Can probable be avoided?

12 Replies

Hey everyone how's it going ? I am new to the site and new to real estate I am actually not even an investor yet but that is what I want to be soon. However I have a question on behalf of my father. His dad passed away last month and owned his own home. He did not leave it to anyone. He had three of his own kids including my dad. And also had 3 step children. My dad was told each kid even the step kids could get a portion of the sale of the house if they went that direction. No one other than my dad has any interest in the house but he is worried that even if he assumes the house that he may still have to enter probate and still pay everyone else. He wants to rent it and keep it long term. Would he have to pay everyone else even if they don't want apart of the house ? I told him this is too good of a deal to pass and could potentially be my in as an investor as well. Any advice and suggestions? Thank you in advance for the help and advice 

I am not a lawyer, nor do I play one on TV.  This is my belief.  If someone wants to transfer a property to their name, the estate will have to go through probate.  Is there a mortgage?  The lender may never find out that your grandfather has passed, so someone may be able to keep paying, but probably not legal or kosher to not let the lender know.

I don't think that probate is a costly deal, just a time consuming deal, especially if your grandfather died without a will.  The siblings could just quit claim any interest in the home so that your dad could put it in his name and rent it out.

thank you for the input Joan I appreciate that. Yes there still is a mortgage.  Also for everyone else I meant probate sorry my phone auto corrected in the subject line 

Welcome to the BP forum community. Your topic headline must have been distorted by the enigmatic spellcheck function of either the website or your iPad, as mine does.

I've been doing probate deals exclusively in CA for many decades, even in your town, Lakeside. 

Absent a will naming which bequeaths specific assets to certain beneficiaries, the laws are pretty clear cut for intestate (no-will) estates. 

Your Father may be able to receive possessory benefits from his Father's house, however he is not the only possible claimant besides his siblings. Other claimants could include secured creditors, unsecured creditors like DHCS Medi-Cal who may force the issue thru CA DOJ. 

As to the step-siblings, not much to be concerned  about unless they can demonstrate they were adopted by your Grandpa. 

Besides residing or rental income, your Daddy-O isn't doing you any favors as you'll get the privilege of dealing with the eventual challenges of multi-generational probate succession. 

It may be easier to buy out the other two heirs and clean up probate now. We make loans to the people in charge of estates and trusts to help them do this. 

Alternatively, we buy heirs' interests pizza-by-the-slice style. Hope your aunts and or uncles don't find my marketing and call me first or go to CloseProbate website.

Remember that heirs know how to add but not subtract. 

@Brent T. , sorry my computer crashed I will try again.  General disclaimer I am not licensed in CA and cannot give you legal advice there, I am simply telling you black letter law concepts.  First there are 3 ways real property passes if someone dies.  The first is some type of survivorship where you are part owner like joint tenants with rights of survivorship.  Next is there is a Will, you are a named heir and so inherit.  This normally means probate but sometimes if the value is low there is simplified probate.  There must be some court order to transfer title.  If no one else wants the property they can disclaim their interest or even quitclaim their share to your dad.  You did not say if there was a Will.  If someone dies without a Will it is called intestate.  In that case the state where they resided or where the land is located has laws that say how the property will pass.  It normally goes all or part to the surviving spouse and the rest to the biological children.  If no spouse it goes to the children.  I am not aware of any state that has given heirship rights to stepchildren.  Keep in mind California is crazy enough they may have done it, but I have never heard of any state doping it yet.  California has palimoney property splits which are pretty rare but becoming more common.  If it is land and your dad's name is not on it, it will take a court order to change the name to your fathers.  You may as well call an attorney and get started.  Make sure you ask prices and especially hourly rates.  There is a huge difference between attorneys and it is not that difficult to do.

    Last but not least there are laws that prohibit banks from calling the loan because the mortgagor has passed away.  As long as payments are kept up the loan should be ok.  I hope this helps.  Good luck.

Just like the folks above, I am not an attorney. But I can tell you that just because there is no will that doesn’t mean it will automatically need to go to probate. If you haven’t already you should go to your local county recorder’s office and look up the deed on the property. If he filed a deed such as a life estate deed, transfer upon death deed or even a bargain and sale deed the ownership may have already transferred to his children. People mistakenly assume that just because there is no will that probate will be automatic. Folks actually file these types of deeds to help their survivors avoid the hassle of probate court. The laws vary from state to state. Again, you will still need advice of an attorney but at least you may know if you actually need probate or not. Good luck!

There's also a Living Trust where the beneficiaries are listed and at the demise of the Trustors, the property immediately transfers to the beneficiaries.  They perform a Quitclaim process into their names and have no taxes on the transaction (this is the Capital Gains escape most estates use.)  HOWEVER, the trust must be create before death AND the property Vested into the Trust.

Without a Trust, both a Will and the Intestate situations will go through probate;  the will only states the desired distribution and the Court normally honors it.  The Intestate probate, the Court will decides who gets what.  The Court order then creates the transfer of real property.

The case of still holding a mortgage is described here:

http://www.sweeneyprobatelaw.com/Articles/What-Happens-If-I-Inherit-California-Real-Estate-With-A-Recorded-Deed-Of-Trust-Mortgage.shtml

@J Beard is correct I forgot to mention trusts.  There are a lot of different types of trusts.  They will avoid probate but will not avoid taxes in most cases.  There are some very complex trusts that do change tax status.  Most trusts are self explanatory.

Thank you all for the insightful information it is really appreciated. So regardless the probate must occur is my understanding. So let's say he does assume the property goes to probate etc. while the process of probate is occurring would he be able to rent it out? He is worried about the probate timeline due to being told it could take upwards of a year and doesn't want to pay on the property if he can't rent it out. 

Properties do not automatically go into probate.

Someone or some creditor, agency or claimant must pay the filing fee and file. 

I can give you well over a hundred different things that could happen as I've been doing this for so long. My guess is that BP posts are your only homework. You'll get opinions from people with opinions, not experience.

The lender could initiate foreclosure due to any number of breaches. If they has a non-curable breach and call the loan, you'd have to pay it off in its entity. If they took to sale, the 3rd party high bidder would now own it. Probate would never have to be filed in order to pass title in that manner!

An adverse possessor could satisfy all of the statutory requirements and later file a quiet title action to perfect title. I've completed this process fully on a number of properties. 

While you debate the right thing to do, someone else may have a similar plan that does not involve you. Therefore, you'd be wise to come up with a plan to resolve before someone else does this and bypasses you

The house in question has an ARV of approximately $375,000 and a loan balance of $236,000. So there is sufficient equity to make it worth liquidating and dispersing funds to heirs. I imagine with the neighborhood it's in it would also be a highly desired rental. @Rick H. has mentioned an important fact that a house doesn't have to be probated. Do the other heirs want a piece of it? Or is dad the only interested party?

according to my dad his brother doesn't want anything to do with it. His other brother actually has passed away as well. Someone told my dad I forget it if was an attorney or realtor that his deceased brothers share would have to go to his two sons. So that is another factor in the equation as well.