Heirs’ property issues have posed significant challenges for many landowners and producers. You might face the same if you inherited a family land without legal ownership documentation. For one, you may be unable to access some USDA programs and services. Thankfully, the Heirs’ Property Relending Program (HPRP) can provide an opportunity for you to resolve these ownership and succession issues.
Heir’s property and the Heirs’ Property Relending Program (HPRP)
Heirs’ property refers to family land inherited without a will or legal documentation of ownership. In such cases, the land becomes jointly owned by descendants of the deceased individual whose estate did not go through probate. While heirs have the right to use the property, they do not possess a clear or marketable title to the land due to unresolved estate issues.
Under the HPRP, eligible entities such as cooperatives, credit unions or nonprofit organizations, may receive funds from the USDA to act as intermediary lenders. These intermediary lenders then provide loans and assistance directly to heirs. They can then help them resolve the issues related to their inherited land.
How the HPRP works
The HPRP process operates as follows:
- The intermediary lenders may apply for loans. This can go up to $5 million.
- The USDA will select and announce the intermediary lenders.
- The heirs can apply directly to one of the selected intermediary lenders for loans and assistance.
- The heirs may utilize the loans to resolve title issues. They may use it to finance the purchase or consolidation of property interests. They may use the loan to cover the costs associated with a succession plan.
- The heirs will repay the loan at the intermediary lender’s interest rate. On the other hand, the intermediary lenders will repay USDA at the 1% interest rate.
Eligibility and loan usage
To be eligible for the HPRP, heirs must meet certain criteria. Individuals or legal entities must be authorized to incur debt and resolve ownership and succession matters. They should also be family members or heirs-at-law connected by blood or marriage to the property’s previous owner. The heirs must also complete a succession plan as part of the loan agreement.
It is important to note that eligible individuals cannot use the loans obtained through the HPRP for:
- Land improvement
- Development purposes
- Acquisition or repair of buildings
- Personal property acquisition
- Payment of operating costs
- Finders’ fees or similar expenses
The Heirs’ Property Relending Program offers a pathway for heirs to address ownership and succession issues. But it can also help protect family farm legacies, promote economic viability and facilitate the preservation of farmland for future generations.