Inherited House, Squatter Damage, Tax Lien: First Steps

I got a call like this a few years back from a woman whose mother had died two years earlier. The house had sat empty in a small town. Squatters moved in, trashed the kitchen, and left a water leak running. The county had placed a tax deferral lien that had grown to more than the local agent thought the place was worth. The siblings were arguing about whether to just let it go.

That's the moment to slow down.

Start with a real inspection

An online estimate on a neglected house is a guess. I've watched heirs use one of those automated values as if it were an appraisal. It isn't. Those models assume average condition, average maintenance, and normal market demand. A house with squatter damage, missing copper, and a leaking roof won't sell for that number.

So the first thing I'd do is hire a licensed structural engineer or a very thorough home inspector. You need someone who will get into the attic and check the foundation, then write down what's actually broken. That report gives you a repair cost range and tells you if the house is salvageable. In one case I worked with, the inspection found the damage was mostly cosmetic and the structure was sound. In another, the floor joists were rotten and the house was worth lot value only. You can't make any decision until you know which one you have.

Get probate open and understand the debts

Probate is the court process where a deceased person's assets get distributed and their bills get paid. Until probate happens, the house belongs to the estate, not to you or your siblings. Nobody can sell it, borrow against it, or legally sign a repair contract without authority from the probate court.

The tax lien is a debt of the estate. Many counties offer a property tax deferral for seniors, which postpones the tax bill while they live in the home. That deferral doesn't disappear at death. The county gets paid first, along with interest and fees, before any heir receives a dollar. The cleanup and repair costs also come out of the estate if the estate has money. If the estate is broke, the house may be sold to satisfy those claims.

I'm not a lawyer, and probate rules vary by state. But generally, you'll need to open probate in the county where the parent lived. A probate lawyer can tell you if the estate qualifies for a simplified process. Some smaller estates can use an affidavit instead of full probate, which saves months.

Check the insurance policy

Here's what most families miss: the parent's homeowners insurance may still have been active when the squatters damaged the house. If the policy was paid annually or through an escrow account, it might have renewed automatically. Squatter damage is often classified as vandalism or malicious mischief, which many standard policies cover.

Call the insurance company and ask for the policy documents. Don't assume the policy lapsed. I watched one estate recover a large chunk of repair costs because the deceased owner had kept the policy on autopay. The insurer sent an adjuster, and the vandalism claim paid out. That changed the entire math.

Even if the policy was canceled, the agent can tell you the cancellation date. That matters because damage before cancellation is still a claim.

Get both lawyers involved

A real estate attorney is different from a probate lawyer. The probate lawyer handles the estate. The real estate attorney handles the title, the lien, and any sale or transfer. You need both.

Medicaid can also have a claim against the estate. If your parent received long-term care through Medicaid, the state may seek repayment from the estate's assets. That's called estate recovery. The rules are state-specific and there are exemptions, so don't guess. A lawyer who does elder law or estate recovery can tell you if the state will come after the house.

The sibling split only happens after the county and the repair bills are paid. Medicaid may take its share next. I've seen heirs start fighting over imagined proceeds before knowing the real numbers. The inspection and the probate filing will tell you if there's anything left.

One more thing from my property management days: don't clean the house yourself before the insurance adjuster and the probate attorney see it. Document everything with photos. Leave the damage alone until you've talked to both. You can board up windows for safety, but don't throw anything away.

That inherited house is a problem with a sequence. Inspection first, probate second, insurance third, lawyers all the way through. Do it in that order and you'll stop guessing.