The problem with lending on a house in probate
Why hard money lenders cannot close with open probate on title — and how alternate investment collateral can still fund your exit when probate blocks closing.
Want the full breakdown with underwriting details, FAQs, and next steps? Read Hard Money on Probate Property: Why Closings Stall.
Video transcript
Lightly edited for clarity.
"I have a statute in a case that hasn't been taken off the will. So I need that loan to take them off the will, as well as the probate case itself. Is that possible?"
"Yeah, I mean, you don't want the possibility of a loss, but you're definitely going to be okay on the loan. If it's going through probate, that generally means that title is getting moved around, right?"
"It never finished probate. It's just—"
"Right. So when I go pull title, it's going to say there's an open probate on the property. I'm not going to be able to close. Probate stays open once it's open, unless you close it."
"Right. I need to close it."
"I know. Yeah, that's the problem. When I go pull title, it's going to bring up the open probate, and the title company's not able to insure title with open probate. So you need a different piece of collateral — one that's not in probate."
"You can borrow somebody else's house."
"Yeah, other collateral. I need collateral — free and clear is best, but other collateral: good title, clear owner, good borrower. We only do investment purpose, so it needs to be like a rental property or something that the borrower does not live in. That's what we do. Yeah."