The process of selling property through probate is designed to dispose of a deceased person’s real estate in a systematic manner. The system, however, can present many problems for those who do not fully understand the process. It is advisable to consult with an attorney prior to entering into probate administration when dealing with real estate. There are a number of requirements that are strictly enforced. If any are not met, the sale of property can be cancelled and the whole process will have to be reinitiated. Effective counsel will ensure that the process runs smoothly.
During the probate process, a petition is filed for the disposal of a deceased person’s assets. At that time, an executor will be named. The executor will consolidate all assets, including property. This person is responsible for consolidating all assets and distributing them according to the deceased person’s will. This process in California usually takes about nine months. It can take longer, though. For those in the Los Angeles, CA court system, it typically takes 12-14 months to process through the probate system.
Some properties must be sold through a court confirmation but not all. It depends on the level of powers that have been afforded to the executor under the Independent Administration of Estates Act (IAEA). Even with full administrative powers, some executors decide to go through the court confirmation process for liability reasons. If the deceased individual has left a will, they may have provided some direction on how they would like for the property to be disposed of. The court will consider this before authorizing a sale.
Before any offer can be accepted for the sale of real estate through the probate courts, the property must be publicly advertised. Failure to do so can result in a cancellation of any sale. Notices for the sale of property, including those that are going to be auctioned, must indicate the location and the date and times that the property may be viewed. Notices must also include whether the sale is ‘as is’. Offers cannot be accepted until after the published viewing time has expired.
If the real estate agent decides to purchase the property, they forfeit their commission. Real estate commissions in Los Angeles Country for improved properties runs about five to six percent of the sale price. For unimproved properties, the commission is ten percent. The courts will also require that the property be appraised. The property much sell for 90% of this valuation. The value will be determined by a probate referee to ensure that the valuation is unbiased.
When an offer has been accepted for the property, the courts will hold a confirmation. All interested parties will be notified of the hearing. In Los Angeles Country, the sale petition usually takes place three to six weeks after the court is notified of an accepted offer. During this period, the property will still be advertised and inspections will be conducted. The realtors will continue to show the property to potential buyers.
Potential buyers can appear at the confirmation hearing and submit an overbid. Thus, it is important that the individual who submitted the accepted bid appear in court for the confirmation hearing. If they fail to do so, the court can deny the sale. Also, there is the potential that they will be outbid by another qualified buyer. Potential buyers need to arrive with a cashier’s check for a 10% deposit and be able to demonstrate that they have financing for the balance of the sale price. Typically, overbidding is the sale price plus five percent and $500. If there are additional
bids, the judge will determine in what increments the sale price will increase. Generally, the bids will rise about $1,000 to $5,000 based on the property’s value. To place a bid, individuals need to participate in the hearings and submit a bid form which is located on the LA County Superior Courts site (www.lasuperiorcourt.org
Purchasing property through the probate courts can be an exciting adventure. The most important things to remember, though, is that buyers and the executor need to proceed through the process carefully. If any steps are missed, the process will restart. This is a case where the guidance of effective legal counsel is important. Whether you are a buyer or have been tasked with the duties as executor of an estate, with proper guidance, you can ensure that the probate process will go smoothly. As an executor, you can ensure that a loved one’s property is handled as they would have liked. As a buyer, you will have access to truly special real estate.
Please don’t hesitate to call or email us if you need assistance in selling a probate property.