Cloudy homeownership widens wealth gap in Fort Worth

Editor’s note: This story was produced as part of Columbia University’s 2023 Age Boom Academy.

Andre McEwing almost lost a family home nearly five years ago.

The unexpected death of McEwing’s stepmother without a will left the fate of her home in limbo as McEwing and his stepsister struggled to save the house amid mortgage issues and a clouded title.

It was messy and stressful, said McEwing, who works as a supplier diversity manager for Tarrant County College.

“We had to do an affidavit of heirship to change titles to add on my stepsister to get on the title so she could present the title to the new mortgage company to get better rates,” McEwing said.

Unfortunately, this isn’t the first time McEwing has dealt with such an issue. A decade ago, his grandmother died without a will and left behind a house. Four heirs had claims to the property; figuring out who could sell it proved tricky.

“Over time, we lost documents. …” McEwing said. “You have to get verification of who owned the house initially, who are the living heirs and then, from there, the signature of everybody that we’re going to sell this house.”

McEwing is among many facing similar struggles. Experts note that the clouded title issue affects mostly lower-income families and families of color, ultimately reducing their chances of homeownership. Blacks have some of the lowest homeownership rates in Tarrant County.

Clouded titles or heirs’ property result when the owner of a home passes away without a will or leaves a property to multiple heirs. Without a clear record of ownership, the current resident of the house can’t sell the home, refinance a mortgage or secure insurance, get loans for home repair or receive any other type of government assistance for the house, which they often believe they now own.

“For most people, their home is the greatest percentage of their net wealth. That’s where most people’s wealth is, in their home,” said Tracey Amaya, a real estate broker. “This kind of messed up title doesn’t serve anyone. It hurts everybody. When you see vacant property sitting for years on end because they can’t get the title cleared, it doesn’t help the neighborhood.”

Amaya estimates about 10% of her yearly business involves a clouded title. The impact of this issue can have long-lasting effects on a family’s ability to create generational wealth, she said.

Trailing behind in homeownership

An unclear title can lead to the loss of the home due to foreclosures or code enforcement violations. In Tarrant County, nearly 50% of all property tax foreclosure sales since 2019 involved heirs’ property.

Odette Williamson, senior attorney at the National Consumer Law Center, has been studying challenges to sustaining homeownership in Black and Latino communities. Williamson found that about 77% of Black adults in the U.S. don’t have a will and instead pass on property informally.

“When we think about this form of homeownership, it is highly, highly unstable. With the cascade of consequences, it may lead to loss of the home and the loss of that generational wealth, the ability to pass off a home to other family members,” Williamson said.

Farwah Raza, supervising attorney for the Home Preservation Project at Legal Aid of NorthWest Texas, sees this issue most often affecting low-income households.

“It kind of doubles the problems that they’re experiencing,” Raza said. “It just compounds the problems that they have, and ultimately, they just end up losing the home. When you talk about generational wealth, it’s harder for folks that are low-income to build it partly because of this issue.”

Local data on the impact of clouded titles in Fort Worth is being collected by Heather K. Way, a law professor at the University of Texas at Austin whose work focuses on increasing the housing stability of homeowners with heirs’ property.

While her research won’t be available until late 2024, Way said, Tarrant County is affected by the issue.

It “definitely creates a much higher level of housing instability when someone has inherited a home and the title is passed down across generations, it becomes harder to manage and maintain a property,” Way said. “These properties are much more vulnerable to being lost.”

The issue can become even more complex if more than one generation is involved in the title entanglement.

One of the main reasons a home’s ownership can become messy is because of a lack of estate planning, Raza said. It’s something most people don’t think about until it’s too late.

“It really is very much a luxury. Because for a lot of people — in particular (those) that are low income — they’re having to deal with the here and now and the immediate issues, whatever those immediate issues are,” Raza said. “And part of that is just getting information out and doing community education, where people are kind of aware of what their rights and responsibilities are.”

The surest way to ensure ownership of a property is up to date and clear is through a will. But administering a will or the estate of a dead person without a will, known as a probate, can set back someone $388 just to file paperwork.

“The probate process is expensive. It’s long. It’s time-consuming,” Williamson said.

However, there are alternative ways to ensure ownership of a property is clear if there is no will or the will was not probated. The descendant of the property owner can file an affidavit of heirship, which gives property to the heirs of a person who has died. The document must be signed and sworn to before a notary by someone who knew the person who had died and the family.

Another tool is to have a Transfer on Death Deed, which allows people to transfer ownership of their property after they die without having to go through a probate process.

“The challenge is just being able to access affordable legal counsel, to be aware of these options and to help navigate them,” Way said.

Unwanted consequences

Not being the documented owner of a property can lead to a spiral of issues for the heir. One such issue is not receiving any notification of taxes due on the house, which can lead to missed payments and eventual foreclosure.

Those living in the home may also miss out on legal tax exemptions provided to homeowners and relief programs. A lack of information about property tax law alongside other issues contributes to Black and Hispanic families paying more taxes than their white counterparts.

According to the National Consumer Law Center, Black families pay nearly 13% more in taxes nationally than white families.

Before 2020, it was very hard for Texas homeowners who inherited their primary residence to qualify for a homestead exemption, and nearly impossible to qualify for a 100% homestead exemption.

“That meant that a lot of heirs homeowners who live in a home they inherit, they didn’t have access to homestead exemptions so they’ve been paying hundreds or even thousands more dollars in property taxes,” Way said.

The passage of SB 1943 changed that rule. Heirs homeowners can now access that exemption if they file the proper paperwork, Way said.

Title issues also open the door to predatory practices against vulnerable homeowners.

While researching this issue, Williamson found that predatory investors often target families and communities where clouded titles are prevalent. Investors will often pressure the owners to sell the house below market value, buy the house from them and then resell it at market value.

“They’re more vulnerable in many ways to scammers,” Williamson said, “Think about it — the property tax, once you’re in default and going through that process, it becomes public. So all the scammers come out of the woodwork. They’re offering you money to help you save your home. It’s just a mess.”

Possible solutions

Amaya said it’s hard to watch this happen to people.

“What makes me cry is the predatory stuff that I see, and that’s a real thing,” Amaya said.

These predatory practices have prompted some legislative action to protect heirs. The American Bar Association’s section of real property, trust, and estate law and the Uniform Law Commission launched a project in 2007 called the Uniform Partition of Heirs Property Act to address this issue.

The Uniform Partition of Heirs Property Act preserves the right of a co-tenant to sell his or her interest in inherited real estate while also ensuring that the other co-tenants have legal protections from a forced sale.

Texas is one of 23 states to have enacted this bill into law.

Experts said the best way to protect your house and therefore wealth is to be informed and prepared. One way to do this is to make estate planning more accessible to the communities directly impacted by clouded titles.

Williamson said this can be done by working with faith-based organizations, trusted community leaders, and even funeral homes.

For many people, homeownership is the American dream, Amaya said, but you have to protect it by making sure all titles are clear.

“It is absolutely a pathway to wealth, especially for people who don’t have it,” Amaya said.

As for McEwing, the biggest lesson he has learned from this experience is patience and trust.

“You gotta be patient with the legal process. … This doesn’t happen overnight,” he said. “There’s a trust factor, patience, and educating them on the process because all of us didn’t know the process.”

Sandra Sadek is a Report for America corps member, covering growth for the Fort Worth Report. You can contact her at sandra.sadek@fortworthreport.org. At the Fort Worth Report, news decisions are made independently of our board members and financial supporters. Read more about our editorial independence policy here.

This article first appeared on Fort Worth Report and is republished here under a Creative Commons license.