Heirs Property Story: Janice

Client name: “Janice” (Actual names throughout have been redacted and replaced to protect the client’s privacy) 

Acreage: 0.46 acres, including a house 

Location: Central North Carolina 

Year the heirs’ property was created: 2008 

Legal tools/strategies used: Settlement negotiations, conversations, external funding 

Outcome: Settlement 

Disputes between family members present significant barriers to families solving heirs’ property issues by clearing title. In this particular matter, family conflict was the main source of friction.  Although this matter was ultimately resolved satisfactorily to all parties, it demonstrates the issues that arise when family property issues are left unaddressed for a long period of time. 

Janice’s House 

Janice’s mother passed away in 2008 without a will. She intended for Janice to inherit her house since Janice had lived there with her mom and cared for her until her death in 2008. However, Janice’s mother never expressed this intention in a will. Under North Carolina’s laws of intestacy, the house passed to Janice and her eight siblings. In 2010, Janice moved back to the property, and Janice’s sister Mary obtained the rest of the siblings’ interest in the property for small amounts of money. This action gave Mary 8/9ths of the interest in the property.  

Intestacy rules apply when a person dies without a will, and they determine who is entitled to inherit from the person who died. 

The tension between Janice and Mary began before the death of their mother and intensified slowly over time. The difficulties in Mary and Janice’s relationship played a significant role in this dispute. When Janice lived on the property without any of the other siblings, she only paid the property taxes occasionally.  Consequently, Mary and one of their brothers paid most of the taxes. Janice did, however, pay for repairs and improvements, as well as home and renter’s insurance. In 2020, Mary brought an action against Janice in court seeking rent if Janice wanted to stay on the property. Mary wanted to sell the property and evicting Janice was the first step for the sale. Janice obtained the help of North Carolina Legal Aid, and Mary’s suit against Janice was dismissed. The court determined that because Janice and Mary were tenants in common, they were co-owners of the property which meant Janice could not be evicted. 

Partition Action 

However, having the case dismissed did not stop the legal conflict between the two siblings. After the eviction case was dismissed, Mary brought an action to partition the property by sale. Under North Carolina law, this action would either physically divide the property between the individuals who held an interest in the property or force a sale of it. If the court ordered a sale of the property, each person with an interest in it would receive an amount of money equal to the proportion of interest they held. For example, since Mary had acquired an 8/9ths interest in the property, she would receive 8/9ths of the proceeds if the property was ordered to be sold.  

Where the property at issue is a small residential plot with a house occupying most of the land, the court almost always orders a sale rather than physical division of the property. Janice appeared in court pro se (representing herself without an attorney) and the court ordered a partition by sale. With no other recourse to help her stay in the house, Janice sought the help of an attorney to appeal the court’s decision. The stakes for Janice were very high. As an older woman with no real capital or source of funding, an eviction meant she would have nowhere to live. Additionally, any proceeds she would receive from the sale would be minimal both due to the value of the property and because she only owned 1/9th of the interest in the property. 

Janice’s new attorney quickly determined that Janice needed additional help and involved the Wake Forest School of Law Environmental Law and Policy Clinic. While some of the Clinic’s work focused on the title transfers to Mary from her siblings, the bulk of the work focused on legal strategies to fight the lower court’s decision on appeal. The Clinic developed a set of arguments for Janice. First, if the property was sold, Janice should receive her interest in addition to a contribution for the amounts she spent on the property. Second, the property should be partitioned in kind rather than by sale. Finally, the court clerk erred when awarding Mary attorney’s fees. The Clinic also used the discovery process to obtain more information about how Mary had obtained her siblings’ interests in the property. 

Discovery is a required process when parties are involved in a court case that involves the exchange of information relevant to the case.

At the same time, recognizing that the appeal was unlikely to be successful, the Clinic and Janice’s attorney worked to secure funding for a settlement offer. Based on conversations with Mary’s attorney, it was clear that Mary was willing to consider a settlement in exchange for her interest in the property. However, Janice did not have sufficient funds to buy out Mary’s interest. The Clinic knew that a corporate donor had started a campaign to help solve heirs’ property matters in the Southeast and so began speaking with this potential donor to secure funding for Janice’s settlement offer.

Just before the trial was scheduled to begin, the corporate donor offered to provide $30,000 in funding for a settlement offer. Janice gave her permission to make the offer and Mary accepted with the condition that the money was received within 30 days. Due to concerns about the short timeline and how this might affect Janice’s legal rights on the appeal, the Clinic and Janice’s attorney met with Mary’s attorney, who agreed to expand the timeline for payment to 60 days. They also secured an agreement that neither party would sue each other again over this matter and that Mary’s interest in the property would be transferred to Janice. Once the settlement agreement was signed by all parties, the matter was resolved.

Lessons Learned

There are several lessons to be learned from this matter that relate to how the issue began and how it was ultimately resolved.  First, estate planning matters. If Janice and Mary’s mother had a will that left the property to Janice as she intended, this entire dispute would have been avoided.

Second, a willingness to seek legal counsel and advice early in the process can have a big impact on how expensive and difficult things become later. If Janice had realized that her living situation was insecure before Mary tried to evict her, she could have consulted an attorney either before Mary obtained all their siblings’ shares or before Mary brought any court action. Family mediation could also have been helpful in resolving the concerns in a structured and facilitated dispute resolution process. Many factors affect resolving heirs’ property issues, but preventing some of the problems by involving an attorney or mediator early can avoid litigation costs later.

Third, negotiation and settlement are very important tools. Courts can be constrained as to what remedies are available. In contrast, the range of possibilities is much wider if a client is able to settle. In this case, the court likely could not have ordered the property be sold to Janice. Rather, it would likely have been limited to ordering a sale by auction. If North Carolina had adopted the Uniform Partition of Heirs Property Act, the court would have had greater flexibility in resolving these kinds of situations.[1] Here, the lawyers communicated and were able to determine that Mary was willing to settle. Whatever the underlying reasons for Mary and Janice’s family conflict, Mary was glad to be able to sell her interests to her sister, be done with the property, get paid for her share, and not evict Janice. Once this was accomplished, the lawsuit was resolved.

Finally, the external funding was crucial to the success of this matter for Janice. Without the funding from a corporate donor, it is unlikely that Janice would have been able to provide enough money for settlement to satisfy Mary. While several strategies were discussed to raise the money, including a GoFundMe, ultimately, a donor was the best and quickest solution. This case study provides an example of how critical it is to build a structure to provide outside funding and systemic help for individuals working to clear title to heirs’ property, as access to capital is critical to these matters and often is not available from the family co-owners.

Footnotes:

[1]This is especially true for the New York version of the UPHPA, which requires a mandatory settlement conference between the parties before the action moves forward.