Are parts of the California real estate market turning into Detroit-esque places where plummeting values have rendered some properties virtually worthless? It’s beginnning to look that way in some of the tougher markets.
I walked away from a little deal earlier this week. A woman contacted us by submitting an heir advance request form.
The basic facts are that her Husband’s parents had both died a few years ago leaving a small house in a tough part of the Inland Empire, along with a vacant parcel several blocks away. The Mother’s estate, the last to die, had never been probated and she left no Will (hence “intestate”).
Although the house doesn’t have a mortgage on it, there are about $3K in back property taxes plus a variety of City liens. As is often thecase, this is where this family’s story goes downhill.
The Husband was in jail for what was probably not the first time and expected that a longer commitment was awaiting his future. The Wife has no income and, unable to pay the water bill for several months, the City turned it off then ultimately “Red Tagged” the house and pulled the certificate of occupancy, forcing out the wife and teenage children. The City promptly boarded up the house to protect the copper, I guess.
The Wife, being resourceful (but dirt broke) had to borrow $1.00 from her friend in order to fax a copy of the Mother’s death certificate to us. Very sad situation.
We discussed choices and agreed that an heir advance was not available because there was no open probate, let alone an exit plan to repay the advance.
An administrator loan was out of the question because there was no way that either the incarcerated Husband or displaced Wife could make payments, nor did the property value support the loan-to-value protective equity that we require, and we were back to the issue that the family had no means to open probate. Also, the alleged heir, the logical first choice of administrator, was hardly bondable as probate bond companies aren’t rushing to do business with people in jail or prison.
After some wrangling, Wife agreed to convince Husband, the heir, to sell and assign his interests in the estate to us for $15,000, on short terms. We promptly arranged for Husband to sign documents in jail with my own notary super-signer, Ernie, and got thru that hassle.
Monday morning, Wife calls to ask to “cancel the loan.” She knew this was a sale, not a loan. This kind of claim of ignorance drives me nuts although by this time, I was ready to throw my hands up anyway. You see, the previous day I did a little more due diligence and discovered that:
- House was in a part of town that I’d never visit during daylight hours, let alone night
- The cost of rehabbing the house would never be finalized as we would be constantly replenishing the stolen copper (wiring and pipes)
- Across the street was a fleet card gas station, a car body repair shop and several warehouses that backed up to the (convenient for them) railroad tracks.
- Probability of additional liens from Department of Health Services looked higher than estimated
- After-repaired property value was looking like $60K subject to further decline, and fix-up would likely top $40K
This deal now reminded me of the joke cartoon that was past around many years ago for a missing dog: small brown, three-legged terrier, left ear chewed up, right ear missing, not fond of strangers, recently castrated. Answers to the name “Lucky.”
So, I was happy to unwind this inheritance purchase deal and assured this Woman that we’d destroy our documents and would not pursue it any more. Also, we’d promptly return her ‘original’ documents consisting of copies of the decedent’s orignal 1968 deeds and lots of Code Enforcement notices.
Frankly, I couldn’t have been any happier or quicker to get out of this mess.
