Editor-in-Chief
Monday, December 31, 2018 7:02AM CST
Tuesday, December 18, 2018 4:49PM CST
Monday, November 26, 2018 9:13PM CST
 
Copyright DTN. All rights reserved. Disclaimer.
Powered By DTN