The following briefly describes the process involved in submitting offers on probate homes for sale and subject to the California Probate Code.
What is the proper way to submit an offer on probate homes for sale?
- All offers submitted must be in writing. Best real estate practice is to use a California Association of Realtors standard probate form. Other purchase contracts, not tailored for probate sales can be used. In either case, the contract must include the following:
- Title to be conveyed must be conveyed however the estate holds the title
- The sale is subject to court confirmation
- The property is sold “as is”, if applicable
- Total commission paid will be approved by the court and paid from the proceeds of the sale
Who are the offers submitted to in a probate sale?
Most typically, as with a non-probate sale, offers are generally submitted to the listing agent who then presents the offer(s) to the personal representative. In some cases, the personal representative may designate their estate attorney to receive and review offers. This is very rare. The most common method of submitting offers is to the listing agent who will then present offers accordingly.
Who accepts and rejects offers submitted on probate real estate sales?
- The power to accept, counter or reject offers is with the personal representative. All accepted offers are subject to court confirmation unless the sale is made under the IAEA and the personal representative has full authority to act and administer the sale.
When is the best time to submit offers on probate real estate sales?
- Generally speaking, offers may be submitted at any time. All offers received by the probate real estate agent any time before the sale closes must be presented to the personal representative. Exceptions to this would be if the personal representative expressly instructs the probate listing broker not to present offers received after an offer is accepted. The best course of action is to present all offers.
Do contingent offers require court confirmation?
- Personal representatives acting with full authority under IAEA do not have specific rules that prohibit accepting a contingent offer.
- California Probate Code § 10315 specifies that acceptance of a credit offer is subject to court approval. Additionally, the court may approve a seller (estate) financing.
- A personal representative may accept an offer with a contingency provided the contingency is removed prior to submitting the offer to the court for approval.
Is there a minimum price estate real property must be sold?
- Under IAEA without full authority, in a private sale, the minimum offer price must be at least 90 percent of the appraised value of the property. The appraised value must be made within one year of the confirmation hearing.
Is a minimum deposit required?
- Under IAEA with full authority, there is not a minimum deposit required.
- Otherwise, all sales are subject to court approval and local rules of court. This includes the minimum deposit required and terms of sale. Many courts require a ten percent deposit in the form of a certified check, cash or cashier’s check at the confirmation hearing.
When does an accepted offer need to be filed for court confirmation?
- The personal representative is required to petition the court for confirmation of the sale within 30 days after acceptance. Failure to do so within 30 days means the buyer may petition the court for confirmation of the sale. A buyer is advised to consult with an attorney if they feel it may be necessary to petition the court for confirmation of the sale.
- An exception is if the personal representative is acting with full authority under IAEA.
Can an original bid be overbid at the hearing to confirm the sale?
- Under IAEA with full authority, no.
- Otherwise, someone other than the original purchaser may show up at the confirmation hearing and submit a higher offer to the court. This process is referred to as an “overbid”.
What is the minimum amount required for an overbid?
The following formula applies to the overbid process:
- The overbid must be the amount of the original bid … plus
- A minimum of 10 percent of the first $10,000 of the original bid … plus
- A minimum of 5 percent of the amount of the original bid in excess of $10,000.
For example, the original bid is for $100,000.00. The initial overbid will need to be at least $105,500.00. This is calculated as follows:
- 10 percent of the first $10,000 = $1,000.00
- 5 percent of the remaining balance of $90,000 = $4,500
- $1,000 + $4,500 = $5,500 which must be added to the original bid of $100,000
- The minimum overbid would need to be $105,500.
After the first overbid, the minimum amount of increase is set by the court at the confirmation hearing. The court continues to accept bids similar to an auction until the highest bid has been made.