Selling a home in California probate is a little different from selling a home that has your name on the title. Here’s what you need to know:
When may the personal representative sell California real property?
- A personal representative is allowed to sell California Probate real estate when:
- The sale is necessary to pay debts, to pay gifts to persons named in the will (devises), to pay expenses of estate administration, to pay taxes, or to pay a family allowance.
- The will specifies that the property be sold, and there is no court order to the contrary.
- The sale is to the advantage of the estate and the heirs do not object.
How may estate property in probate be sold?
Estate real property may be sold by private sale, public auction, or any method specified in the will.
Must the personal representative list the estate real property with a real estate broker?
California has no legal requirement that you must list the property when it is being sold during probate. However, listing with a knowledgeable California broker experienced in handling probate sales will help assure your success in selling quickly and for the highest price. Unless the personal representative has full authority under the IAEA (The Independent Administration of Estates Act), any sale of real property will be subject to confirmation by the court.
California real estate probate statues provide that the original listing period must be for 90 days or less. One or more 90 days extensions may be granted with approval of the court.
Is there a required form to be used in listing California probate and trust real estate?
Yes. If court confirmation is required, the California Association of REALTORS® Standard Form PLA – the Probate Listing Agreement – is required. Trust properties are listed on form TLA – the Trust Listing Agreement.
Are there any restrictions on the selling price of real property?
Yes. According to California Probate Code 10309, real property subject to probate court confirmation must be sold for at least 90% of its appraised value, and that appraisal must have been done within one year prior to the sale. All the terms of a sale are subject to court approval.
Can the personal representative accept offers with contingencies?
Offers with any kind of contingency, such as financing or the sale of a home are usually not approved by the court. If the personal representative has full authority under the IAEA, he or she may accept offers with all the same contingencies as a normal non-probate sale. The personal representative may also accept contingent offers when the contingency will be removed before the offer is submitted to court.
An exception is that the probate court may approve offers with a contingency if there is evidence that the property cannot be sold without the contingency.
Are prospective purchasers required by California probate statutes to submit a minimum deposit when submitting an offer on a probate property?
No, California probate statutes do not require a specific minimum deposit.
Is compliance with agency disclosure laws required in the sale of California estate real property?
Yes, the personal representative has the same right as any other California home seller to know who the agent represents in a real estate transaction. The law applies as long as the property consists of one to four residential units, including mobile homes.
Must the personal representative complete a Real Estate Transfer Disclosure Statement (TDS) or provide other disclosures?
No, personal representatives in California are exempt from providing a TDS. However, he or she must still disclose any known material facts regarding the value or desirability of the property.
Probate sales must comply with certain other disclosure laws. For a complete list of which disclosures are required and which are exempt, see the California Association of Realtors Sales Disclosure Chart.
Must a licensed real estate agent involved in the sale of California probate real estate conduct a visual inspection of said property?
Yes, licensees are required to conduct a diligent visual inspection of all accessible areas of the property and to disclose all facts materially affecting the value or desirability of the property. Although a written report not required by California law, this disclosure should be made in writing.
What is a “Notice of Sale” and is it required prior to selling probate real property in California?
A “Notice of Sale” is simply a notice that a certain parcel (or parcels) of real property is to be sold. It must be published at least three times over a period of not less than ten days before the sale, with the third publication at least five days after the first. The notice must be published in a newspaper that is published at least weekly in the county where all or some of the property is located.
The personal representative is exempt from publishing this notice if he or she has full authority under the IAEA; if the will directs the real property to be sold; or if the will gives authority to the personal representative to sell the property.
How does court confirmation of the sale of real property come about?
Within 30 days of accepting an offer, the personal representative is required to report the pending sale and petition the court for confirmation. Should he or she fail to do so, the potential purchaser may petition the court on his or her own behalf. A confirmation hearing will then be set.
Confirmation is not required if the personal representative has full authority under the IAEA.
How is the California real estate listing broker’s commission established?
As with any California real estate listing, the commission is negotiable between the seller and the agent, and the listing agreement will specify the commission to be paid upon closing the sale. However, the court will determine what is a reasonable commission and may not approve an amount in excess of the maximum percentage established by local court rules. To determine this amount, call the clerk of the probate court in the county where the estate is being administered.
The court will order the broker’s commission to be paid only after the property is successfully transferred to the buyer.
May a licensed real estate agent be paid a commission if he or she is the purchaser of a house in California probate?
No, California Probate Code specifically prohibits a licensee from receiving a commission when he or she is directly or indirectly the purchaser of the estate property.
How should an offer be submitted on California estate real property?
Offers must be submitted in writing on CAR Standard Form PPA – Probate Purchase Agreement and Joint Escrow Instructions.
To whom is an offer on California probate property submitted?
To the personal representative or, if designated by the personal representative, to the estate attorney.
Who has the power to accept an offer?
The personal representative is the only one with authority to accept an offer on California real estate in probate. However, unless he or she has full authority under the IAEA, the acceptance is subject to court confirmation.
When may offers on homes in Probate in California be submitted?
Offers may be submitted at any time before a sale closes.
How soon must an accepted offer be presented to the probate court for confirmation?
Once accepted, offers must be submitted to the California probate court within 30 days. This is the responsibility of the personal representative. However, California statutes provide for a potential buyer to petition the court if his or her offer is not presented for confirmation in that time frame.
What is “overbid” and how does it happen?
Overbid can occur at the probate court confirmation of an offer that has been accepted by the personal representative. Other interested buyers may physically attend the hearing and place a higher bid at that time. To prevent small incremental bidding, as at an auction, the amount of such bid is set by California probate statutes and must raise the selling price by 10% of the first $10,000 and 5% of the balance over $10,000.
Overbidding rarely occurs, but it is one more way that California real estate probate courts have to assure that property being sold by an estate is being sold for the highest possible dollar amount.