The Situation
A professional fiduciary administering a decedent's estate in Los Angeles County faced a common but legally complex scenario: the estate's primary asset was a 48-unit multifamily property in the Koreatown neighborhood, generating approximately $62,000 per month in gross rents. Three of the four adult heirs wanted to sell immediately. One heir -- with a smaller fractional interest -- wanted to retain the property as a long-term investment. The property carried no existing debt. The estate appraised the property at approximately $9.2 million. The dissenting heir's share was valued at roughly $1.4 million.
The Challenge
The fiduciary's core obligation was to treat all beneficiaries equally while maximizing estate value. A forced sale satisfied the majority but potentially at a discount to intrinsic value -- the property's in-place rents were approximately 18% below market, meaning a buyer would price in rent upside the estate would not capture. The fiduciary needed a mechanism to: (1) cash out the three selling heirs at full appraised value, (2) retain the property for the one heir who wanted it, and (3) obtain court approval for any financing transaction. Conventional lenders had three objections: the borrower was an estate (not a natural person), the transaction required probate court approval under Probate Code Section 10000 et seq., and the property had a deferred maintenance backlog the fiduciary estimated at approximately $280,000.
Our Approach
Commercial Lending Solutions ran a targeted process among bridge lenders who specifically work with estate and trust borrowers -- a narrow but active subset of the debt fund market. We identified three lenders with relevant estate transaction experience and obtained competing term sheets within 11 business days. The selected lender was a California-licensed debt fund with prior probate court approval experience. Loan structure: $5.8 million bridge loan (63% of appraised value), 18-month initial term with two 6-month extension options, interest only at a floating rate of SOFR plus 325 basis points, non-recourse to the heir who retained the asset. The loan proceeds covered: cash distribution to the three selling heirs ($5.52 million combined), deferred maintenance reserve ($280,000 funded at close and disbursed by lender inspection), and closing costs. The retaining heir assumed the property out of the estate with a clear title and a bridge loan in place. We prepared and submitted the probate court declaration package alongside the fiduciary's counsel, documenting the competitive process and confirming the loan terms were within market range for the asset type and borrower structure.
The Outcome
Court approval was obtained within the standard hearing cycle -- approximately six weeks from filing. The three selling heirs received cash distributions equal to 100% of their appraised share. The retaining heir took title to a stabilized 48-unit asset with 18 months to arrange permanent financing as in-place leases roll to market rents. Permanent placement target: Fannie Mae small balance loan at approximately $6.2 million once the property reaches stabilized occupancy and market rents -- a substantially lower rate than the bridge with a 10-year fixed, non-recourse structure.
Key Takeaway for fiduciaries
Fiduciaries who administer estates with commercial real estate are not limited to a binary choice between forced sale and indefinite hold. A broker-run competitive process among estate-experienced bridge lenders can create a third path: full liquidity for selling heirs, retention for the heir who values the asset, and a documented competitive process that satisfies fiduciary duty and court scrutiny.
A note on figures: All dollar amounts, rates, timelines, and specific details in this case study are illustrative and based on hypothetical scenarios representative of the types of transactions Commercial Lending Solutions arranges. They are not descriptions of any specific client, property, or transaction.