Ag Policy Blog

New USDA Loan Program for Heirs' Property

Chris Clayton
By  Chris Clayton , DTN Ag Policy Editor
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Jennie Stephens, CEO of Center for Heirs' Property Preservation in Charleston, S.C., said on a press call Thursday that the new $67 million USDA lending program for heirs property will help unlock the wealth of land that has been unavailable to Black farmers. (image from screenshot)

USDA on Thursday announced the department is providing $67 million in loans through a new program to help deal with legacy issues on heirs' property, a problem that has challenged Black farmers for decades.

Heirs' property refers to land that is inherited without a will or documentation of ownership. It often involves multiple heirs with claims on the land as well. Historically, farmers on heirs' property have bene unable to access loans or USDA programs because they cannot get a farm number without proof of ownership or control of the land. Congress in 2018 added language to the farm bill for USDA to find ways to resolve some of the issues around heirs' property.

USDA created the Heirs' Property Relending Program to help producers and landowners use the loan funds -- up to $600,000 -- to buyout out other people with claims to land, consolidate a title and clear the titles on the ground. Those farms would then become eligible for other USDA agricultural programs as well.

Lenders such as cooperatives and credit unions can apply for up to $5 million at 1 % interest when a two-month sign up window begins in late August. USDA will loan the money to those intermediate lenders who will then loan out the funds to the farmers.

Agriculture Secretary Tom Vilsack held a press conference with advocates for Black farmers, and a group of senators and House members focused on the topic to address "fractionated interest of land." Vilsack noted in some instances land has been carved into fractions of ownership over time, making difficult for owners to access any USDA aid in the past.

"The title of a property is not only proof of ownership, but it is really the gateway to a myriad of programs and opportunities," Vilsack said.

The secretary added that Black farmers were not the only owns affected, but Latino farmers, Native Americans and white farmers also have had similar challenges in the past with heirs' property as well. "This is a reflection and a consequence of poverty," he said.

While language was approved in the 2018 farm bill, funding needed to be appropriated to create a loan program that could address heirs' property. The program will work as a revolving loan fund.

Sen. Raphael Warnock, D-Ga., said too many farmers in Georgia lack the legal documentation to keep the farm securely in their family and pass it down. Warnock said roughly one-third of southern Black-owned land is considered to be heirs' property. Warnock added that's not by accident and stems from generations of discrimination against Black farmers in agriculture.

"Heirs' property is a real and direct threat to ownership and the ability of these farmers to build intergenerational wealth for their families," Warnock said.

Warnock added he and Sen. Tim Scott, R-S.C., have been working with the Senate Appropriations Committee to seek more continued funds to help with the program. Rep. Sanford Bishop, D-Ga., chair of the House Appropriations Subcommittee for Agriculture, also has been working on similar funding on the House side.

Bishop said heirs' property landowners have faced challenges because all the landowners need to agree about the land-use decisions on that ground. There also has been a history of investors who have come in and stolen land from farmers as well.

Rep. Cheri Bustos, D-Ill., pointed out she's a white woman who represents largely white farmers in her northwest Illinois district. She noted out of 9,600 family farms in her district, the USDA Ag Census shows just one Black farmer. Fifteen years ago, there were at least 13 Black farmers in the district. "That's still a miserably, miserably low number, but going from 13 to one is a 92% decrease over that period of time," Bustos said. "So why would we have one Black farmer. So, when you look at the history, it adds up."

Bustos said in her time on the committee, she has heard of Black farmers being harassed and denied services at USDA, or having their applications delayed. "We've heard of them being pushed off their family property," Bustos said. She added, "It's nothing short of a tragedy, it's shameful."

Jennie Stephens, CEO of Center for Heirs' Property Preservation in Charleston, S.C., said the lending program will help "unlock the wealth" of land that has been unavailable to Black farmers. Her group has worked to address 285 title issues for farmers on roughly 1,400 acres. Stephens pointed to a story about a farm family offered a chance to sell 300 acres of forestry, but the title search showed the ground was heirs' property. Her organization was able to help clear the title to sell the ground.

"So I just want to emphasize again how important it is to having families have access or the ability to access funds to resolve their title," Stephens said.

Dania Davy, who works on farm and estate planning at the Federation of Southern Cooperatives, pointed to farmers in Alabama trying to preserve their farm, but one of the heirs has sold their shares to a non-family member who doesn't have the same goals for the property. "The risk is that the non-family member can at any time can petition the court for a partition action," Davy said. The loan program would allow the family to buy back the interests in the land and get legal assistance to keep that from happening again.

USDA will be trying to extend outreach to educate farmers and landowners about the loan program, though now it's unclear just how many landowners will become eligible for the loan program.

"I don't think we fully know how many farmers may be positively impacted by this program, until we get it set up, and we see what the demand is for assistance," Vilsack said. "But I think it's fair to say there are probably thousands of landowners out there in the countryside today who could be positively impacted."

Along with that, USDA also announced nearly $1 million for universities and non-profits to increase risk-management training for underserved farmers and ranchers as well. The various projects will include education on federal crop insurance, wildfire preparedness, financial management, recordkeeping and risk analysis.

More detail on the heirs' property lending program can be found at https://www.farmers.gov/…

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

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