Could the Deed to Your House Be Haunted by a Missing Heir?

Most people die intestate—that is, without leaving a willwhen they go. This typically leaves a probate court using public channels to find parties owed money by the deceased, as well as possible heirs.

If no heir is found, then the state would take control of the deed, pay off all outstanding financial claims tied to the home, and ultimately sell it or make it useful somehow to the public. But that sort of thing rarely happens these days. Modern probate courts are well equipped to find heirs.

When a legal heir is located, that person will get the home by way of an administrator’s deed. Depending on what state law says, that might close off any other future claims to the deed.

Or not.

The Ghostly Reality: Heirs Aren’t Always Apparent

Heirs are the living relatives of a deceased person. They are people with legally recognizable claims to property owned by someone who dies.

An heir’s location, even their existence, could be unknown.

Sometimes this situation is present when a home is sold off by a deceased person’s estate.

Perhaps there was no will to be found. Or perhaps there was a will, but the beneficiaries cannot be located. Sometimes, it happens.

Or perhaps someone died a long time ago in the chain of title, and the probate court skipped over relatives with potentially legitimate claims. Sometimes, it happens.

What if a relative turns up later and claims an interest in a property after the deed has already been transferred to some other party?

Or what if a will turns up later, with a more recent date than the one handled in probate?

The current deed holder could then hear from a lawyer representing missing heirs. Pretty spooky!

That’s the time when a deed holder will need to get a wills and estates lawyer of their own to uncover what rights, if any, the challenger might hold. The law on marketable title in your state—plus the specific facts surrounding the past deed transfers—will steer the outcome. In many cases, heirs are willing to quitclaim their rights when they learn about obligations that come with the home. In any case, all parties should get their own legal representation.

If you need to contact a lawyer because of a property dispute involving relatives, be prepared. Get a copy of your deed. Trace the chain of title to the extent you can, and work quickly. (Tracing heirs’ rights gets more complicated as time passes and people die.) Drawing up a family tree in advance could save time and curb legal costs.

A Scary Story About an Infamous Lawyer

Attorney Tucker is a real estate investor in Asheville, North Carolina. Tucker’s company bought a ten-acre stretch of land along the scenic Blue Ridge Parkway.

Within this stretch of land, about two and a half acres had been left to nine heirs in the Lyda family by their deceased mother. Yet Tucker’s company sued to get their claim removed. Tucker’s lawyer reasoned in court that none of the nine Lyda siblings could be found, so full ownership should be granted to Tucker. The court agreed and declared Tucker’s company to be the owner of the entire strip of land.

The Lyda siblings appeared to still “have an interest” in the property, the lawyer acknowledged in a court filing. But he said a (now-dissolved) company had relied on the mother’s statement that she was the sole heir. The company got the acreage from the mother for $5,000 before transferring it to Tucker.

Attorney Tucker’s land was about to be haunted—by descendants of its late deed holder. An investigative reporter from Asheville Watchdog was able to quickly locate the Lyda siblings. The reporter explained: “Asheville Watchdog found a 2007 obituary for the Lydas’ father, available online through a simple Google search, that showed the city and state for each of the Lyda siblings.” One of the siblings told the reporter they would have questioned the $5,000 sale if they’d only known there had been a hearing to clarify the title.

Tucker’s company forced a sale of the Lyda property through what’s known as a partition action. Deed records show Tucker’s company sold the property for $255K—less than two years after paying just $90K to that now-dissolved company. The Lyda siblings got nothing at all.

There oughta be a law against this, you say? Some states, indeed, have reformed their partition laws to protect families. In New York, real estate investment companies may not petition for partition. Only the heirs may do this.

North Carolina may want to follow New York’s lead. Asheville Watchdog says Attorney Tucker has used North Carolina’s partition law to obtain properties formerly owned by other local deed holders, many of them African Americans and seniors. The North Carolina State Bar is now investigating Tucker’s transactions.

Most states now make it easier for homeowners to pass along clear title to their property by recording a transfer-on-death deed or a lady bird deed. These take effect (usually without probate) after the deed holder dies.

Frightful Confusion: When Multiple People Inherit a Home

When a property is left for heirs, each gets an undivided (not severable) interest. Over generations, more heirs turn into co-owners. Here’s why this is problematic:

• An investor can seek and acquire any of the heirs’ interests in the property and file a partition action. This can lead to a forced, cheap sale of the whole property—even if other heirs who did not sell out live in the home.  

• When an occupant’s name doesn’t match the property’s deed, there is no way to demonstrate their legal interest. They can’t apply for any tax relief. This situation can, and often does, lead to a property tax foreclosure.

• Financing for big upkeep expenses needs permission from each heir, no matter how many there may be.

What a tangled web! And solving the matter in court takes thousands of dollars.

Accepting (or Refinancing) a Title That Could Be Haunted by Heirs?

We’ve discussed title insurance often at Deeds.com. Even when a title is transferred using a warranty deed, unknown factors that could haunt the title may slip through the cracks at closing. The chance that missing heirs could turn up may prompt you to consider extended title insurance.

Title insurance is optional for buyers. Although lenders regularly require it for their protection, many buyers don’t know that they can also get a policy for themselves. There is one premium to pay on closing day, and then the title holder gets sustained coverage. The policy will cover legal costs to have title agents resolve title claims in the future. Speak with the insurer your lender is using for coverage information. You can, alternatively, go with an insurer of your choosing.  

Also, do make a written estate plan once you have any major asset such as a real estate deed. You can use a will. You can, in most states, use a transfer-on-death deed. Both are good options. Talk with an estate lawyer about a living trust or family LLC. These options are even better, because they protect the future chain of title—not just one deed transfer.