Heir Property Primer
Heir Property is a legal concept that has both its roots and most of its current incarnations in the Southern United States. That alone makes it a unique challenge to handle, as many people traveling to or from the region find themselves having to come to terms with the term.
This is a very familiar concept to those of us who have grown up in the South, but one that finds itself in a rare spotlight from time to time.
The term refers to a category of ownership for those people whose family has not formally conveyed property by will or deed. What this means is that the property belongs to the descendants in a lineal fashion. In this way, the estate will pass as long as there are heirs. As you might imagine, that can be a lot of people.
In some southern cities and towns, this concept of commercial law leads to the reality that many properties are actually owned by dozens of people. The legal concept gets its roots in the issue of family land, which has often passed down from generation to generation. This type of land is referred to as heir property. When the passing of the title to these estates is spread out equally among, say, eight siblings of a single family, it is often referred to as heir property. To be legally accurate, we would use the word "undivided," but for practical purposes, we will say "heir property . "
While this concept is not foreign to South Carolina, what is foreign about it is the fact that South Carolina law does not treat heir property as community property (some southern states do). This has its benefits and disadvantages. Essentially, if one spouse were to pass away, the surviving spouse would still own half of the entire estate, since it is not considered as community property.
On the other hand, since it is not considered community property, the property will pass through intestate succession to the heirs, rather than a surviving spouse. To further complicate the issue, in South Carolina, all of the decedent’s real property will follow the rules of intestacy (intestate succession rules). If all of the decedent’s real property is his homestead, then his surviving spouse would have the choice to make claim to the property, thereby making her half of the real property her half of the estate.
However, there is an exception to this rule. Under South Carolina’s "homestead" laws, the surviving spouse has the choice to accept a family allowance and homestead allowance rather than claiming his or her one-third share. Assuming the real property was the decedent’s homestead, it will be the only asset of the decedent’s estate after he claims the homestead and family allowances. So, at best, the surviving spouse will get the house, but the property may very well be owned by siblings or adult children of the decedent.
What Does Heir Property Actually Mean
The legal definition of heir property in the State of South Carolina refers to land that has been passed down from generation to generation without any formal recording of the title or related legal documents. In other words, the land is a product of inheritance, rather than purchase. When a person dies, his or her estate, including real property, passes to the deceased individual’s heirs. The real property is then entitled to inherit as tenants in common, which means that each heir will have an undivided interest (or share) of the real property. The method by which this takes place is pursuant to intestate succession laws. Succession laws are the documents which specify legal rights related to any property that is owned by a person at the time of his or her death.
Because of the division of ownership among heirs, heir property is particularly difficult to sell. Real property that is owned by multiple individuals can only be transferred via a partition action. The partition process breaks the joint ownership of property and equalizes ownership interests through sale and distribution of the proceeds among those interests. The statutory provisions governing partition actions are found in Section 15-61-10, et seq. of the S.C. Code.
Heir property should be handled carefully by all ways involved. There are several steps landowners should take to protect themselves and their rights.
Using Heir Property to Inherit Estate in SC
As previously mentioned, an individual may leave behind real estate to his or her heirs without a will in place. When this occurs, the real property assets are ultimately subject to the process of the "intestate succession," and are inherited via the laws of the state of South Carolina (and not the application of any last will and testament).
In short, the process of inheritance in South Carolina dictates the following order of succession among heirs: If the decedent, or deceased individual, has no remaining heirs as defined by law then his or her real estate assets become the possession of the state. In this case, "escheat" takes place; whereupon the real property becomes a part of the remaining estate of the state, and will then be sold by the government while proceeds go towards the long-term benefit of the state of South Carolina.
Problems with Heir Property
The first problem is usually one of de facto exclusion. The way that many estates change hands today is a result of the law of descent and distribution. That law says, basically, that when a person dies without a last will and testament, his or her estate passes to all of the children of the decedent, and snowballing from there. If the decedent had three children, the estate passes to all of the children’s children (i.e. siblings, cousins, grandkids, or whatever). When there are lots of grandchildren, great grandchildren, nieces and nephews, and/or great nieces and nephews, the property is owned by more and more people. South Carolina law says that possession of property includes control over it. Therefore, if you don’t have control of the property, you are excluded from possession. For the property owner, this can become a maddening cycle – basically, whenever an heir shows up, he or she may be told, "you can’t have access unless we let you in". This can lead to situations where heirs do not visit the property for years at a time. If you don’t see the property for a long while, do you know about the dilapidation? If it has been winterized, do you know what condition the pipes and fixtures are in? What if someone else has moved in, or claimed ownership?
The next problem is one of possession. The way possession of property works in South Carolina is a little complex. Essentially, the first claim of possession allows the possessor to possess until someone else who claims possession shows up (with a deed, tax bill, or some other indicator of ownership). After 10 years of continuous possession, the person with superior title can "quiet" the other person(s) and be granted the right to possess the property. Issues become complicated when an heir dies within the same 10-year period. At that point, the heirs of the deceased heir must stake their claim, or they get "quieted" in favor of the other heirs. After 20 years of continuous possession, the heir owners are finally put on notice that the adversary is attempting to assert his/her rights. After the notice, they have 10 years to respond. After 30 years (i.e. year 2020), the property passes to the original adverse possessor. Note that all of this is contingent on all heirs’ being located. What if the mother/father has 10 children, two of whom are unknown, and one other child dies? Someone has to find the one remaining child, which can take several years, and be considered quite expensive.
Probate Filing – Solution or Problem
As mentioned, a dispute may arise between any number of the heirs, or between an heir and a third party, regarding the property. Because such matters are often complicated, they should be addressed by an attorney experienced in handling disputes involving heir property. The following represents a general overview of the proceedings which may be used to resolve some of the common disputes encountered by an heir:
Partition
A partition is a proceeding to divide property into separate parts or interests. Partition suits involving real estate can be difficult due to the fact that when divided, the value of the entire property is less than the value of the whole. To remedy this dilemma, a partition sale of the property may be ordered. That is, the property will be sold at auction, and the proceeds will be divided among the various owners based on their respective ownership interest in the property.
Trust
A trust is a legal arrangement whereby one party holds legal title to property for the benefit of another party. If one or more of the heirs is uncooperative, an heir may petition a court to set up a trust for the benefit of the other heirs. The terms of the trust will be administered by a trustee , who will be responsible for making any payments necessary to maintain the property, such as mortgage payments, HOA dues, property taxes, or insurance. Upon the sale of the property, the proceeds will be held in trust for all parties. Prior to sale, the court will likely require an appraisal of the property to determine its fair market value. The property will then be sold, usually at auction. Again, the proceeds from the sale will be divided among the owners, based on their respective ownership interest in the property.
Sale to Third Party
The sale of heir property to a third party is probably the least likely situation to occur. Because the property is owned by multiple parties, the purchaser obviously runs the risk that one or more of those owners will file suit to set aside the sale. Moreover, because more than one owner must agree to sell, the sale cannot proceed without the cooperation of all owners. That said, a third party sale may nevertheless be successful in some circumstances. For example, if one or more of the owners petitions the court for the foreclosure of the rights of the other owners, a sale may be ordered to all property subject to the lien. This foreclosure proceeding is akin to a way to partition property when one owner is not cooperative.
SC Heir Property Law Changes
At the end of the last year, the General Assembly of South Carolina made a number of changes to South Carolina law that affect the manner in which people deal with heir property. These changes include:
Under new law, the statute of limitations is tolled if any of the following occur:
Also included in this change is a specific provision for tolling the statute of limitations while the petition for partition is pending. A similar tolling provision is included if a party entitled to notice because of an heirship order dies before the partition action is concluded.
The law also contains better defined requirements for notice, allows for notice by publication to a non-resident tenant(s), and allows for the county in which a partition action is pending or filed to be moved in certain circumstances. The notice provisions now permit a party to seek an award of attorneys fees where a motion to quit is unreasonably refused.
In addition to these minor changes, the law also provides for a process by which the property can be sold directly with a partition action. This process resembles a foreclosure sale, with the attorney in the action (rather than a master) obtaining a bid as described in the notice and then certifying that the entity desiring to bid has placed a bond with the Court. Ten days must pass between the filing of the bond and the signature date.
It is too early to tell how many of these changes will be followed and whether or not the process will be more efficient overall. We’ll keep you up-to-date with our own results and those of other area lawyers.
Finding Solutions Over Heir Property
From a legal perspective, disputes over heir property or "clouded" real estate can be resolved either with a deed from a competent "owner" (that is, someone who has the legal capacity to transfer ownership under a judicial decree) and a judicial determination or agreement among heirs on an appropriate sale, including the distribution of proceeds or a division of the property.
Since only court action can produce a court-ordered sale and a transfer of title free and clear of the claims of unknown and unascertained heirs or unknown creditors, such action is a common strategy for owners. Under this option, a quiet title action is filed in the probate court, after which management or control of the property can be transferred from the Personal Representative to a newly appointed Special Personal Representative or a judge-appointed Commissioner. The newly appointed officer is responsible for managing the property, selling it, and distributing the proceeds, under the guidance of the probate court.
A second approach is for the family or heirs to reach their own agreement that includes an appropriate sale of the property, a determination of how the proceeds will be distributed, and a division of the property prior to a closing. Such a strategy can help the family reach their own decisions, and manage the closing process. A written agreement is strongly recommended so that all parties understand the terms. However, delivery of a deed(s) to the buyer should be made only after preclosing approval and order by the probate court (this will be discussed in a later blog post).
Conclusion and Getting Help
In this detailed overview, we have covered the complexities and nuances of South Carolina’s heir property laws, which particularly affect those living in the Lowcountry and all of the coastal counties. While this is a detailed discussion of the laws that can have significant impacts on family property, it should not be viewed as legal advice. Individual circumstances and preferences should always be carefully considered by outfit counsel. However, if you can follow this general analysis you should be better able to navigate how to deal with heir property.
It is strongly suggested that legal counsel be sought before taking any action that could be construed as transferring ownership or partial ownership of property by people who do not already own an interest in the property. Legal counsel can provide a broader view that includes consideration of the various options available under the law, and an analysis of relative costs for the various options. Before doing nothing, speak to legal counsel about the issue . You will not be charged much for an initial consultation, but you could save yourself a great deal of money and heartache down-the-road.
South Carolina Appleseed Legal Justice Center provides free legal services to people who qualify based on income. Community Legal Services of Mid-Florida, Inc. (a non-profit, independent law firm) is dedicated to seeking justice for the most vulnerable people in our community.
Legal Services of South Carolina provides free civil legal services to eligible low-income people and is a nonprofit legal aid organization that operates statewide. One of its main areas of focus is helping people deal with heir property. The Legal Services Assistance Project (LSAP) offers help with a variety of civil matters to residents of Charleston, Berkeley, Colleton and Dorchester counties who are elderly, disabled, or live in deep poverty and meet financial eligibility guidelines. Their attorneys can provide legal advice, and if you qualify, possible legal representation.