Generational housing or heirs’ property is a term used when real estate is occupied by a generation or more of family members, but none of the occupant’s names are on the deed to the property. I’ve seen this a lot in the states where I practice. An example of generational housing is Granddaughter is living in her Grandpa’s home. Granddaughter’s mother lived there as well, and the home is still in Grandpa’s name. Traditionally, this was a form of generational wealth building and keeping valued property in the family for stability. Although generational housing is a great concept, the non-legal transfer of the property causes complex legal challenges if a living occupant wants to benefit from the property’s value. For example, an occupant would be unable to refinance the home or take out any equity in the home for home improvements or to purchase new property because the property is not in their name. Also, no one would have authority to rent out the property or land for value if there is no proper legal deed. This could lead to a decrease in the value of the property and loads of money in attorney fees to correct the legal title. Finally, this could lead to multiple people owning property who may not all agree on what should happen to the property or the value of the property. It often causes rifts in families and could lead to the destruction of legacy property.
If you’ve encountered this issue or know of families living in generational housing, make sure they speak to an attorney to help them resolve the legal issue of ownership.