Preventing Tax Foreclosures is the Best Way Local Governments Can Protect Heirs Property Owners

This article is part of The Rooftop, a blog and multimedia series from New America’s Future of Land and Housing program. Featuring insights from experts across diverse fields, the series is a home for bold ideas to improve housing in the United States and globally.

Millions of Americans own their homes and land as heirs property—a tenure type many people have never heard of, yet one that is crucial to preserving Black homeownership. Heirs property homes and land are passed down through generations without formal documentation, leaving ownership informally shared among multiple heirs and largely unrecorded in land records. This arrangement has drawn growing attention from funders, nonprofits, policymakers, and governments at every level—and for good reason. While heirs property represents an enormous source of wealth for low-income communities, it is also an inherently risky form of ownership that leaves families vulnerable to loss. The collective value of these properties is conservatively estimated at between $32 billion and $41 billion, and likely much more. Yet because ownership is undocumented and fractured among several owners, the families who hold this wealth have few protections to defend it. 

The movement to protect heirs property from the risk of exploitation and distressed partition sales has grown exponentially over the past 20 years, thanks to tireless advocates and a uniform law spearheaded by Thomas Mitchell and promoted by the Uniform Law Commission. 

Local governments have now joined the efforts to address heirs property, as an issue of housing insecurity as well as generational-wealth building. Cities like Philadelphia, Jacksonville, Detroit, and Savannah have launched initiatives including wills clinics and community education events. Some cities have even funded legal services to help heirs clarify their ownership. 

Public servants are recognizing the value proposition of protecting and resolving heirs property—a return on investment some have estimated at up to 36 to 1. They know that promoting stable homeownership is good for communities and keeping long-time homeowners in their homes is more affordable than having to provide subsidized rental housing or emergency services for unhoused families. 

Yet the single biggest way local governments could protect heirs property owners from loss remains largely undiscussed: making their property tax relief programs accessible to heirs property owners and increasing their uptake. 

Every state in the country provides some kind of owner-occupant property tax relief. The vast majority of states provide a basic level of relief for all owner-occupants, known as the principal residence or “homestead” exemption or abatement. All states provide an extra level of tax relief for older-adult homeowners, and many provide additional relief based on income, disability, or veteran status. In many places, these discounts are significant, reducing annual property tax bills by half or even more. They may come with an assessment freeze that enables long-time homeowners to avoid an escalating tax bill as they age in the home. In many places, the taxing authority has begun to pull owner-occupied properties off the tax foreclosure list. 

Yet owner-occupants living in heirs property generally do not obtain any of this crucial relief. One study showed that over half of the residential properties in tax foreclosure in two Texas counties were heirs properties. 

Families who own heirs property tend to be poorer and have less experience and resources to navigate probate and other inheritance processes. As a result, heirs of a deceased homeowner often don’t know about the property tax relief they could apply for, how to apply, or how much of a difference it could make in their annual tax bill. Heirs are carrying the burden of grieving a loved one, paying for funeral and burial expenses, and often facing a loss of income that the deceased person had contributed. They have likely never gone through a first-time homebuyer class or sat at a closing table where an attorney reminded them to apply for the homestead exemption and pay their property taxes. 

Local governments could do more to help bring this information to light, but often do not. Counties make little effort to notify potential heirs that they could apply for a homestead exemption in their own names, and often bar heirs from applying for a homestead exemption until they have gone through the time-consuming and costly process of filing a probate action to legally get their names on the deed. The result is that families lose critical tax relief at precisely the moment they’re most financially vulnerable. 

There’s nothing illegal about heirs property ownership. Heirs inherit their interest in the home at the moment of the prior owner’s death. The only issue is proof of that ownership. State laws say that “owners” occupying the home are eligible for homestead tax relief; and yet, in the execution, this becomes “only owners whose name is already on the deed.” Other proof of ownership, like an affidavit, should be sufficient, as cities like Philadelphia have shown. 

For heirs, the impact of losing out on homestead tax relief is dire. Their tax bill skyrockets and before long, the property starts spiraling down towards tax foreclosure. 

Property tax foreclosure laws have been the focus of significant litigation in the past three years—with a U.S. Supreme Court decision ruling 14 state laws unconstitutional, and another challenge to the system of tax foreclosures heard this spring and awaiting an opinion. 

The great unfairness of losing a home that is worth hundreds of thousands of dollars over a tax bill of less than $10,000 seems obvious, and has led to these legal challenges. While the litigation to date focuses on the tax foreclosure process, it is equally important to prevent properties from going into tax foreclosure to begin with, by ensuring broad access to available relief. 

Local governments rely on property taxes to fund essential services, and so it’s easy to understand their frustration towards property owners who fail to pay property taxes. On the other hand, ensuring that every household is getting the property tax relief they are entitled to under the law will allow more households to pay the taxes they owe—and can actually afford. We should not be satisfied with unequal access to property tax discounts based on information and technology gaps. 

Everyone entitled to owner-occupant tax relief should get it. Here are three strategies that the National Consumer Law Center believes can work:

• Information campaigns are crucial, including multiple, proactive attempts to reach heirs. Counties should not remove an exemption without making every effort to determine whether the relief should be carried over to an heir living in the home. 
• Counties can review their tax rolls to look for people who are likely entitled to homestead relief and not getting it: Any time the tax bill is going to the property address, there is a likelihood of owner-occupancy. It is well worth targeting the properties with a tax bill going to the home and no homestead exemption for additional outreach. 
• Finally, counties need processes that are accessible and easy for heirs to navigate. This means accepting applications year round; accepting applications when the name is not on the deed; and allowing affidavits as proof of ownership. It means making sure the websites, forms, and marketing are all consistent in the message that heirs can apply and get this relief. 

To keep older adults stably housed, reduce the racial wealth gap, and allocate property taxes equitably, we have to address these significant risks and promote fairer property tax systems.

Editor’s note: The views expressed in the articles on The Rooftop are those of the authors alone and do not necessarily reflect the opinions or policy positions of New America.