What is a probate?
Probate is the court-supervised administration of a decedent’s estate. The probate proceeding involves “proving the will” (if there is a will), appointing the personal representative, determining the decedent’s assets that are subject to probate, paying outstanding debts and disbursing funds to the beneficiaries. In some cases, the decedent’s estate includes real property that must be sold under the court’s supervision.
Why do some probate properties not require court confirmation?
If a probate property is a Trust Sale or if the Executor/Administrator of the estate has been granted “full independent powers” under the Independent Administration of Estates Act (IAEA), the sale may not require court confirmation. If the Administrator has full independent powers, he or she may elect to list the property for sale. Once an offer is accepted, the estate’s attorney mails out a Notice of Proposed Action stating the terms of the proposed sale to all the heirs. The heirs then have 15 days to object to the sale. If there is no objection within 15 days, the sale goes through without any court hearing required. (Regardless of the details of the probate transaction, sellers are strongly encouraged to work with a professional probate attorney to protect the estate’s best interests.)
Should I make repairs before listing a probate property for sale?
No. In California, probate properties are sold “as-is.” If you make repairs you may inadvertently conceal something about the condition of the property. Even a coat of paint can unintentionally conceal a defect. Except for removing personal possessions, clearing out trash and cleaning up the entryway and yard, it is important to leave the property in its present state and let the buyers do their inspections and satisfy themselves as to the condition of the property.
Is the paperwork different in a probate sale than a traditional real estate transaction?
Yes. In most real estate transactions, the seller is required to disclose information about the property, including defects, construction conducted without a permit, evidence of pest or water damage, etc. Because sellers of real property through probate, trust or conservatorship may never have lived in the property that’s being sold, special disclosure forms take this into account. Probate and trust sales require special disclosures, listing agreements and purchase contracts. In California, the California Association of Realtors has standardized forms specifically for probate transactions.
When is a Notice of Proposed Action is mailed to all heirs?
When the property has an accepted offer, simply stating the terms of the proposed sale. The heirs have 15 days to review the notice and pose any objections. If there are no objections, the sale may proceed without a court hearing.
How do you determine the minimum bid in court at the court confirmation hearing?
The minimum first overbid price is set by a statute in the Probate Code. Calculating the overbid assumes that there is an accepted offer on the property. The minimum overbid amount is 10% of the first $10,000 plus 5% of the balance of the accepted offer. The overbid must be presented in person by cashier’s check (no personal checks). If a property is highly desirable, there may be more than one over bidder. In that case, an overbid above the minimum would be to the advantage of the potential buyer.