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In May, Maryland joined twenty-one other states that have enacted a version of the Uniform Partition of Heirs Property Act. Maryland’s new “Partition Of Property Act” goes into effect October 1, 2022. The goal of the legislation is to help Maryland families preserve their families’ wealth and legacies in the form of real property that can be passed on to the next generation. The law impacts both urban and rural families, and could help owners of heirs’ property better protect and manage the land they own in Maryland.
The term “heirs property” refers to instances when someone dies without a will and the title to their property is passed down to their heirs through state intestate laws. Because the individual died without a will, the title of the property becomes unclear, a situation which is commonly referred to as having “clouded” or “tangled” title. A tangled title is when you have a number of identified or unidentified heirs who all have an equal interest in, and ownership of, the land as a whole. In this scenario, the heirs are considered by law as tenants-in-common, which means all of the heirs have an equal ownership interest in the property. When the heirs are deemed tenants-in-common, it can create a series of problems.
One problem is that, because all of the heirs have equal ownership, any one heir can force a sale of the entire property with the proceeds from the sale to be equally distributed among the heirs. For example, if a descendant has three heirs, all deemed to be tenants-in-common, and one of the heirs is dissatisfied with how the other two heirs have used the property, the displeased heir can force a sale of the property. This action is called a partition by sale, and Maryland’s courts have historically leaned toward settling disputes between heirs by using this method of resolution. However, not only does a forced sale often lead to a loss of ownership for all heirs, it’s also often associated with a loss in intergenerational wealth because the property is not sold at the fair market value.
Forced sales in these situations have been used by real estate speculators throughout the country to acquire homes and land at below-market prices, and often the targeted owners are from economically disadvantaged backgrounds and lack access to lawyers and real estate professionals. Over the past century, heirs’ property has been a particular problem throughout the U.S. for farming communities where the legacy of heirs’ property has resulted in devalued property and partitioned land. It has also financially hindered farming families seeking loans for property improvements or to qualify for a government grant. This includes in significant measure African-American and other minority owners with limited financial resources.
The new Partition of Property Act changes existing partition law in Maryland to better protect owners of tenancy-in-common property from forced court-ordered sales of the property. Specifically, the law provides new procedures for serving notice on owners with unknown whereabouts and for determining the property’s fair market value if the co-owners of the property are unable to agree. The law also requires that if an owner seeks a partition by sale, it is only the owners who did not request the sale who may buy out the interests of all of the other owners in the property.
A petitioner in a partition action could alternatively seek a court order to physically divide the real estate among the owners into separately-titled parcels. This is called a “partition-in-kind.” Importantly, for partitions in kind, Maryland’s new law requires the court, in determining whether and how to partition the property, to specifically consider various things, including the owners’ respective ownership share, whether they have contributed towards the property’s carrying costs, and whether owners have certain sentimental ties to the property.
To learn more about Maryland’s new Partition Of Property Act, join us in Annapolis on October 28th at ALEI’s annual Agricultural and Environmental Law Conference. The primary sponsor of the enacted Senate bill in the General Assembly, Senator Malcolm Augustine, will be joined by Attorney Shakisha Morgan of The Morgan Firm to discuss the new law. For information about the conference, go to umaglaw.org.