By: Mathias A. Young
Small family farms are in dire straits. The U.S. Department of Agriculture’s Economic Research Service found that in 2019, between sixty-two and eighty-one percent of small family farms were operating at a “high risk level.”[1] This problem is worse for farmers of color, who for decades have faced discrimination in applying for and receiving grants and loans from the U.S. Department of Agriculture.[2] As a result, the number of Black farmers in the United States declined by ninety-seven percent in the twentieth century.[3] Not only do small farmers, particularly those of color, face threats from insolvency and potential discrimination, these farmers also face threats that their farms could be sold out from under them without their permission. This mechanism is known as partition.[4]
Partition by sale is the common law process by which a tenant-in-common can force the sale of land without the consent of the other owners.[5] Partitions by sale are meant to be an option of last resort.[6] In practice, however, judges often prefer issuing partitions by sale and they are the most common result of a petition for partition.[7] An action for partition is usually available to owners of property as tenants in common. Black farmers are more likely to own their land as tenants-in-common for a number of reasons,[8] which puts them at a higher risk for being dispossessed of their property.[9] For example, a real estate developer who does not want to pay market value for a piece of property owned by tenants-in-common could buy one of the part owner’s share in the property. The developer then needs only to make a claim for partition and the property can be sold on the steps of the courthouse.[10] If the family cannot afford to outbid the developer, then they can be dispossessed of the property for less than its market value.[11] Aside from the financial loss of being unable to sell the property on the open market, the family also loses the sentimental ties they had to the property, which may span generations.
To help combat these losses, the Uniform Law Commission has created the Uniform Partition of Heirs Property Act (“Heirs Property Act”).[12] Enacted in nineteen states and territories and introduced in a further seven—including North Carolina—the Heirs Property Act makes changes to the statutory rules regarding partition by sale.[13] The Heirs Property Act is not a comprehensive overhaul of the rules regarding when a tenant-in-common can petition a court for partition. Instead, it makes targeted changes to help owners of heirs property avoid receiving far below market value for their property due to a forced auction.[14]
The ability to secure property at a price below market value is one of the driving characteristics that results in forcing landowners off of their land.[15] Traditionally, a partition by sale is conducted in the same manner as other judicially ordered sales of real property, with a commissioner appointed to conduct the sale and the property sold at public auction.[16] This procedure brings far less money than property sold on the open market by a broker.[17] The Heirs Property Act changes this procedure in several ways, beginning with the requirement that the court first determine the fair market value of any heirs property.[18] Next, the Heirs Property Act provides for a mandatory buyout option by the other co-tenants.[19] This provision is perhaps the most important when it comes to protecting the livelihoods of small family farmers.
The buyout provision allows other co-tenants of the property to purchase the interests of a co-tenant who requested partition by sale to prevent the sale on the open market of the property.[20] This option gives families a far greater chance of retaining ownership of land than trying to outbid a developer or other interested buyer in a public auction, which often requires buyers to pay in cash.[21] For example, assume that the enterprising real estate developer from the preceding example instead buys a ten percent stake in a farm that meets the definition of heirs property. Instead of proceeding to a courthouse sale where the family must outbid the developer for the entire price of the property, the family can instead opt to purchase the developer’s shares beforehand. This is an especially helpful tool when an outside buyer or estranged family member begins a partition action with an extremely small fractional share of ownership, which is common when land has passed through intestacy for generations.[22] While families still face the prospect of coming up with enough money to buy out a co-tenant’s shares—which can be challenging in its own right due to a number of factors[23]—it is less insurmountable than attempting to outbid a well-equipped cash buyer at public auction.
Small family farms, particularly those owned by people of color, have been decimated in recent years due to a variety of factors. While it cannot address the underlying causes of the decline in small family farms or the astounding amount of Black land loss that has occurred in the South, the Heirs Property Act can at least help families maintain possession of their property.
[1] Christin E. Whitt et al, U.S. Dep’t of Agric., America’s Diverse Family Farms 8 (2020).
[2] See generally Tadlock Cowan & Jody Feder, Cong. Rsch. Serv., RS20430, The Pigford Cases: USDA Settlement of Discrimination Suits by Black Farmers (2012) (noting that the USDA settled suits alleging discriminatory lending and technical assistance practices, primarily at the extension office level); Ximena Bustillo, ‘Rampant Issues’: Black Farmers are Still Left Out at USDA, Politico (July 5, 2021, 7:00 AM), https://www.politico.com/news/2021/07/05/black-farmers-left-out-usda-497876.
[3] Black Land Loss, Duke Sanford World Food Pol’y Ctr., https://wfpc.sanford.duke.edu/media/black-land-loss (last visited Nov. 7, 2021).
[4] Will Breland, Acres of Distrust: Heirs Property, the Law’s Role in Sowing Suspicion Among Americans and How Lawyers Can Help Curb Black Land Loss, 28 Geo. J. Poverty L. & Pol’y 377, 380 (2021).
[5] See N.C. Gen. Stat. § 46A-21(a) (2020) (“Any person claiming real property as a tenant in common . . . may petition to partition the property in superior court.”).
[6] See, e.g., N.C. Gen Stat. § 46A-75(a) (2020) (“[T]he court shall order a sale of the real property . . . only if it finds . . . that an actual partition of the property . . . cannot be made without substantial injury to any of the parties . . . .”).
[7] See, e.g., John G. Casagrande, Note, Acquiring Property Through Forced Partitioning Sales: Abuses and Remedies, 27 B.C. L. Rev. 755, 771 (1986) (describing the Alabama Supreme Court’s acknowledgement that the usual end result of a partition action is the sale of the property).
[8] See Roy W. Copeland, Heir Property the African American Community: From Promised Lands to Problem Lands, 2 Pro. Agric. Workers J. no. 2, 2015, at 1, 2 (noting that between one third and one half of Black farmers in the South own their land as heirs property).
[9] Id. at 6 (“Partition actions are one of the most notable legal procedures leading to the loss of heir property.”).
[10] See Thomas W. Mitchell et al., Forced Sale Risk: Class, Race, and the “Double Discount”, 37 Fla. St. L. Rev. 589, 611–12 (2010).
[11] Id.
[12] Unif. Partition of Heirs Prop. Act prefatory note (Unif. L. Comm’n 2010).
[13] Id.
[14] See id. The Heirs Property Act defines “heirs property” as property held in a tenancy-in-common where there is no ownership agreement and twenty percent or more of the interests are held by a family. See Unif. Partition of Heirs Prop. Act § 2(5) (Unif. L. Comm’n 2010).
[15] See Thomas W. Mitchell, From Reconstruction to Deconstruction: Undermining Black Landownership, Political Independence, and Community Through Partition Sales of Tenancies in Common, 95 Nw. U. L. Rev. 505, 579 (2001).
[16] See, e.g., N.C. Gen. Stat. § 1-339.13 (1997).
[17] See Mitchell et al., supra note 10, at 608 (noting that “vulture buyers” target forced sales because they often result in fire-sale prices).
[18] Unif. Partition of Heirs Prop. Act § 6
[19] Unif. Partition of Heirs Prop. Act § 7
[20] Id.
[21] Mitchell et al., supra note 10, at 605.
[22] See Leah Douglas, African Americans Have Lost Untold Acres of Land Over the Last Century, The Nation (June 26, 2017), https://www.thenation.com/article/archive/African-americans-have-lost-acres/.
[23] This challenge is exacerbated by the Heirs Property Act’s requirement that the price of shares be calculated by the fair market value of the property. Unif. Partition of Heirs Prop. Act § 6. For a more thorough discussion of the challenges this provision creates for owners of heirs property, see Avanthi Cole, Note, For the “Wealthy and Legally Savvy”: The Weaknesses of the Uniform Partition of Heirs Property Act as Applied to Low-income Black Heirs Property Owners, 11 Colum. J. Race & L. 343, 360–63 (2021).
