Heir property is land that is jointly owned by descendants of a deceased person whose estate was never handled in probate. These descendants (heirs) have the right to use the property, but they do not have clear or marketable title to the property since the estate issues have not been resolved.
Without a court proceeding to deal with these estates, third parties (like buyers or lenders) have no way of knowing who is really entitled to the property and whether any creditor claims apply. This means that the heirs cannot sell, mortgage, or otherwise deal with the real estate. Heir property has the following characteristics:
It is vulnerable to involuntary loss of the property through adverse possession, tax sales or judicial partitions;
The heirs cannot sell the property or use it as collateral for a mortgage;
The property is usually ineligible for federal assistance;
Most lessees (such as tenants, timber companies, or other people who would want to deal with the real estate) will not do so due to the title issues;
The heirs are reluctant to repair or improve the real estate since every dollar they spend on the property is divided among all of the other heirs.
Over time, as each generation passes, the ownership of the property becomes more and more fragmented and divided among a larger group of people. At the same time, the number of unprobated estates in the title increases. Before long, it isn’t worthwhile for any one heir to pay the property taxes and the group of heirs cannot agree to keep up with the property. At that point, the property is usually sold for outstanding taxes. The new owner then acquires the property for a deeply discounted value, none of which goes to the heirs.
The best way to avoid this loss is to simply deal with the estates promptly. This keeps the title clear and allows the heirs to sell or mortgage the property at will.
Source Copyright: MSProbate.com