Cloudy title, heirship property, and hurricanes

Heirship Property, Cloudy Title, and HurricanesAfter Hurricane Katrina, 20,000 people with claims to heirship property with “cloudy” title faced difficulty getting government aid to rebuild, because they couldn’t prove they owned their homes.

What is heirship property and cloudy title?

If someone dies without a will and if a deed to his or her property does not expressly include joint tenancy with survivorship language, issues may arise as to who should have title to that property, as well as the percentage of each person’s ownership interest. Such property is often referred to as heirship property. Because there is no clear paper trail documenting who owns the property, lawyers call this a “clouded” or “cloudy” title.

Lots of low-income families don’t have access to the legal help they need to pass title to their homes. One study that looked at over 1000 homeowners in low-income communities in Texas found that 90% of them didn’t have wills, mainly because of cultural norms and lack of information. In addition, people in these communities don’t necessarily go through a bank when buying or selling a house, where you have documentation and oversight over the passage of title.

Rebuilding after disaster

After Hurricane Katrina, some 20,000 homeowners found it difficult to convince the government to give them the funds to help them rebuild. Similarly, thousands of Texans after Hurricane Ike in 2008, Rita in 2005, and Dolly in 2003 faced the same problem.

What do Houston residents face as they try to rebuilt after Harvey?

The barriers are not high to get FEMA relief, which is the first level of assistance for families trying to get immediate assistance to repair their homes. For example, home ownership can be shown simply by providing evidence that the family has a track record of paying taxes.

It is the longer-term disaster recovery assistance that helps families whose homes have been destroyed and can’t be rebuilt or who need a lot of funding to rebuild them that has large barriers.

Case study

Years after Hurricane Katrina in 2005, New Orleans Legal Assistance Director Mark Moreau estimated that thousands of people with title problems still were being deprived of money to rebuild.

In 2008, 80-year-old Alice Cousin was still living in a house that was unrepaired after the ravages of Katrina . Her parents bought the house in the 1940s, and the title to the house remained in their name. The family didn’t change the title when Cousin’s parents died. When Cousin applied for government money to fix the house, she was turned down by the state-run Road Home Program, which funnels federal Katrina aid to homeowners for rebuilding.

Cousin was told that to get the money, she had to prove she owned the home or get a power of attorney from all of the other heirs. According to law, Cousin and a dozen or so nieces and nephews have a claim on the house. Although most of the relatives signed over their shares in the house to Cousin, one nephew, living in California, was initially holding out. Eventually, the Road Home Program gave Cousin $18,000 to repair the home. Cousin died in 2013.

How to prevent heirship property problems

What can families use to prevent such title problems? A simple solution is a Transfer on Death (TOD) deed. It has been adopted by about 20-plus states, including Texas. The TOD deed became codified in the Texas Estates Code, chapter 114 in 2015. With a TOD deed, an individual may transfer his or her interest in real property to one or more beneficiaries, with the transfer being effect at the transferor’s death. The TOD deed must be recorded before the transferor’s death in the deed records of the county where the real property is located. The TOD deed can also be revoked if the transferor changes his or her mind.

We are now in the peak of the Atlantic hurricane season, with category-five Hurricane Irma brewing in the Atlantic just barely a week after Hurricane Harvey devastated Houston.

It is amazing that a simple inexpensive document can prevent so much future heartache and worry.

Cloud photo by Anandu Vinod