Michigan’s Uniform Partition of Heirs Property Act: Protecting Family Wealth

The State of Michigan has taken a significant step towards preserving family wealth and protecting inherited property with the recent passage of the Uniform Partition of Heirs Property Act (“UPHPA” or “the Act”). This new law, set to take effect on April 2, 2025, addresses a critical gap in property rights that has long put families at risk of losing their inherited homes and land.

I. The Historical Problem

One problem, particularly for low-income families, is limited access to legal services. As such, many low-income property owners would pass away without formal estate planning providing specific instructions for the disposition of their property. Typically, then, each of the owner’s descendants would take a fractional ownership interest in the property as tenants in common.

A tenancy in common refers to a legal relationship between property owners whereby each cotenant owns a separate and distinct share in the property. One key feature of such tenancies is that each co-owner can unilaterally transfer their interest in the property without the consent of the others.

Because such interests are freely alienable, those cotenants who needed liquid assets or who could not share their portion of expenses would historically sell their interests. This resulted in third parties owning a small interest in the property.

The problem occasioned by this system is two-fold. First, owning a fractional interest in property renders property less marketable. That is, because co-ownership is less desirable than owning an outright property interest, a cotenant’s interest would become less valuable in any attempt to sell or otherwise transfer the interest. Second, in Michigan, a co-owner of property can petition a court for partition, which would result in either a split or sale of the property. Because of potential shortcomings of court-ordered sales, it is argued that heirs may not receive fair market value of their interest.

The failure of this process lies in the inability of those without access to legal services to preserve generational wealth in the form of property ownership. The UPHPA is designed to protect this “heirs property,” which refers to real estate passed down through generations without formal estate planning.

II. The Solution: The Uniform Partition of Heirs Property Act

Again, the UPHPA is set to go into effect on April 2, 2025. Under this new law, more technically, “heirs property” refers to real property held by tenants in common, which, as of the date of filing for partition, satisfies the following:

1. There is no written partition agreement with respect to the property;
2. At least one cotenant acquired title from a relative; and
3. Twenty percent (20%) or more of the owners or interests are related.

The UPHPA ensures that all cotenants have a chance to maintain their property interest or that they will receive better value for their ownership interest. Importantly, this law does not disallow a co-owner from selling their interest. Rather, it provides the other co-owners an opportunity to maintain their interest by buying out the departing owner or by ensuring a fair sale price.

Specifically, a court will first determine the fair market value of the subject property by ordering an appraisal or by another method provided in the Act. Next, the court will send notice to all non-petitioning cotenants.

At this point, the other cotenants have an opportunity to purchase the interest either outright (if they are the only buyer) or in proportion to their ownership interest (if there are multiple buyers). Essentially, this functions as a right of first refusal for cotenants before partition can be ordered.

Finally, if no cotenant opts to purchase the property, the court will order partition in kind where practicable; alternatively, if physical division is not practicable, the court will order an open-market sale and division of the proceeds. Notably, the UPHPA establishes important mechanisms for sale, which include rules regarding appointment of a real estate broker, offering property for sale, and fallback alternatives in the absence of an open-market buyer. Through this process, the Act ensures equitable sales of heirs property.

One of the most significant aspects of the UPHPA is its potential to address systemic inequities. Statistics show that citizens in urban areas have been disproportionately affected by forced property sales. By providing a framework for resolving disputes fairly, the Act aims to promote land tenure security for vulnerable populations and preserve generational wealth.

III. Shortcomings of the Uniform Partition of Heirs Property Act

Some commentators have opined that the UPHPA is not without shortcomings. First, there are no remedies short of litigation since the Act applies after a partition action has been filed. Next, the UPHPA does not address legal fees, which indicates a failure to acknowledge those individuals who already have limited access to legal services. And third, some sources have pointed out that a buyout option is really an illusory remedy for low-income families since cash-on-hand is likely limited.

While the Act certainly takes steps to protect family property and wealth, there is still room for growth. Idealistically, legal services will become more accessible to all individuals such that prudent disposition of real property at death will become a matter of common knowledge. With proper planning, information, and accessibility, heir ownership of real property need not rest on this tenuous form of ownership.

IV. Conclusion

The UPHPA represents a significant advancement in Michigan property law, aligning our state with approximately half of the nation that has adopted similar legislation. By balancing the rights of individual heirs with the preservation of family wealth, the Act ensures that Michigan families have a fair chance to maintain their inherited properties for generations to come.

Our firm is committed to informing clients about property ownership, estate planning, and preserving family wealth. Clients should work closely with our experienced estate planning and real estate attorneys to navigate these areas of law. For over 120 years, Curtis, Curtis & Brelinski, P.C., has remained committed to providing the greater Jackson community with cost-effective legal services.

Disclaimer

This publication is for general information only. The information contained is not intended as formal legal advice. If you have any questions or need assistance, please contact your attorney at Curtis, Curtis & Brelinski, P.C.

Article by: Ethan J. Loch