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Real Estate Investing in California Probate

Real estate investing in California probate provides investors and individuals the option to purchase properties at discounted prices. Probate real estate refers to property that belonged to a person who is deceased. When decedents' do not engage in California estate planning prior to death, their estate may be forced to sell their property to settle outstanding debts.

Real estate investing in California probate is nearly an untapped market. While a few real estate investors have discovered this potential goldmine, the general public is unaware they can buy properties held in probate. Additionally, the majority of probate personal representatives do not realize that real estate can be sold during the probate process.

When probate real estate is secured by a mortgage note the decedent's estate is responsible for paying loan installments. The exception to this rule is if the property is jointly titled with the surviving spouse. In this situation, the spouse takes over home mortgage payments. If the spouse is financially incapable of paying future payments, the property can be sold to eliminate financial burdens.

Decedents' estates are also responsible for property taxes, homeowner's association dues, homeowners insurance, and required maintenance. If the estate does not possess adequate funds the probate property can fall into foreclosure.

In some cases, multiple heirs are designated within the decedent's last will to receive probate real estate. If heirs do not want the property or cannot afford to properly maintain it, they can elect to sell the real estate for lump sum cash.

California utilizes two processes for selling inheritance property held in probate. In most cases, estate administrators must obtain court confirmation before they can act as the estate fiduciary. All actions must be approved through the court.

The second protocol allows probate executors to settle estates without court approval under the Independent Administration of Estate's Act (IAEA). Decedents can grant IAEA authority within their last will or estate executors can petition the court to obtain approval.

When estate administrators are required to obtain court approval to sell probate real estate, buyers are required to submit offers through the court. Otherwise, the sale can take place privately between probate executors and buyers.

Locating California probate real estate involves reviewing public records through local courts that handle probate cases. Once decedents' Wills are submitted to the court they become a matter of public record. Information pertaining to real estate holdings is included within the Will, along with contact information for the estate executor.

After locating properties of interest, investors search property records to determine if a mortgage loan is attached, as well as the appraised property value. When decedents own real estate outright, or if the loan balance is low, there is a good chance they can buy the property below market value.

Investors who participate in real estate investing in California probate often develop a list of a dozen or more properties. They contact estate administrators to discuss the potential sale. Heirs will often agree to sell probate property for 20- to 30-percent below market value in order to eliminate the debt from the estate.

California has some of the strictest probate laws in the country. Investors who buy probate real estate often work with California probate lawyers to ensure they follow protocol. In most cases, investors compete with other buyers to purchase probate properties. Once bids are accepted, buyers must obtain court confirmation and transfer property rights within 30 days.

Anyone can buy probate property, but those who have never engaged in this type of purchase should spend time becoming educated about the process. Individuals may want to work with real estate investors or probate specialists who can assist them throughout the buying process.

We encourage you to peruse our California probate real estate article library to learn more about the benefits of buying probate properties. Take a moment to subscribe to our mailing list to receive instant notification when new probate articles are published.