Home title problems leave some Detroit families who need debt help in tough spot
Tenai Leali wants to pass down her grandparents’ home — the one she’s living in now — to her own children.
The three-bedroom bungalow on the west side of Detroit is full of family memories, like opening up gifts at midnight on Christmas and Thanksgiving dinners that continue to this day. When her grandmother died a few years ago, Leali decided to stay in the home.
But after losing her job in 2014, Leali fell behind on the home's property taxes. In 2020, when she tried to apply for programs to help with home repairs and paying off property back taxes, she realized that the house needed to be in her name. The fact that the house is still in Leali's grandfather's name disqualifies her from most of those programs. The home is in the probate process and the title hasn't yet been transferred to Leali.
Leali, a single mom of three, doesn’t want to lose her home. Rent prices are high right now, she said.
“I've been stressed out trying to figure this out because the last thing you want to do is be homeless with your children,” Leali, 47, said.
It’s unclear how many Detroiters are living in homes involved in what some called "tangled titles." But it’s an issue that foreclosure prevention experts that focus on the city often come across. They say there needs to be more education on how to navigate the process. Title problems can prevent people from getting into assistance programs that help pay for home repairs or back property taxes. When a title doesn't transfer within a family, it can be a barrier for families building generational wealth through their homes.
“Every time we can keep someone in a family home, that's one more anchor in the community, that's one more family who can begin to build wealth through having a home and an asset that has remained in the family," said Alyssa Petroni, a staff attorney at Michigan Legal Services.
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Limited legal aid resources
Petroni, who provides probate assistance to the tax foreclosure prevention project at the United Community Housing Coalition, said that title issues arise when there is no will or trust in place. In those cases, when a homeowner dies and ownership of the home still remains in their name, transferring ownership is usually done through probate. But that process can be inaccessible to many because there are limited legal aid resources to help people who can't afford a lawyer.
People living in these homes often don't realize they must go through the legal proceeding to transfer the title until they need to do something with the home, housing experts said. That could include selling the home, applying for assistance for home repairs or to pay property taxes or applying for the city of Detroit's poverty tax exemption, known as the Homeowners Property Exemption.
It's an “on fire, red-hot emergency” for her clients who are facing tax foreclosure, she said.
Over the past five years, Michigan Legal Services has helped 1,179 households in Wayne County administer probate cases to transfer title to the heir occupying the home. The nonprofit legal services organization has two full-time attorneys dedicated to probate.
"The need is far greater than what we can provide," Petroni said. Probate can be done without an attorney, she said, but it's much easier with legal help.
Wayne County Probate Court said in late September that it is on pace to have about 4,400 new decedent estate filings this year. That's when an estate is opened if a person dies and their property is still in just their name. In 2021, there were 4,708 such cases. The court does not track how many of these filings specifically involve the transfer of a house.
The cost of retaining an attorney can be a barrier for people with low incomes. Probate fees may start at $175, and that doesn't account for other court and register of deeds costs or paying for an attorney. The majority of Petroni's clients will spend under $1,000 on court fees and the property transfer, she said, but at her nonprofit firm, the legal aid is free.
Assistance programs out of reach
Title troubles have the potential to disrupt the building of generational through home ownership.
"Once the property begins to fall behind and back taxes, we know that if they're three years behind, that asset is going to be pulled from the future of the family, they are no longer going to have legal rights to the home,” Petroni said.
Wayne County Treasurer Eric Sabree said his office doesn’t track how many taxpayers are dealing with title problems.
He said the county will remove homes from the foreclosure process as long as the person occupying the home notifies his office, showing court documents and a case number. Sabree estimated that the county pulled fewer than 100 homes from foreclosure this year because they were in probate. His office refers people to legal aid services as well.
"Most of the time people find out late in the foreclosure cycle,” he said, and they can’t access a slew of assistance programs.
Leali wants to stay in her Detroit home. It's the perfect size for her family, she said, and nine minutes from her job. She likes the neighborhood.
“I was raised in this home. I lived with my parents, but I spent a lot of time with my grandparents as well,” she said. “We had big family dinners. We had family gatherings. So this house means the world to me. My grandparents loved their home and for me to have the opportunity to keep up something they took so much pride in, gives me great honor, so I definitely don't want to lose it.”
Leali's property was taken out of the tax foreclosure this year because it was in probate. For that to happen next year, she would need to notify the Wayne County Treasurer's Office of being in the probate process again or pay off the back tax debt. But the fact that the home is not in her name disqualifies her from most payment plans.
Aside from one program for non-owner-occupied properties, the majority of payment plans through the Wayne County Treasurer’s Office are out of reach for this group.
They also can’t access the county's Pay As You Stay, or PAYS, program, which can reduce back taxes for some low-income residents.
The $243 million Michigan Homeowner Assistance Fund, or MIHAF, program — which can help pay off delinquent property taxes — is out of the question as well because it requires applicants to “own and occupy the property as their primary residence.”
Those without a title can apply if they have a will or probate documents showing they are in the process of getting ownership, according to the Michigan State Housing Development Authority (MSHDA).
"For households that don’t have a home in their name, we typically make a referral to a counseling agency or nonprofit legal services," MSHDA communications director Katie Bach said in an email.
The MIHAF program has denied roughly 3% of applicants because they were unable to prove ownership of a home. This was out of the more than 9,000 applications that were rejected, as of Nov. 1.
The city of Detroit’s Homeowners Property Exemption, or HOPE program, spares qualifying homeowners from their property taxes for the current year. But in order to qualify, a person must own and occupy the home. Otherwise, the property would have to go through probate if the owner is deceased.
Home repair programs like one for roofs and window work and another home repair loan program requires ownership, too.
"We know there is great need for this type of help, and we are working as fast as we can to get these services up and running. Title issues (probate, estate planning, property transfers, etc.) will be built into the Detroit Housing Network’s line of services in the very near future," said Dan Austin, a spokesperson for the city of Detroit's planning, housing and development departments in an email.
The Detroit Housing Network is a coalition of housing nonprofits coming together to provide services for homeowners.
Housing advocates say more people need to know how to properly pass properties on to heirs and for heirs to obtain ownership through the probate process.
In 2018, the Washtenaw County Treasurer created a program called Home for Generations to help families living in inherited homes or other informally purchased houses get free legal help to clear title and establish homeownership. Once that happens, another program can help with delinquent property taxes.
Often referred to as “tangled titles” or “heirs property” in other parts of the country, title snags can have repercussions for individual families and neighborhoods.
Homes in this situation may fall into disrepair, leading to abandonment and blight, and ultimately reduce the number of affordable housing units if occupants can't obtain help maintaining their homes, according to a 2021 report from the Pew Charitable Trusts, which looked at tangled titles in Philadelphia. The city has a grant program to help low-income residents clear titles to their homes.
Nushrat Rahman covers issues related to economic mobility for the Detroit Free Press and Bridge Detroit as a corps member with Report for America, an initiative of The GroundTruth Project. Make a tax-deductible contribution to support her work at bit.ly/freepRFA.
Contact Nushrat: [email protected]; 313-348-7558. Follow her on Twitter: @NushratR. Sign up for Bridge Detroit's newsletter. Become a Free Press subscriber.
This article originally appeared on Detroit Free Press: Title can make it harder for Detroiters to avoid home foreclosure
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