Probate

Court Supervised or Independant Representative

A probate is a type of real estate sale where a "higher entity", namely the Court, will be involved in the process of the sale which is governed by the California Probate Code.

Often, these properties may need some repair or have some type of deferred maintenance issue. The owner's financial circumstances and other life situations often prevented them from standard property maintenance, and they may not have left a will, or the will may be a source of dispute among heirs. So when the property is ultimately put on the market, the buyer may be submitting an offer that is negotiated with the personal representative of the decedent's estate, or it must submitted to the Court to be dealt with on the Court's schedule. Typically, it may take about 60 days or longer for a Court hearing for the sale before even starting escrow. When dealing with a personal representative who has the authority to negotiate without a court hearing (full authority), a buyer may expect a more "normal" escrow time of 30-45 days, but that also depends on the Court's availability and schedule, so it could take longer.  Sellers are usually, and advisedly so, working with their attorneys who represent them in court and advise them on all issues of the disposition of the property. The attorneys are also working with the listing Realtor during the transaction who is able to list and sell the property in cooperation with applicable Court and/or Civil Code requirements. A Realtor has the required forms required in a probate sale, and can make sure the  sale is handled fulflling probate requirements.

Sellers of probate properties are not required to provide the Transfer Disclosure Statement (although they are not excluded from disclosing material facts), so a buyer may not be able to find out or expect answers about certain conditions in the home other than through their own inspections. Heirs may fix up a property before putting it on the market, but the buyer should usually not expect the seller of a probate property to perform further repairs once it's put on the market--they are usually sold without further repair--so the buyer should obtain their own cost estimates, if necessary, for future work.

Buyers may feel they are getting a "deal" when bidding on such a property, however, there is an "overbid" process in Court confirmation transactions, and like any property if listed at a very advantageous price, it may attract other buyers.

Offers are submitted, when using a Realtor, on specific forms for probate properties, and require by law at least 10% down payment for court-confirmation properties, with no contingencies to sell other property first. Court confirmation properties require offers to be 90% of the appraised value, so buyers should really forget about making lowball offers in these circumstances. However, a seller with full authority to sell without court supervision ('Independant Administration of Estates Act" administrator, or IAEA) has more freedom to accept terms and conditions, so knowing the circumstances concerning probate sellers are important for a buyer to understand prior to making an offer. The IAEA personal representative with full authority to act, given by the Court, generally can respond more to the prevailing market forces when negotiating with a buyer.

A probate property seller, as shown on the deed to the property, may execute a listing agreement and put on the market a property when the court issues the document known as Letters. When a representative obtains full authority from the court, the property may sell and close escrow under normal circumstances as soon as possible--but a representative with limited authority must follow certain requirements, including obtaining a court hearing date to confirm the sale and any overbids on the property. Limited authority takes longer, so if a representative obtains full authority under the Independent Administration of Estates Act there is freedom to conduct a sale the same as a non-probate sale. The property sale may be completed well before the entire probate process is concluded, which usually takes about one year, and this is in fact advisable because taxes, mortgage payments and other maintenance expenses on the property are no longer paid out.

There are some exceptions to the probate process, so working with an experienced Realtor and probate attorney is strongly recommended, as there are numerous legal aspects and court filings required in order to  complete the entire probate process.

For more information, please contact me directly.

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