What Happens If a Probate Property Has Liens in California?

If a probate property in California has liens — such as mortgages, tax liens, or contractor debts — those liens must typically be paid off or resolved before the property can be sold or distributed to heirs. The probate court ensures creditors are properly notified, and liens are either satisfied through escrow during the sale or negotiated before closing.

What Is a Lien on a Probate Property?

A lien is a legal claim against a property for an unpaid debt. When someone passes away, their debts don’t disappear. If they owed money on a home, that debt stays with the property and must be handled during probate.

Common liens on probate real estate include:

• Mortgage liens

• Tax liens (property tax or IRS)

• Mechanic’s liens (unpaid contractors)

• HOA liens

• Judgment liens from lawsuits

Can You Sell a Probate Property With a Lien?

Yes — but the lien must be resolved.

In most cases, liens are paid off at closing from the sale proceeds. The title company will run a report, identify any existing liens, and work with the escrow officer and executor to ensure they’re settled before the buyer takes title.

Example:

If a probate home in Los Angeles sells for $800,000 and has a $50,000 mortgage and $10,000 in tax liens, those debts will be paid through escrow, and the estate receives the remaining $740,000 (minus costs).

What Happens If the Liens Are Greater Than the Property Value?

This creates a situation known as insolvent estate or negative equity.

Here are the executor's options:

1. Negotiate the debt — Some creditors (especially second lenders or HOAs) may accept less than what’s owed.

2. Short sale — The property may be sold for less than the total debt with lender approval.

3. Abandon the property — If debts are too high, the executor can decline to administer the property. It reverts to foreclosure or tax sale.

4. Probate court resolution — A judge may order specific steps or approve a below-debt sale to prevent legal challenges.

How Does the Probate Court Handle Liens in California?

Here’s the standard lien process in a California probate case:

Step What Happens

1 Executor or attorney files for probate

2 Title report is ordered — identifies all liens

3 Creditor claims are officially notified

and given a deadline to respond

4 If the property is sold, liens are

paid through escrow

5 Court confirmation may be needed if under

limited authority or sold below value

6 Executor distributes remaining

funds to heirs once debts are cleared

Can Liens Delay the Probate Sale?

Absolutely.

Here’s how:

• Title won’t clear if liens aren’t addressed — delaying closing

• Court may require additional documents or notices for tax or judgment liens

• Negotiating lien reductions can take weeks or months

• Probate sale buyers may walk away if liens create uncertainty

That’s why it’s critical for executors to work with a probate real estate team who understands how to uncover and resolve liens early.

Can an Executor Be Held Liable for Lien Issues?

Yes — if they mishandle the situation.

An executor has a fiduciary duty to:

• Notify all known creditors

• Avoid transferring property with unresolved liens

• Work in the estate’s best financial interest

Failing to address liens could expose the executor to legal action from creditors or heirs.

What Should You Do If There’s a Lien on Your Probate Property?

If you’re the executor, follow this checklist:

✅ Order a preliminary title report immediately
✅ Work with a probate real estate specialist
✅ Consult the probate attorney about notifying creditors
✅ Gather documentation for mortgages, judgments, and tax records
✅ Plan to resolve all liens before closing

At The Borges Real Estate Team, we specialize in identifying and clearing liens on probate properties across Los Angeles County. From IRS tax debts to forgotten HOA liens, we help families navigate it all with zero stress.

Local Note: Liens in Los Angeles Probate Real Estate

In LA County, we’ve seen cases where:

• A family discovered a $30K mechanic’s lien from unpermitted roof work.

• A South LA triplex carried 3 separate tax liens from a deceased landlord.

• An Altadena home had a reverse mortgage that exceeded the property’s value — and needed court approval for a short sale.

Los Angeles probate properties often come with complex title histories. Working with an experienced probate team is essential to avoid costly mistakes.

Final Thoughts: Don’t Let Liens Derail Your Probate Sale

Liens don’t have to be a dealbreaker — but they do need to be handled properly.

If you're dealing with liens on a probate property in Los Angeles, we’re here to help. Our team works closely with title companies, escrow officers, and probate attorneys to make sure everything clears on time.

Need help? Get in touch here for a no-pressure conversation about your probate situation.