NLS is working with top practitioners, legislators and professors in the field of trust and estate law to try to develop legislation that would keep hundreds of Missouri properties from becoming blighted and abandoned while preserving millions of dollars of hard-earned urban core wealth.
Today there are approximately 7,000 abandoned urban core properties in Kansas City. Abandoned properties frequently become blighted, are magnets for crime (with high numbers of police and fire calls), and lower neighboring property values. They cost Kansas City millions of dollars each year in lost tax revenues, code enforcement actions and, ultimately, demolition expenses. They also greatly reduce the quality of life for urban core residents.
One of the primary causes of abandoned properties is that urban core homeowners frequently die intestate, which means that they have no will, trust or other legal means of transfer their home to their loved ones. The result is that either (1) there is no one to move into the property or (2) the property is occupied by a family member who does not have legal title to the home (and cannot afford to prosecute a probate action). Without legal title, the family member cannot obtain loans to maintain the property and, most importantly, cannot sell it. As a result, time-after-time, the home falls into disrepair and is abandoned.
U.S. census records show there are roughly 20,000 owner-occupied properties in Kansas City’s urban core. Roughly estimating the owners of 60% of these properties—approximately, 12,000-- have no means of transferring ownership upon their death. Accordingly, the properties are at serious risk of abandonment.
Each abandonment is also a lost opportunity to transfer much-needed wealth from one generation to the next, and this wealth literally disappears. Assuming conservatively that each at-risk urban core property is worth only $25,000, the Kansas City urban community risks losing $300,000,000 ($25,000 x 12,000). That staggering loss has far-reaching consequences not only for the urban community, but for the City as a whole.
The question becomes: How to keep the thousands of homes in urban neighborhoods from being abandoned after their owners die intestate?
One Possible Solution
NLS and our partners are investigating a revision of Missouri Trust and Estate law, limited to Kansas City, to permit title to transfer to a family member (or other claimant) if the following conditions occur:
--The property must have a fair market value, as determined by the County Assessor, of less than $50K;
--There must be no living owner of record and no action filed in probate court to obtain ownership of the property;
--90 days must have passed since the prior owner’s death; and,
--A family member, either the spouse or a direct descendant of the prior owner must file a Certificate of Responsibility with the Probate Court and the Jackson County Recorder of Deeds, stating that he/she assumes legal responsibility to (i) secure and maintain the property, (ii) pay all property taxes that come due after the Certificate of Responsibility is filed on the property and (iii) correct any code violation. The Responsible Individual must provide notice of the Certificate of Responsibility to all known heirs (under intestate succession law), stating any competing claim on the property must be filed in Jackson County Circuit Court within two years.
The Responsible Individual would have a legal right to take possession of the property immediately upon filing the Certificate of Responsibility.
During the two years following the filing of the Certificate of Responsibility, any other heir or claimant to the property could file a probate action or other action to assert their interest in the property. Thus, for the two years following the filing of the Certificate, all rights that are currently available to heirs and other interested parties in the house would remain in effect. The proposed legislation would have no impact on rights under existing law during the two-year waiting period.
Upon the expiration of two years, if no probate action or other action claiming a right in the property has been filed, the Responsible Individual could file a request with the Court for a Court Administrator’s Deed. The filing would require a certification by the Responsible Individual stating (i) the Responsible Individual has paid all taxes on the property and (ii) no one has filed an action in Jackson County Circuit Court to claim ownership of the property. The Responsible Individual will then receive an administrative deed for the property granting him/her the former owner’s interest in the property. If a competing claim is timely filed or an estate opened, the property would be probated through the estate and title would pass pursuant to established laws.
While the law would be limited to Kansas City, it could be expanded to include any area that wanted to participate and had a Land Bank or its functional equivalent.
As a not-for-profit organization, NLS will devote less than 5% of its time and resources on advocacy for this proposed legislation.
What the Legislation Would Accomplish
Limited to homes of relatively small value located in Kansas City, the legislation would allow claimants of deceased property owners to take possession and maintain at-risk properties during a two-year period through the use of a simple “Certificate of Responsibility.”
By establishing an abbreviated process by which claimants may obtain title (without having to incur the prohibitive cost of a probate or a quiet title action) it rewards the first claimant or heir to file a Certificate of Responsibility but it protects other heirs by providing a two-year window in which to file an action in probate court to secure his/her interest under the laws of intestate succession—just as he/she would under existing law. The Legislation would also permit the Land Bank to obtain possession and title when no claimant or heir was immediately forthcoming.
These targeted changes in the law would prevent hundreds of houses from becoming abandoned each year. Because it would reduce the number of abandoned properties, it would reduce police and fire costs for the City while increasing tax revenue. It would also provide the City with a readily identifiable “Responsible Individual” to pursue, if there were code violations on the property. Finally, and no less importantly, it would enhance the transfer and preservation of wealth from one generation to the next.