The personal representative accepted the offer, the heirs signed off, and then a creditor filed a claim two days before the confirmation hearing.
The numbers in the illustration: purchase price 210k, ARV 265k, estimated rehab 28k, which left roughly 27k before carry and closing costs. The estate had passed the four-month creditor window under state law, or so the attorney had represented. The claim came in under a separate federal statute that runs on a different clock, a Medicaid recovery lien the PR either did not know about or chose not to surface. The lien was 19k. The estate wanted to net the same number and asked the buyer to absorb the difference through a price reduction. The buyer's margin went from 27k to around 8k before any carry, which is not a margin at all once you count the six weeks already spent and the cost of the confirmation hearing itself.
The structural problem is that most buyers underwriting a probate deal treat the creditor window as a binary: open or closed. The actual exposure is layered. State creditor windows close on one schedule. Federal recovery programs, Medicaid chief among them, operate on a different timeline and sometimes survive the state window entirely. A title commitment will flag a recorded lien but it will not flag a lien that has not yet been filed when the commitment is issued. The two-day gap in this case was not a coincidence; the creditor had been notified by the estate and filed before confirmation specifically to preserve its claim.
The question worth running to ground before any probate offer goes hard is whether the decedent received any means-tested public benefits in the last five years, because that is where the second clock usually starts. The PR may not volunteer it, and the disclosure exemptions most estate sales carry do not help the buyer here.
At what point in your underwriting are you asking about benefit history, and is the answer coming from the PR directly or from the probate file itself?
