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Heirs' Property Relending Program FAQ

Frequently asked questions about the Heirs’ Property Relending Program (HPRP).

Heirs’ Property Relending Program Overview

What is heirs' property?

Heirs’ property is a legal term that refers to family land inherited without a will or legal documentation of ownership. The family owned land that is jointly owned by descendants of a deceased person whose estate did not clear probate. The descendants, or heirs, have the right to use the property, but they do not have a clear or marketable title to the property since the estate issues remain unresolved.

What is the Heirs’ Property Relending Program?

The Heirs' Property Relending Program (HPRP) provides funds to eligible entities to relend with the purpose of assisting heirs to resolve ownership and succession issues on farmland with multiple owners. Once USDA’s Farm Service Agency (FSA) selects lenders, heirs can apply directly to those lenders for loans and assistance. HPRP is a loan and will need to be repaid as directed by the 2018 Farm Bill. 

Why is the program needed?

Heirs’ property issues have long been a barrier for many producers and landowners to access USDA programs and services, and this relending program provides access to capital to help producers find a resolution to these issues. HPRP is another example of how USDA is working to rebuild trust with America’s farmers and ranchers.  

It has historically been challenging for heirs to benefit from USDA programs because of the belief that they cannot get a farm number without proof of ownership or control of land. However, FSA provisions allow heirs to provide alternative options that allow an heir to obtain a farm number. 

Though those affected are in all geographic and cultural areas, many Black farmers and other groups who have experienced historic discrimination, have heir’s property. USDA is committed to revising policies to be more equitable and examining barriers to heirs’ property owners is part of that effort.

The program’s benefits go far beyond its participants. It will also keep farmland in farming, protect family farm legacies and support economic viability. 

How does the Heirs’ Property Relending Program work?

USDA provides funds to intermediary lenders. They in turn, relend the funds to Heirs to help them resole ownership and succession issues on farmland with multiple owners.

This is the breakdown of the process:

  1. Intermediary lenderscooperatives, credit unions, and nonprofit organizations – can apply for loans of up to $5 million at 1% interest.
  2. USDA selects and announces intermediary lenders. 
    1. They will be listed on farmers.gov/heirs/relending later this year.
  3. Heirs can apply directly to one of the selected intermediary lenders for loans and assistance.
    1. Heirs may use the loans to resolve title issues by financing the purchase or consolidation of property interests and financing costs associated with a succession plan.
    2. Some of intermediary lenders may be able to provide these services.
  4. Heirs will repay the loan at the interest rate set by the intermediary lender.
  5. Intermediary lenders will repay USDA at the one percent interest rate.

Information for Lenders

What is an intermediary lender?

Intermediary lenders relend funds from USDA to heirs. They are called “intermediary” as they will work with heirs and the USDA. 

What are the eligibility requirements for intermediary lenders?

Eligible intermediary lenders include cooperatives, credit unions, and nonprofit organizations. They must be certified as a community development financial institution and have experience and capability in making and servicing agricultural and commercial loans that are similar in nature.

If applications exceed the amount of available funds, those applicants with at least 10 years or more of experience with socially disadvantaged farmers that are located in states that have adopted a statute consisting of enactment or adoption of the Uniform Partition of Heirs Property Act (UPHPA) will receive first preference. States with UPHPA currently include Alabama, Arkansas, California, Connecticut, Florida, Georgia, Hawaii, Iowa, Illinois, Mississippi, Missouri, Montana, Nevada, New Mexico, New York, Rhode Island, Texas, South Carolina, and the Virgin Islands.

A secondary preference tier is established for those that have applications from ultimate recipients already in process, or that have a history of successfully relending previous HPRP funds.  When multiple applicants are in the same tier, or there are no applicants in tier 1 or 2, applications will be funded in order of the date the application was received.

Who will determine rates and terms?

Selected intermediary lenders will determine the rates, terms, and payment structure for loans to heirs. Interest rates will be the lowest rate sufficient for intermediaries to cover cost of operating and sustaining the loan.


Information for Heirs

How will heirs use the loans?

Heirs may use the loans to resolve title issues by financing the purchase or consolidation of property interests and financing costs associated with a succession plan. This may also include costs of buying out fractional interests of other heirs in jointly-owed property to clear the title (closing costs, appraisals, title searches, surveys, preparing documents, mediation, and legal services).  Heirs may not use loans for any land improvement, development purpose, acquisition or repair of buildings, acquisition of personal property, payment of operating costs, payment of finders’ fees, or similar costs.

What are the eligibility requirements for heirs?

Intermediary lenders will make loans to heirs who:

  • Are individuals or legal entities with authority to incur the debt and to resolve ownership and succession of a farm owned by multiple owners
  • Are a family member or heir-at-law related by blood or marriage to the previous owner of the property
  • Agree to complete a succession plan

Are there items heirs cannot use the loans for?

Heirs may not use loans for any land improvement, development purpose, acquisition or repair of buildings, acquisition of personal property, payment of operating costs, payment of finders’ fees, or similar costs.

Are Freedmen eligible for a loan through the HPRP? Is other assistance available?

Currently, FSA is accepting applications for HPRP from organizations to apply to become intermediary lenders. Once selected, as an heir and a Freedman, you will be eligible to work with an intermediary lender to receive a loan.

In the meantime, if you have questions about establishing a farm number, FSA now has alternative documentation options for heirs. See the “Getting a Farm Number for USDA Assistance” section for more information.


Program Details

How much in loans is available to intermediary lenders?

Intermediary lenders can apply for up to $5 million each at 1% interest beginning in August 2021.

Why do intermediary lenders get the loan at one percent interest, yet charge heirs a higher interest rate?

Intermediary lenders will determine the rates, terms, and payment structure for loans to heirs. They will set interest rates to an amount that covers their costs of operating and sustaining the loan.

Will heirs and intermediary lenders need to repay the loans?

Yes. Heirs must repay the loan to the intermediary lender. The intermediary lender must repay USDA.

What happens if the heir and/or intermediary lender default on the loan?

FSA will work with an intermediary lender to attempt to resolve any default by an intermediary lender. Intermediary lenders are to establish loan servicing options for ultimate recipients in the loan agreement that is approved by FSA as part of the application process.

Why is this a loan program and not a grant?

The 2018 Farm Bill directed USDA to make loans to eligible entities to relend the funds to individuals or entities to assist heirs with undivided ownership interests to resolve ownership and succession on farmland that has multiple owners.

Why should I get a loan from an intermediary lender if FSA can also provide loans for resolving title issues?

The Heirs’ Property Relending Program allows heirs to work with organizations you are comfortable with and who have deeper understanding of your unique situation.


Getting a Farm Number for USDA Assistance

What is a farm number, and why would I need one?

A farm number is required to be eligible for many different USDA programs, including lending, disaster relief programs, participation in county committees, price support, and other programs.

How do I get a farm number?

There is no charge to get a farm number, and no obligation. Your local USDA Service Center can provide you with a farm number for your land. Typically, you need proof that you own or have rights to use the land with a document like a lease or title. You can also provide alternative proof of property rights.

Does USDA accept different types of proof of property rights?

The 2018 Farm Bill authorizes alternative documentation for heirs’ property operators to establish a farm number. Operators on heirs’ property who cannot provide owner verification, or a lease agreement, may provide alternative documents to substantiate they are in general control of the farming operation.

What is the difference between a farm operator and farm owner?

A farm operator is defined by USDA as an individual, entity, or joint operation who is in general control of the farming operations for the current year. The farm operator is the person who runs the farm, making day-to-day management decisions. The operator could be an owner, hired manager, cash tenant, share tenant, or a partner. USDA defines a farm owner as an individual or entity who has legal ownership of farmland.

How do I establish my farm as an operator?

How to establish your farm as an operator will vary based on whether you farm in a state that has enacted the Uniform Partition of Heirs Property Act (UPHPA). UPHPA helps preserve family wealth passed to the next generation in the form of real property. If a landowner dies intestate, the real estate passes to the landowner’s heirs as tenants-in-common under state law.

In states that have adopted the UPHPA, you can use:

  • A court order verifying the land meets the definition of heirs’ property as defined in the UPHPA, or
  • A certification from the local recorder of deeds that the recorded owner of the land is deceased and at least 1 heir has initiated a procedure to retitle the land

In states that have not adopted the UPHPA, you can use:

  • A tenancy-in-common agreement, approved by a majority of the owners, that gives the individual the right to manage and control a portion or all of the land
  • Tax returns for the previous 5 years showing the individual has an undivided farming interest
  • Self-certification that the individual has control of the land for purposes of operating a farm or ranch
  • Any other documentation acceptable by the FSA office, that establishes that the individual has general control of the farming operation, including, but not limited to, any of the following:
    • Affidavit from an owner stating that the individual has control of the land º limited power of attorney giving the individual control of the land
    • Canceled checks and or receipts for rent payments and/or operating expenses

How do I establish farm ownership?

Proof of ownership, when establishing a farm number, may include the following:

  • A copy of the deed, if recorded
  • An unrecorded deed, if the specific USDA program does not require a recorded deed
  • A land purchase contract or other similar document that affirms ownership interest
  • An FSA employee’s check of the record at the county land records office or website
  • A certification of an heir that may not be able to provide a legal documentation to confirm ownership of the property. The certification will need to be accompanied by documentation such as:
    • Real estate tax assessment or bill
    • Proof of gift tax
    • Will
    • Affidavit of ownership
    • Other documentation as may exist under State law

How do I get started?

USDA will announce the selected entities later in the summer of 2021. At that point, you can select an entity on the list to receive a loan to resolve the ownership issues. At any time, you can contact the FSA office at your local USDA Service Center, which you can find at farmers.gov/service-locator. Schedule an appointment to meet with the county outreach coordinator to discuss your questions and interests and learn more about USDA programs. To learn more about applying for loans to participate, visit farmers.gov/heirs/relending.