Inheriting a home can be a bittersweet experience. On one hand, it represents a loved one’s legacy and may hold decades of memories. On the other hand, an inherited home can come with unexpected challenges, especially when the property is facing foreclosure, burdened with code enforcement issues, or in a visibly distressed condition.
If you’ve inherited a distressed property that needs work or has legal or financial complications, knowing what to do first can make all the difference.
Below are 9 key steps to help you navigate this process thoughtfully and protect both your finances and your peace of mind.
- Understand Your Situation Early
Before making any decisions, it’s critical to understand exactly what you’ve inherited. A distressed property may involve foreclosure proceedings, unpaid taxes, liens, deferred maintenance, or even hoarding conditions. In California, these factors can significantly affect your legal options and timeline.
If the property is in probate, the court may need to grant authority before you can take certain actions. The California Courts provide a helpful overview of probate and estate administration.
- Gather Important Documents
Start by collecting all relevant paperwork related to the inherited home, including:
- The will and/or revocable or irrevocable trust
- Death certificate
- Property deed
- Mortgage statements
- Foreclosure notices
- Property tax records
In urgent situations, such as a pending foreclosure sale, it may be possible to request an emergency probate hearing within 5-7 days. Courts can grant temporary authority to work directly with lenders or foreclosure trustees, if delaying action would harm the estate or beneficiaries.
- Evaluate the Property’s Condition
Next, take a realistic look at the condition of the property. Walk through the home and document visible issues such as roof damage, plumbing problems, mold, code violations, or structural concerns. Licensed contractors will be able to provide estimates for these repairs, to give you an idea of how much it will cost.
However, keep in mind: not all repairs are necessary to sell a distressed property. A licensed real estate agent or broker can help estimate the property’s value as-is, which is often eye-opening for heirs who assume major renovations are required. You may also be able to sell your inherited home as-is to a local cash buyer, like Laurel Buys Houses, without doing any repairs.
- Assess Liens, Mortgages, and Legal Issues
Distressed properties often carry more than one financial obligation. In addition to the primary mortgage, there may be:
- Second mortgages
- IRS tax liens
- Judgment liens
- HOA liens
These must typically be paid in full when the property is sold or transferred. Understanding these obligations early helps you maximize any remaining equity.
- Research Outstanding Debts Carefully
Beyond the liens mentioned above, there may be additional debts tied to the estate, such as:
- Utility bills
- Medical bills
- Credit card debt
Before you pay any outstanding bills, we strongly recommend consulting an attorney who can provide further clarity regarding which debts are owed by you or the estate due to your inheritance of the property.
If you’re unsure what debts exist, you can request a credit report from a reputable agency like TransUnion.
- Identify Other Estate Assets
The inherited home may not be the only asset involved. There may be other assets, such as bank accounts, life insurance, retirement, stocks, bonds, and vehicles.
These assets may be part of the probate or trust administration process and can play a significant role in the legal direction and procedures that are necessary.
- Seek Legal Guidance Early
Inheriting a distressed property often involves overlapping legal areas: probate, trust administration, foreclosure law, and real estate. An experienced attorney can help you:
- Determine whether probate is required
- Delay or stop a foreclosure sale
- Transfer title legally
- Understand your rights and liabilities
While there are certainly costs associated with hiring an attorney, we assure you that an experienced attorney will help you save time, headaches, and money in the long run.
- Secure Financing (if Necessary)
If you decide to keep the inherited home or need time to sell it, you may need short-term financing to cover:
- Mortgage payments
- Property taxes
- Insurance
- Code compliance
- Essential repairs
An attorney and financial advisor can help assess whether financing makes sense or if selling the distressed property is the safer option.
- Decide Whether to Keep or Sell the Inherited Home
Finally, step back and evaluate your long-term goals. Ask yourself:
- Can I afford the ongoing costs?
- Do I want to manage repairs or tenants?
- Is selling the fastest way to resolve the estate?
According to Bankrate’s 2025 Hidden Costs of Homeownership Study, a single-family home in California may cost more than $32K annually in hidden costs, after the mortgage. It’s no surprise that in 2025, nearly 70% of people who inherited a home chose to sell it.
Selling Your Distressed Inherited Home
If selling makes the most sense, many heirs choose to sell their inherited home to a cash buyer. Selling a distressed property for cash allows you to avoid repairs, cleaning, showings, and prolonged probate-related delays.
At Laurel Buys Houses, we help families sell inherited homes quickly and fairly—even when the property is in probate or distressed condition.
Click here to learn more about how we can buy your inherited Sacramento property, or give us a call at (916) 476-2381 to discuss your situation. We’d be happy to help.
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