Farm Bill Helps Heirs Property Farmland Owners
This article is not a substitute for legal advice. See here for the site’s reposting policy.
For U.S. farmers, having clear title to land has been the key that opens the door to federal programs, including loans, conservation programs, crop insurance and disaster assistance. That’s because, in order to apply for federal programs, USDA requires farms to have a “farm number.” And, in order to get a “farm number,” the USDA has historically required proof of clear title to land. Before the 2018 Farm Bill passed, this meant that owners of “heirs property” couldn’t qualify for USDA programs. But thanks to a new provision in the Farm Bill, heirs property owners with farming and ranching operations can now secure a farm number and access USDA programs. In addition, heirs property owners in certain states are eligible for funding for assistance in clearing title.
“Heirs property” is rural or urban land that’s been informally passed down through families, often without a will and often over several generations. In many instances, because there was no will, the land passed under probate law, and the next generation owners of heirs property owns the land as “tenants-in-common;” regardless of whether those family members maintain any connection to the family or the property.
Any land that’s held as tenants-in-common is vulnerable to being lost because any individual owner can force a partition of the land, which means they can force a sale of the land, and unless the family members who want to keep the farmland can afford to pay the winning bid at public auction, they will lose the land.
Provisions of the 2018 Farm Bill, however, help heirs property farm and ranch owners maintain ownership of their property and access government assistance programs.
Section 5104 of the Farm Bill empowers the Farm Service Agency (FSA) to give money to qualified intermediaries, including banks, cooperatives, credit unions and non-profit organizations, for loans to heirs property operators looking to clear their titles. This relending program is specifically designed to assist heirs property owners in states that have adopted the Uniform Partition of Heirs Property Act (UPHPA) resolve ownership and succession on farmland.
The UPHPA is uniform legislation designed to address the heirs property problem that led to significant land loss primarily for black farmers in the U.S. The UPHPA allows the tenants-in-common owners of heirs property to buy out an owner who wants to sell. It requires the property to be assessed by a neutral third party and publicly listed, and it instructs the probate court to consider factors such as the heritage, historical or cultural value of the property in deciding how to partition the land. 18 states have enacted the UPHPA into law, including Virginia. Washington DC introduced a bill this year. Maryland, Pennsylvania, and Delaware, however, have not yet adopted the UPHPA nor introduced legislation to adopt any part of the UPHPA.
Section 5104 of the Farm Bill gives farmers and ranchers who own heirs property in states that have adopted the UPHPA priority consideration for the funding that helps them obtain legal assistance in restructuring their ownership and obtaining clear title to their property.
Section 12615 of the Farm Bill provides two ways for farmers and ranchers who own heirs property to qualify for an FSA farm number. The first way is by being in a state that’s adopted the UPHPA. For heirs property landowners in a state that has adopted the UPHPA, under Section 12615 of the Farm Bill, they can obtain an FSA farm number by providing the USDA with either a court order verifying that the land meets the UPHPA’s definition of heirs property or certification from the local recorder of deeds that the recorded landowner is deceased and that at least one of the heirs has initiated a court proceeding.
For heirs property landowners not in a state with the UPHPA, Section 12615 provides that they can obtain a farm number by providing the USDA with the following:
A fully-executed tenancy-in-common agreement approved by the majority of ownership interests in the property and giving a particular owner the right to manage and control any portion or all of the land for purposes of operating a farm or ranch;
Tax returns of the farm operator for the preceding 5 years;
Self-certification that the farm operator has control of the land for purposes of farming or ranching; and
Any other documentation identified by the U.S. Secretary of Agriculture.
The USDA sent its proposed rule to implement the 2018 Farm Bill “heirs property” provisions to the White House Office of Management and Budget for review in March. The rule is expected to be released later this year, and will be subject to a 90-day comment period after it’s published in the Federal Register. Watch this blog for updates on the rule.
For questions about the heirs property provisions of the Farm Bill or the UPHPA, contact Nicole Cook, ALEI’s Agricultural and Environmental Faculty Legal Specialist at the University of Maryland Eastern Shore, at email@example.com or by calling 410-651-6182.