How to work with inheritance properties?
Even though working with off market properties is hugely beneficial for your finances, the deals’ closing process might take a bit longer, and you may also need greater knowledge to address motivated sellers. As you surely know, real estate investors often specialize in certain types of leads and know their twists and turns by heart. But in case you’re just starting – or are looking for an opportunity to expand your expertise –, today, we decided to dive into inheritance properties.
Inheritance properties include probate and heirship leads, which means that you will deal with people who lost a relative. To learn the basics and masted these leads, we invited Gaylene Rogers Lonergan to host the webinar “Navigating inheritance properties like a pro.” She is certified in commercial and residential real estate law in Texas and has practiced law for 37 years.
Thus, she brought all her experience to the seminar and taught attendees everything there is to know about this type of leads. Here, we bring you a summary with the most common questions.
What is the difference between probate and heirship?
As we just mentioned, inheritance properties include both probate and heirship. Heirship is generally defined as the legal right to receive money, property, or possessions from a person who has died intestate (without a will). Then, an heirship proceeding is a court proceeding used to determine who an individual’s heirs are or preparation and execution of documentation to determine that.
On the other hand, probate is generally defined as the legal process of administering the estate of a deceased person. It resolves all claims against the estate and distributes the dead person’s property. Requires and applications must be filed in the probate court, and proceedings take about 3 to 8 weeks (depending on the county).
Pros and cons of investing in inheritance properties
As you can imagine, working with inheritance properties carries several advantages, but sadly it doesn’t lack disadvantages. Among the pros, Rogers listed:
- Inheritance properties are one of the most lucrative niches in real estate investing.
- 80% of all properties left to the family get sold within one year.
- Many people who inherit property almost always want to sell.
- And, generally, they do not want to invest any money to make the properties attractive to retail buyers; therefore, they are more often willing to sell at wholesale.
Meanwhile, these are the downsides:
- They can be very time-consuming.
- You need to deal with multiple sellers (family members).
- Sometimes, there are minor heirs that require additional maneuvers.
- Inheritance properties can bring up family issues that need to be dealt with (in other words, you might encounter unavailable or unwilling heirs).
- Title issues are pretty common and must be resolved.
- There might be child support liens, tax liens, and bankruptcies.
If there’s a will in place, the legal process is as follows:
- You need an original executed will submitted to the Probate Court in the county where the individual died, together with a legal petition to have the court approve the will.
- Once the will is submitted to the Probate Court, a hearing date is set (generally 30 days out.
- At the hearing, the executor and attorney appear, and the executor provides oral testimony as to the specifics of the will’s validity.
- If the executor is not named an “Independent” Executor in the will, extra steps are required for approval.
- Following the hearing, the Probate Court Judge generally has its clerk issue Letters Testamentary to the executor (authorizing the executor to act under the will, including the power to sell property).
- Lastly, a certified copy of the probate application and will has to be recorded in Real Property Records to establish ownership in beneficiaries.
If there’s no will at sight, things get a bit trickier. Rogers explained that this situation is known as intestacy because the person died intestate. In Texas, the Texas Estate Code sets explicitly out who the heirs of the deceased individual are. This is decided based upon the family situation of the dead and the nature of the property (separate or community).
For instance, if the deceased was married at the time of their death with children all from the same marriage, everything goes to the surviving spouse (in community property), or 2/3 goes to the children and 1/3 to the surviving spouse (in separate property). But if the deceased was married with children, and any of the children are not from the current spouse, half is retained by the surviving spouse and half goes to the children (in community property), or 2/3 go to the children and 1/3 to the surviving spouse (in separate property).
And the list goes on, with precisions to address each possible case. Regardless of the situation, these are the documents needed to transfer property if there’s no will:
- Certified copy of Death Certificate of Deceased – To establish that the person has died and to corroborate information given to the title company from third parties.
- Affidavit of heirship (AOH) – The Title Company prepares this; it must be signed by a family member and corroborated by two independent non-related parties who knew the deceased for at least ten years.
- Deeds from all legal heirs must be executed.
- All heirs’ names are searched, and liens against any heirs attached to the property must be paid.
Working with inheritance properties is no piece of cake. Knowing these basic legal notions beforehand is better to spot potential issues and work even harder to win smooth deals. It’s also essential that you have an attorney and a Title Company at the other end of the line, so you can quickly clear up any doubts that might come up.
But at the end of the day, it’s a very lucrative niche with a high return on investment. And that’s something that shouldn’t be dismissed at all! All you need is to ensure yourself a lead flow coming to you periodically, so you always have new people to contact. And that’s something we can do for you!
We offer probate and heirship listings in Texas, Florida, Georgia, and Utah at Real Estate IQ. They arrive at your inbox every day, from Monday to Friday, and they include the skip tracing information (phones and email addresses) of the heirs and a close relative! Subscribe now to our Premium Off Market Leads, get a special discount, and become the master of inheritance properties!
Disclaimer: The blog articles are intended for educational and informational purposes only. Nothing in the content is designed to be legal or financial advice.