New law addresses vulnerability of joint property owners - By RODDIE A. BURRIS
Monday morning. On the steps of the county courthouse. There, blacks in South Carolina have lost one of the greatest symbols of their heritage: land.

For generations, sheriff's sales have been a tool of developers and others to gain control of coastal property, primarily from African-Americans, where ownership is not clear. The price paid for heirs property is often a pittance of its fair market value. A new state law is designed to change that. It grants families a right of first refusal to buy land if another family member — who alone can force a sale — wants out. It also guarantees families a window of time to do so. There is much at stake.

"If 70 percent of (black) heirs took the necessary steps to protect their land, it could change the entire economic face of the Southeast," said Willie Heyward, managing attorney for the Center for Heirs' Property Preservation in North Charleston. "It's a giant problem in South Carolina." It's unclear how effective the changes will be in keeping lands within families.

While the law creates a clearer opportunity to buy out willing family members, coming up with the required dollars in a tight time period can be a challenge. Additionally, blacks historically have been slower to use wills as a means of passing possessions to future generations. Still, hopes are high the new law might help stem the flood of valuable, black-owned heirs property moving away from traditional owners. And the increased attention on the issue has given rise to other options for families. For example, some hope the creation of family-owned limited liability companies, a more solid option to keep land within families, will take off. Lowcountry lawmakers, for some years, have aimed to limit the historic vulnerability of poorer families trying to hold on to what many say is a birthright. A few earlier attempts at legal change stalled, primarily over concerns that well-intentioned language could have negative ramifications for family members who had the right to access their share of an inheritance.

This year, South Carolina lawmakers modeled change on legislation in North Carolina that has been on the books for several years. The S.C. change was crafted by Sens. Clementa Pinckney, D-Jasper, and Robert Ford, D-Charleston.

HISTORY OF CONFUSION
Nearly 14 million acres of heirs property has been lost nationwide since the end of the Civil War, according to published reports. About 1.3 million acres of such land, bought by former slaves, remains in the hands of their families. Ex-slaves bought property as a way to establish and anchor their freedom during Reconstruction, the center said — a feat in the 1870s, given the numerous obstacles blacks faced.

Freed slaves began to come into property possession after Gen. William Tecumseh Sherman issued Special Field Order No. 15 in January 1865. It awarded huge portions of unwanted, "worthless" land to black families along the South Carolina and Georgia coasts, set aside in 40-acre plots. Generations passed down the land without wills. That created nightmares for families in preserving or extracting value. Without clear ownership, for example, banks won't make loans on the property.

Also, family disputes have resulted in land being sold to developers at a fraction of its worth. Under S.C. law, land that is passed on without a will is legally owned by all the heirs in common. Therefore any heir, regardless of how small his or her stake, can request a buyout.

Developers have used this provision to buy a family member's stake for pennies on the dollar, then forced a complete sale through the courts. When such suits are brought, the court can divide the land, allow one or more family members to buy out the disgruntled heir, or force the sale of all the land. None of those options may be optimal for blacks, said Columbia civil and real estate attorney H. Ronald Stanley, who cautioned that blacks can no longer afford to sit on their acres of heirs property as if it were "safe" agricultural land. "It's a tremendous problem in South Carolina," Stanley said, "particularly among African-Americans." In some cases, the uncertainty has opened the door for unscrupulous developers, cheating attorneys and even conspiring county employees to wrest land away from blacks. "County (offices) have taken a lot of land from people," Ford said.

CLEARING IT UP
Land that doesn't have clear ownership, as is the case with much heirs property, sits outside the stream of commerce and can't be used to its best economic potential, said Stanley, who for 10 years worked on clearing titles to heirs property. He quit because the work is so tedious, but he has since returned to the work because the need is so great. "Often you have heirs living up North, with no intention of returning, and who may only have one one-thousandth of an interest, forcing a partition action," he said. "With this new statute, it will require that heir living in New York to offer that property to a family member first."

Settling land title claims among family members, some of whom may not know each other, can be a big emotional issue that requires time, openness, and trust-building. The new law gives family members 10 days to tell a court they want to buy out a disgruntled family member. It also sets up a system of appraisal and gives families 45 days to pay the fair market value of the share. It also gives family members time to reach an agreement on a sales price prior to court intervention. This process gives families a chance to buy before a court-ordered sale puts land on the open market. In such cases, property heirs have found themselves on the courthouse steps bidding against deep-pocketed developers who stand to make millions once land is acquired.

SEALING THE DEAL
Though there are problems statewide, blacks in the Palmetto State have taken their biggest land losses in the Lowcountry, said Heyward, of the Charleston preservation center. The center conducts programs in Beaufort, Berkeley, Charleston, Dorchester and Georgetown counties, educating black landowners about the pitfalls of heirs property, and helping secure clear ownership to their lands.

Through that, Heyward recommends heirs take an additional new step: limited liability companies. Such companies are formed by existing family members. Approved by a court, the company is the clear owner of the land, and the family is the clear owner of the company. Those who want out can sell at any time, but only to a family member or the company.

Adolph Dupree Brown, of Hilton Head Island, and his family took steps through the preservation center to protect their land. They ended up forming a company that specializes in protecting property through limited liability companies. Brown's great-, great-, great-, great-grandparents, who can be traced back to slavery in Richland County in the 1830s, left a 21-acre tract to their heirs, without a will. The land is along U.S. 278, the main route through Hilton Head, at the gateway to the island. There are 180 heirs who can claim an ownership interest in the property.

Brown, who has lived in New York most of his life, led the family to form a limited liability company, the Matthew and Tina Jones Limited Liability Co., a couple of years ago. One member from each branch of the family tree has a seat on the board. The panel makes all decisions about the property by voting. No one else can get into the company. But the company struggles with one family member who lives in New Jersey and wants to sell his interest for more than Brown says his interest is worth.

In spite of that, the company has signed a deal with Carolina First bank to build a $14 million, 26-unit condominium on part of the property, Brown said. That could generate millions of dollars in ongoing revenue for the family, making this deal one of the first of its kind on the island for African-Americans, Brown said. "Once everybody signs on, they can't sell their interest to an outsider," Brown said. "They have to sell to a family member or the LLC."

Brown's partner in the LLC business venture, Gateway Development, is an African-American tax attorney in Rock Hill, Horace Jones. Jones travels around the state meeting with heirs property owners who want to protect their land, and said that is 90 percent of his business. "It is vastly important for blacks to know that, not only can they protect their property, they can develop it, too," Jones said.