The Legal Implications of the State of Michigan Adopting the Uniform Partition of Heirs of Property Act

An important issue currently facing many Michiganians who inherit real estate is how they will be able to preserve their wealth moving forward. In many situations where families do not plan appropriately, there are no due process protections in place for heirs of property owners, and they remain vulnerable to court-ordered partitions. This can occur when an interested party, outside of a family relationship, has a fractional interest in the property and can then force a sale of the property pursuant to their existing right as a tenant in common.

Currently, House Bill 4924 is being considered by the Michigan Legislature for enactment of the Uniform Partition of Heirs of Property Act (UPHPA) which seeks to address these types of issues. This bill is based on a Uniform Act produced nationally by the Uniform Law Commission. This group is a non-profit organization formed in 1892 to draft non-partisan legislation and seeks uniformity for adoption amongst the states. So far, about half of the states have already enacted the UPHPA.

The UPHPA is designed to address issues related to heirs’ real property, which often arise in situations where land has been passed down through generations without clear legal documentation or formalized estate planning. This can lead to disputes among heirs regarding ownership, management, and disposition of the property. Wealthier families often use sophisticated estate planning techniques to create trusts or LLCs to hold their property and ensure their land remains under family control. However, property owners without access to professional guidance are more likely to use a simple will to pass assets to their heirs or to die intestate without a will. In either case, the owner’s descendants will take ownership of the real estate as tenants in common. There are certain requirements in these situations where (1) there is no written partition agreement; (2) at least one co-tenant acquired title from a relative; and (3) 20% or more of the owners or interests are related.

The UPHPA seeks to provide a framework for resolving disputes over heirs’ property in a fair and equitable manner. Its intention is to protect the interests of all heirs while promoting the efficient and orderly administration of estates. Key provisions of the UPHPA typically include procedures for initiating partition actions, guidelines for determining fair market value, and mechanisms for facilitating buyouts or sales of fractional interests.

Forced sales usually bring sparse returns. Court-ordered auction procedures are not designed to receive the highest possible purchase price, but rather to sell the property as quickly as possible. An auction might be conducted with minimal notice to the public, not much opportunity to inspect the property, and no opportunity for bidders to finance their purchase if bids must be paid in cash soon after the auction is completed. Throughout this process, a “speculator” (often a developer) may be able to buy other siblings’ interests, for example, at a price far below the property’s fair market value. In the end, the siblings who wanted to maintain their family property lose their land and a significant part of their inherited wealth.

This is another instance where current law governing tenancies in common leaves heirs’ property vulnerable to devastating court-ordered forced sales. The proposed adoption of the UPHPA in Michigan seeks to address the broader social and economic implications of the inheritance of property, including its disproportionate impact on minority and low-income communities. In our area, statistics have shown that the citizens of the City of Detroit are greatly affected by these situations, more so than their neighbors in the surrounding suburbs. Thus, the effectiveness of the UPHPA will assist those most in need in Southeast Michigan in addressing systemic inequities and promoting land tenure security for some of its more vulnerable populations.

It is important to note that the UPHPA will not prevent a willing seller from selling their property to a buyer. The statute only protects landowners who want to keep their property from being forced to sale. The bill does so by providing a series of reasonable court procedures designed to inform heirs of their rights and give those who wish to retain family-owned real estate the opportunity to do so without unduly restricting the rights of heirs who wish to sell their inheritance.

John D. Gwyn is an attorney in our Livonia office where he focuses his practice on the representation of community associations, management companies and developers with a particular emphasis on real estate and commercial litigation. He has handled many types of community association related matters, including assessment collections, lien foreclosures, bylaw violations, civil rights defense, and creditor bankruptcy matters.

He has gained experience in community association law over the years through his representation of condominium and homeowners associations, as well as individual homeowners, in matters involving real estate, contract, and construction defect litigation issues. His extensive litigation and transactional background provides him with the experience necessary to handle even the most complex legal issues that neighborhood associations may encounter. He may be reached at (734) 261-2400 or jgwyn@cmda-law.com.