Co-authored by Kiley Yuthas, Housing & Community Development Graduate Intern
Many residents occupy land informally through inherited property, lack of formal titles, or informal housing infill development. Because of these informal tenancy situations, residents cannot access home equity or government assistance, and may face increased threat of displacement or forced eviction.
Cities can play a central role in addressing these issues that impact the stability of their economy. They are key in facilitating pathways to formalization and should consider incorporating these pathways into displacement prevention efforts, particularly among vulnerable residents. Formalization not only strengthens residents’ rights but also stabilizes neighborhoods and supports intergenerational wealth building.
Understanding Informal Tenancy
Although informal tenancy is frequently associated with developing countries, it also exists across U.S. cities, albeit in ways that are often hidden or interwoven in formal markets. For example, in New York City, housing advocates estimated in 2008 that there were 100,000 illegal apartments in the city; in 2016, a scholar at UCLA estimated that there were 50,000 unpermitted accessory dwelling units (ADUs) on single-family homes in Los Angeles. Rising housing costs, limited affordable options and complex property laws have given rise to two key forms of informal tenancy (PDF):
- Informal infill: In densely populated cities with high housing costs and constraints on urban growth, there is often intense demand for lower-cost units, particularly for low- and middle-income households. In instances of informal infill, projects such as home renovations, accessory dwelling units (ADUs) or subdivided buildings create new rental units outside of the city’s permitting process and in violation of zoning codes. These units are often more affordable than formally permitted and zoned housing, making them attractive to people who otherwise might not be able to afford similar housing. However, these arrangements also leave tenants without legal protections or recourse if a property is cited or demolished.
- Heirs’ property: In cases of inherited land or housing, formal ownership of a property can be complicated to establish, particularly if the deceased person’s estate did not clear probate. Joint ownership among multiple heirs can complicate legal control of a property, and unresolved estate issues compound with each generation. Additionally, tenants who live in inherited properties may face challenges associated with probate that result in informal tenancy even in cases where there is clear and uncontested heirship.
Instances of informal tenancy often arise in response to cost or process barriers associated with homeownership (PDF). In cases of illegal infill, building owners may attempt to bypass permitting and zoning regulations to avoid administrative fees and delays associated with inspection and approval. In heirs’ property cases, households may choose not to formalize tenancy due to the high cost of legal assistance in complicated probate cases or remediation in cases of contested ownership among heirs. There are also many instances of inherited land being subdivided between heirs without formal legal processes, particularly in rural and lower-income communities.
These informal arrangements may meet short-term housing needs but often come at the expense of long-term stability. In cases of informal tenancy, tenants are left vulnerable to displacement, particularly in areas vulnerable to natural disasters. After Hurricane Harvey, many Black families in Houston were deemed ineligible for federal relief programs when they could not produce a clear title for their homes. In Puerto Rico, where many homes have been built outside of formal permitting processes and lack documentation due to a history of inheritance and subdivision among heirs, many households struggled to access federal relief after Hurricane Maria due to their lack of documented ownership. Non-formalized tenancy can also inhibit tenants’ ability to build equity in and transfer their property, invest in home repairs and improvements or avoid forced eviction.
Legal and Administrative Tools for Cities
Municipal governments can provide critical resources to support vulnerable residents in their efforts to formalize property ownership and tenancy, including:
- Title clearing programs that provide legal aid for probate, mediation and lien resolution.
- Land rights offices that serve as one-stop hubs for permitting, notary services and zoning guidance.
- Fee waiver programs for low-income residents filing probates, transferring titles or seeking approval for small-scale subdivisions and renovations.
- Transfer-on-death deeds that help residents avoid expensive probate processes and ensure clear ownership transfer.
- Digitized property records that streamline title verification and improve interagency coordination.
- Partnerships with legal aid and community-based organizations to ensure accessible, culturally competent support.
Why Municipalities Should Support Formalization
Securing land rights is not just about streamlining paperwork; it is an important part of promoting equity and stability in communities. Supporting residents in formalizing property tenancy promotes community well-being and helps increase resilience to displacement. Formalization programs also align with broader local goals such as neighborhood revitalization, affordable housing preservation and disaster recovery readiness. Facilitating pathways to formal property ownership and tenancy expands opportunities for marginalized residents to build generational wealth and supports long-term housing stability.
Cities, towns and villages are key partners in helping vulnerable residents get legal recognition of their tenancy. By embedding formalization into housing and anti-displacement strategies, cities can ensure that long-term residents share in the benefits of local growth rather than being displaced by it.
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