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Almost everything in Indian Country relates to the status of the land. Today, about 60 million acres of Indian land are held in trust by the federal government and managed by the BIA on behalf of the Secretary of the Interior for the use and benefit of the 573 federally recognized tribes. Social and cultural connections to the land remain strong for the 5.2 million American Indian and Alaska Native peoples. A high percentage of this rapidly growing population (about 60 percent), lives on or near reservations.

Homeownership in native communities is about more than personal wealth. It is about perpetuation of culture, preparing future generations, and building collective wealth.
—JEFF GILBREATH, Executive Director, Hawaiian Community Assets

Tribal and Indian Lands in Indian Country

In Indian Country, most economic and community development activity depends on the status of the land. Both tribes and individuals own lands in three basic categories: trust, restricted fee, and fee simple (or fee).

Planning an economic development project in Indian Country requires three essential steps:

  1. Identify the land to be developed.
  2. Determine and understand the legal ownership status of the land.
  3. Identify or create an appropriate property right to support a mortgage on the property.

Land Status

Trust lands

  • The most common form of land tenure in Indian Country.
  • Legal title is held by the federal government.
  • Tribal trust lands are held in common and managed by the tribal government with oversight of the BIA.
  • Individuals may hold parcels of trust land as well, often as trust allotments.
  • Trust lands may not be conveyed or sold without the consent of the federal government.
    • While this makes trust lands more difficult to use as collateral, leases on trust land are readily pledged as security for loans.
    • Leasehold mortgages are the main vehicles for lenders to invest in housing and business on trust lands.
  • The state of Hawaii also holds about 200,000 acres of Hawaiian home lands in trust for Native Hawaiians, which may be used as homestead sites eligible for leasehold mortgages.

Restricted fee lands

  • Legal title of restricted lands is held by a tribe or the individual, but the land is subject to restrictions against sale or conveyance without the approval of the BIA.
    • While this makes restricted fee land more difficult to use as collateral, leases on restricted fee land are readily pledged as security for loans.
    • Leasehold mortgages are the main vehicles for lenders to invest in housing and business on restricted fee lands.
  • These lands are under tribal jurisdiction and the protection of federal law, and usually are not subject to state or local taxation.

Fee lands

  • The owner of the land holds the legal title to the lands.
  • Fee lands are freely alienable without federal approval and thus can be used as collateral for a mortgage.
  • When owned by a tribe or individual within the boundaries of a reservation, fee lands are subject to tribal jurisdiction.

Other Land Categories


Allotments are discrete parcels held by individual tribal members. Original allotments were established by the General Allotment Act of 1887, which divided reservation land into individual parcels of about 160 acres for each tribal member. More than 120,000 tracts of allotted lands are held in trust by the federal government for individual Indian owners, mostly on reservations in the Great Plains, Rocky Mountain, Northwest, and Western regions.

The federal government, through the BIA, manages allotted lands, including managing the income and property of the allottee. In practice, this generally consists of leasing the parcels or negotiating royalties from, for example, rights-of-way, grazing, mining, and farming. The leasing proceeds are held in the federal trust account for distribution to the owners of the allotment. Allotments present challenges to land use similar to trust lands:

  • Federal approval required due to restricted trust status.
  • Increasingly fractionated ownership.
  • Complex probate processes for multiple common interests.

Fractionation – Divided Ownership

When an allottee dies without a will, ownership often is divided among all the heirs, but the land itself is not physically divided.

  • The heirs of an original allottee own undivided interests in the allotment.
  • Many allotments now have hundreds and even thousands of individual owners.

Here is a simple illustration of fractionation using only three offspring in each generation.

Fractionation is a serious problem facing Native communities.

  • BIA estimates on fractionation (2017):
    • 150 reservations with 2.9 million fractional interests owned by approximately 243,000 unique owners.
  • Consent from a majority or supermajority of the parcel’s owners is required to use the land for any purpose – leasing for agriculture or natural resources purposes, or business and home site development.
  • With so many owners, individual income from the land is minimal – sometimes less than what it costs the federal government to process the payment.

Congress has attempted to fix this fragmented system through these strategies:

  • Encourage land consolidation – the Land Buy-Back Program.
  • Promote gift deed conveyances, wills, and estate planning – American Indian Probate
    Reform Act.
  • Relieve federal bureaucratic burdens on land use while returning control to tribes—the HEARTH Act.

The Land Buy-Back Program for Tribal Nations. Established in 2014, this ambitious program implements the land consolidation component of the Cobell Settlement, which provided $1.9 billion to purchase fractional interests in trust or restricted land from willing sellers at fair market value. Consolidated interests are immediately restored to tribal trust ownership for uses benefiting the reservation community and tribal members. As of September 2017, the program has purchased more than two million acres from more than 700,000 fractional interests on almost 40,000 tracts at 45 locations.

The American Indian Probate Reform Act of 2004 created a nationwide Indian probate code and changed the way trust estates are distributed to heirs. In effect, it replaced state law with a federal probate code. The Act applies to all individually owned trust lands unless a tribe has its own probate code. Its purpose is to:

  • Limit fractionation.
  • Encourage estate planning and drafting wills.
  • Maintain land in trust status.

General probate rules:

  • When the landowner dies, the BIA must “probate” the land in order to pass it to the owner’s heirs.
  • With a will, the landowner may do almost anything with their land, except devise the land in trust to a non-Indian unless they are lineal descendants.
  • Without a will, the process of dividing the land to the owner’s heirs is complicated: The surviving spouse gets a "life estate" and holds property until death, then it is inherited by children, grandchildren, parents, or siblings.

Writing a will or using a gift deed to convey land is very important because:

  • The owner has more control over the property and assets.
  • Trust land retains trust or restricted status if it passes to eligible heirs.
  • Fractionated ownership is reduced or eliminated.
  • Land with consolidated ownership interests becomes more usable and economically productive.

Several programs offer specialized resources and assistance for will writing and estate planning for landowners of trust lands. For example, the Indian Land Tenure Foundation provides extensive information and forms for managing the probate process.

The HEARTH Act of 2012

Leases of trust lands play an important role in tribal housing development since trust lands may not be sold or encumbered. In Indian Country, mortgage financing typically is secured by a leasehold interest. Delays in approving individual leases cause a great deal of frustration to homebuyers and lenders alike.

In 2012, in a major shift of authority over tribal lands, Congress amended the Long-Term Leasing Act through the Helping Expedite and Advance Responsible Tribal Homeownership Act (commonly referred to as the HEARTH Act). The HEARTH Act amendments provide authority for Indian tribes to lease tribal trust lands directly pursuant to tribal law, without further Secretarial approval. This enables tribes to exercise more decision-making authority over land use decisions and engage more efficiently in larger scale homeownership and business development.

The passage of the HEARTH Act amendments was nationally lauded by tribal leaders and tribal organizations as a valuable tool that would:

  • Empower tribes to realize their potential for economic growth and job creation on tribal lands;
  • Increase community development; and
  • Strengthen tribal self-determination.

The HEARTH Act amendments establish an alternative land leasing process for tribes to negotiate and enter into leases with minimal involvement from the BIA.

  • Tribes that adopt their own tribal leasing regulations approved by the Secretary of the Interior no longer need BIA approval to issue leases.
  • Tribal lease regulations may provide for the lease of lands for residential purposes for up to 75 years.
  • Where the federal government has undertaken an environmental review process in connection with a federally funded activity, the tribe can rely on that federal environmental review.
  • Tribes issuing leases under approved tribal leasing regulations are required to provide the BIA with copies of the leases issued.

This means that tribes can avoid having to obtain BIA approval for each lease on a transaction-by-transaction basis. More tribal authority over leasing reinforces sovereignty and self-governance, and further enhances the tribes’ ability to develop their lands more efficiently.

Implementing the HEARTH Act – Deference to Tribal Land Use Decision-Making

Amendments to the Part 162 Leasing Regulations

The BIA implements the HEARTH Act through amendments to the long-term leasing regulations in 25 Code of Federal Regulations Part 162, with new subparts particularly for business and residential leases. These regulations reflect stronger deference to tribes for decisions related to the leasing of tribal trust and restricted lands, such as:

  • Mandatory approval of leases, amendments, subleases, assignments, and leasehold mortgages, unless the BIA identifies a “compelling reason” for nonapproval.
  • Elimination of insurance and bonding requirements.
  • Deference to a tribe’s negotiated valuation.

Advantages to using tribal leasing regulations:

  • Speeds up the process for approval of homeownership documents such as leases, leasehold mortgages, and promissory notes.
  • Builds a readily accessible local recording system of tribal homeownership documents and normalizes the recording process.
  • Allows tribal housing developers to more efficiently plan larger-scale housing projects.
  • Creates more certainty to the homebuyer and lender around interest rates and closing time frames, and allows potential homebuyers to “lock” in a rate with a lender.

Despite the substantial benefits of the HEARTH Act, coupled with the BIA leasing regulations, to date very few tribes have taken advantage of the opportunity to use these tools by promulgating tribal leasing ordinances that take advantage of HEARTH Act authority. While securing lease approval authority under the HEARTH Act does not provide a cure-all for tribal leasing concerns, it can be an excellent start.

Securing a Leasehold Interest in Tribal Trust Land

Leases of trust lands play an important role in tribal housing development since trust lands may not be sold or encumbered. In Indian Country, mortgage financing typically is secured by a leasehold interest in the land on which the home will be located. Delays in approving individual leases cause a great deal of frustration to homebuyers and lenders alike.

Leasehold Interest

A long-term lease of tribal trust land issued by a tribe to a tribal member for homeownership or residential purposes (homesite lease) is different from a lease of a dwelling. The lessor is often the tribe. The goal of a lease is to give the tribal member an interest in the land resembling homeownership, so the lease term typically is 50 years. Now the HEARTH Act permits residential leases up to 75 years. These longer term leases also make the mortgages eligible for purchase in the secondary mortgage market (25-year term leases do not correspond to the requisite 30-year mortgages). The residential lease essentially creates a private property interest in Indian Country.

Tribal leasing and lending laws are important to defining ownership rights and responsibilities. These laws must balance the individual’s expectations as a landowner with the tribe’s need to maintain its lands as a steward of tribal resources and development.

Model Lease for Homeownership

A popular model lease form used by tribes and recognized across the federal government was the HUD “One-Stop” lease for homeownership on tribal trust lands. The One-Stop lease was drafted in the 1990s to collectively accommodate the HUD Section 184 program, the USDA RD 502 programs, and the VA lending program. That model lease sets out generally agreed upon terms for using trust and restricted land as collateral for mortgage lending.

Today, tribes that enact tribal leasing laws demonstrate the tribe’s commitment to creating meaningful ownership rights for its citizens while maintaining tribal authority over trust lands and public safety. Importantly, these tribal laws inform both the homebuyer and lender who invest in a home on trust land under a long-term lease about the rules and process to enforce their respective rights and responsibilities.

Tribal leasing laws should address these key issues:

  • Eligibility for a residential lease.
  • The application process, including the environmental review process.
  • Circumstances under which mortgages will be permitted without further approval by the tribe, such as mortgages for home purchase, construction, or improvements.
  • Maximum lease terms of up to 75 years are permitted under the HEARTH Act.
  • Standard requirements (no illegal use of the premises, use only for principal residence).
  • Ownership of improvements.
  • The lessee’s right to transfer the leasehold (usually limited to tribal members).
  • Upon death, the right of the lessee’s heirs to inherit the leasehold for the remainder of its term, either under a will, intestate succession, or a special beneficiary designation outside of probate (usually limited to tribal members).
  • The right of a nonmember to occupy the premises pursuant to a court order upon a divorce decree issued by tribal or state court.
  • Dispute resolution procedures, presumably in tribal court where one exists.

Securing a Residential Lease

Every tribe has its own unique process for securing a residential lease of its tribal lands. This process usually involves a set of core actors: the tribal housing program, the tribal council, and the BIA. Here are the typical steps in this process.

Tribal Leasehold Approval Process Flowchart

Almost everything in Indian Country relates to the status of the land.