Case Study: $955K Probate Portfolio Cash-Out Refinance in Los Angeles

The Deal That Walked in the Door

We are Commercial Lending Solutions, a commercial mortgage brokerage based in Los Angeles, CA. Commercial Lending Solutions specializes in bridge loans and private money placements for estates and investors across California. This one is a reminder that some of the most urgent financings never show up on a bank's radar at all, and it ultimately closed with a Los Angeles-based private money lender. The borrower was a Los Angeles man who had spent almost three years as the court-appointed administrator of his father's estate. His father died without a will in June 2021, leaving a real estate portfolio the probate court inventoried at $17.4 million but almost no cash: $11,601.85 in the bank against an estate of that size.

In February 2024, the Los Angeles probate court entered its order for final distribution. Good news, mostly. He inherited everything, including four contiguous rental parcels in Pico-Union, a dense, working-class neighborhood just west of downtown Los Angeles: three single family houses and a fourplex, seven doors in all, worth roughly $3 million together. The catch was in the fine print. The court awarded the properties subject to liens, and the liens were stacking up: a court-ordered $124,648.79 attorney fee lien recorded against one of the parcels, $7,100 in city tax liens, roughly $190,000 tied to an SBA loan obligation, and $451,500 of short-term private liens that had been placed on title that spring to keep the estate moving. Cash-poor and asset-rich is the classic probate trap, and the meter on the attorney lien was running.

What Made It Hard

• Probate title. The borrower held the properties as administrator of an estate mid-distribution. Conventional lenders will not touch title in that condition; the file needs a lender who can read a probate order and get comfortable.
• Four first mortgages that had to stay. Each parcel already carried a bank first mortgage, about $450,000 combined, at rates worth preserving. Paying them off to write one new first would have destroyed value, so the new money had to sit in second position behind four different senior lenders.
• No cash flow to service debt. Rents were still untangling from the estate administration. A loan with a monthly payment was a loan designed to default.
• A moving target. The capital need kept growing as payoff demands came in. The first letter of interest on March 13, 2024 was for $550,000. Five days later it was $700,000. By April 12 it was $870,000, and the final figure at signing was $955,000. Every increase meant re-underwriting, not starting over.

"The real asset in a probate deal is the court order, not just the real estate. Build the loan file around that record and the lender's title questions answer themselves."

How We Ran the Process

Trevor Damyan, a California-licensed real estate broker (CA DRE 02244836), knows that a blanket second trust deed on probate title with zero servicing income is not a deal you canvass to fifty banks. It is a deal you place with precision. We took it straight to a Los Angeles-based private money lender that specializes in exactly this: junior liens, business-purpose cash-out, equity-based underwriting, and a principal willing to physically walk the properties and meet the borrower before funding, which he did. Being based in Los Angeles ourselves, we were in the same room within days, not weeks.

The winning structure:

• $955,000 in one blanket second trust deed across all four parcels, leaving all four bank first mortgages undisturbed and keeping combined leverage at roughly 50% of value
• 13.99% fixed, interest only, 9 month term, sized to bridge the borrower to a conventional refinance once title cleaned up and the rents stabilized
• A $100,203.38 interest reserve prepaying all 9 months of interest, so the borrower owed nothing monthly while he finished winding down the estate; the payoff at maturity was a single balloon of $966,133.71
• A 4 month interest guarantee capped at $44,534.83 as the only prepayment cost, leaving him free to refinance out early
• $42,975 origination plus defined closing costs: $2,250 processing, $1,895 underwriting, $4,950 in valuation work covering three broker price opinions and an investor valuation

The proceeds did surgical work. Escrow paid the $124,648.79 attorney fee lien in full, cleared the $7,100 in city tax liens, retired $451,500 in short-term private liens, and addressed the roughly $190,000 SBA obligation, with signed payoff demands coordinated across every lienholder on May 1, 2024 and final escrow demands out by May 14. From first letter of interest to a fully signed final disclosure package took seven weeks, while the loan amount nearly doubled underneath us.

Why We Won This One

The first lesson is that probate deals are underwritten off paper most lenders never read. The asset here was not really the real estate; it was the February 2024 court order distributing that real estate to our borrower. We built the loan file around the probate record: the order for final distribution, the inventory, the lien schedule, the payoff demands. When the lender's principal sat down with the file, every question about title had a recorded document answering it. That is what let a lender fund behind four separate bank firsts on estate property without blinking.

The second lesson is that structure beats rate when cash flow is zero. A cheaper loan with a monthly payment would have been worse than this loan at 13.99%, because this borrower had no stabilized income yet. Prepaying the entire interest burden through a reserve turned a scary rate into a fixed, known cost of solving the problem: use of $955,000 for 9 months, price certain to the dollar, no default risk from a missed payment. The 4 month interest guarantee, rather than a long lockout, meant the moment his conventional takeout was ready, he could go.

And the third lesson is speed as a form of savings. The attorney fee lien carried a court-approved payment schedule with penalties for delay, the private liens were short-dated, and every month of drift compounded. Closing in seven weeks, while the request grew from $550,000 to $955,000, is the difference between a broker who processes a file and one who manages a transaction.

Is This Structure Right for Your Deal?

If you have inherited property tied up in probate, or you own real estate with real equity but temporarily messy title or cash flow, a bridge structure like this one can buy you the time a bank cannot. We arrange bridge loans, specialty financing for situations conventional lenders decline, and the permanent loans that take these bridges out, from a network of more than 1,000 capital sources including the Los Angeles private lenders who close in weeks.

Apply for financing or call us at 310.708.0690 to talk through your situation.

This is one of 32 closings we have arranged in Los Angeles County. Read about how we work as a Los Angeles commercial mortgage broker, see our Los Angeles commercial mortgage loans, or browse all 46 California closed deals.

Trevor Damyan

Commercial Mortgage Broker, Commercial Lending Solutions | CA DRE 02244836

Trevor Damyan is a commercial mortgage broker at Commercial Lending Solutions with a background in structured finance at CBRE and Marcus and Millichap Capital Corporation. He specializes in bridge loans, construction financing, SBA programs, DSCR loans, and complex capital structures for investors and developers across all 50 states.

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