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HOW IS A PROBATE (“ESTATE”) SALE DIFFERENT?
IN CALIFORNIA, when real estate of a deceased person goes into probate, the sale of that real estate becomes subject to certain
legal requirements and
regulations.
In the majority of cases in our area today, the estate representative (an executor or
administrator of the estate) has the authority to sell the property through
powers granted by the Independent Administration of Estates Act (IAEA). When the
estate representative has full powers under this act, he/she may elect to sell
the property without the need for a court confirmation hearing. Unless there are
objections by interested parties to the estate, which could require the sale to
be confirmed in a hearing, the
sale can usually be completed with a minimum of additional requirements. Most
estate sales sold under the IAEA are completed very smoothly and differ very
little from most other sales.
In some cases, the estate representative sale of property
in probate may be granted only limited powers through IAEA, in which case a
confirmation hearing is required. Even if the estate representative has full
powers, he/she may elect to have the sale confirmed in court.
When court confirmation is either chosen or required, certain procedures are
generally followed, as required by law and/or custom:
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An offer
is presented and conditionally “accepted” by the estate representative. This
purchase agreement is not binding on the estate. |
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After
all buyer contingencies are removed from the accepted offer, a petition for
the court hearing is made. The date of the court hearing depends upon the
court calendar at the time, but is generally 20-40 days from the date of the
petition. |
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The buyer
needs to deposit 10% of the purchase price prior to or on the date of the
court confirmation hearing. |
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The sale,
together with the accepted offering price, is advertised for a statutory
period in a local newspaper. |
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There is
open, competitive bidding at the court hearing. The minimum first overbid
price shall be an amount equal to the accepted purchase price of the accepted
offer, plus five percent of that amount, plus $500. In the
event of such an overbid, the court shall determine any further incremental
overbidding amounts - for example, $1,000 or $2,000. The bidding stops with
the final bid. |
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Any
person who bids in court must make an unconditional offer (i.e., obtaining
financing and approving inspections should not be a condition of the offer) and
if confirmed must present a cashier’s
check deposit for 10% of the purchase price as described above, or as
determined by the court. |
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In the
event a buyer defaults after a court confirmed sale, the buyer may lose
his/her deposit. |
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If the
court confirms the sale to an overbidder rather than the original buyer, the
original buyer’s deposit shall be refunded. If the sale is confirmed to the
original buyer, the deposit shall apply to the purchase price. |
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The
purchase price accepted must be at least 90% of the probate referee’s
appraised or re-appraised value of the property. |
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Real
estate commissions are subject to approval of the court. |
The preceding is a general discussion of certain probate
sale procedures in California. This information is not intended as legal
advice, or guaranteed accurate or
complete. Specific situations may differ. Contact your attorney for information
regarding any particular situation.
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