California probate provides for the orderly distribution of real and personal property owned by the decedent’s estate. The process is supervised by the probate court.
An estates representative is the person responsible to administer the estate and may be:
- A person named in the Will, the Executor or Executrix
- Someone appointed by the court, the Administrator, when there is no Will, if the Will does not name an executor, or if the named executor is unwilling or unable to serve.
An executor or administrator has a duty to gather the assets and pay the debts of the decedent according to the California probate code.
An estates representative most often hires a probate attorney to petition the court for probate.
When Can Property Be Sold Through Probate?
If there is a Will, it may state the representative is to sell the property. If the Will does not require the representative to sell the property, or if there isn’t a Will, the estates representative may sell the property. Most times, probate homes are sold to pay debts, taxes, and expenses to administer the estate.
The executor or administrator must have the authority to perform their duties.
The court grants their authority with Letters Testamentary or Letters of Administration.
Letters specify the name of the executor or administrator and if granted full authority or limited authority under the Independent Administration of Estates Act.
Probate sales in California are sold in five traditional ways:
- Real Estate Experts: The most common way a probate home is sold is by hiring a real estate agent.
- Private Sale: Private sales get published in a legal newspaper. The attorney opens the sealed bids at a designated date and time. The highest bidder wins.
- Public Auction: Public auctions are get published in legal newspapers and held at a pre-determined date and time. Bids are oral rather than written and sealed. The highest bidder wins.
- Private Auction: Auction companies manage private auctions. The home buyer who offers the highest bid is the one that wins!
- Trust Department: The trust department may act as the personal representative and sell the probate real estate.
Is the estates representative required to sell the property using real estate experts in a California probate?
- Probate sales in California do not require the representative to sell the property with the use of a real estate agent.
- An executor or administrator is the “seller” in a probate sale in California.
- The probate process is like a non-probate home selling and home buying, with the exceptions discussed below.
- The court requires that home selling through California probate to be confirmed by the court unless the executor or administrator has full authority to act under the Independent Administration of Estates Act (“IAEA”).
- A representative must petition the court for home sales in California if the court requires confirmation.
- A prudent way the executor or administrator sells a probate home is by hiring probate real estate experts.
Can a probate home in California be sold at any price?
- The short answer is, No. When the court requires confirmation of a sale, the sale price must be at least 90 percent of the appraised value set within one year of the sale. The terms of the sale are subject to the approval of the court and local rules of court which vary from county to county.
- Probate real estate sales by the executor or administrator with full authority under the IAEA do not have the same restrictions.
- Sales with full authority under the IAEA may have the same contingencies as non-probate sales.
Are home buyers required to submit a deposit of 10% of the purchase price when submitting an offer?
- Estates representative may require a 10% deposit.
- California probate law does not require a deposit on homes sold through probate to be 10% of the purchase price.
- The deposit requested on probate sales in California is up to the representative.
- Probate real estate experts will discuss with the representative the pros and cons of requesting a smaller deposit from home buyers.
- A smaller deposit may cause more offers at higher offer prices.
Is a Notice of Sale required before homes are sold under the California probate process?
A Notice of Sale gets published before homes are sold in probate sales in California unless:
- Decedents Will directs the executor or administrator to sell the property
- Will gives authority for the representative to sell the property
- An estates representative has full authority under the IAEA
If there isn’t a Will and the estates representative does not have full authority to act under the IAEA, then a Notice of Sale gets published before the sale of the person’s property.
The Notice of Sale provides information regarding the sale to the public. It gets published in a legal newspaper in the county in which all or some of the property is located. The newspaper must publish no less than once a week, at least three times over a period of no less than 10 days before the sale. The third publication must be at least five days after the first publication.
Sale of real property sold under IAEA can sell with or without notice.
Is court confirmation required in a California probate?
- The court requires that a property sale be confirmed by the court unless the representative has full authority under the IAEA.
- If the estates representative does not have full authority, then they petition the court to confirm the sale within 30 days of accepting an offer from the home buyers.
- The offer from the original buyers may be subject to overbidding at the court hearing.
- The court will confirm the sale of the original buyers or to another buyer with a minimum overbid.
- Title passes to the home buyers after all terms of the sale have been met, the court has confirmed the sale, and the executor or administrator executes the conveyance to the buyer.
- For more information on over-bidding refer to submitting offers.
Home Selling in a California Probate
- A representative may hire a probate real estate agent and sign an exclusive right to sell agreement for an original period of not over 90 days.
- One or more 90 day extensions are allowed between the listing broker and representative.
- Unless the representative is acting with full authority under IAEA, they must get prior court approval for each extension.
- Under IAEA, once 270 days have lapsed, the executor or administrator must give a Notice of Proposed Action of further extensions.
- If the representative is acting with limited authority, the sale is supervised by the court.
- The court must grant approval for the extension.
For real property sales under IAEA, we use the California Association of Realtors® standard form listing agreements.
A probate listing addendum and probate advisory are necessary attachments to the residential listing agreements.
A 90 day listing period rule applies to all probate listing agreements including when the representative has full authority under IAEA.
The Representative Capacity Signature Addendum is used to ensure the signature is set up correctly.
With the use of the signature addendum whenever the personal representative signs or initials their name they are deemed to be in their representative capacity for the estate.
California Probate Home Selling By Real Estate Experts
The real estate experts selling the house will review recent sales and market trends to determine a list price. It might make sense to recommend home improvements before the property is marketed. It is important that the homes priced right. They’re often priced too high, or too low.
Real estate experts know their local market and the recent sales. The location and the condition of a home sold through probate get factored in the recommended list price.
The probate referee provides an appraisal value for the real and personal property.
Once the property is marketed the home selling agent will provide home buyers and their agents with the disclosures and information regarding the probate process.
A probate sale in California is only complicated to agents who do not understand the probate process.
The home selling agent will include the probate home among their featured properties and syndicate the listing for maximum exposure.
Home buyers get informed of court dates or court hearings. In most cases, the home buying and home selling process will not require more time than a traditional sale.
Real estate markets are different throughout the state of California. The probate process may vary in various California counties.
It is common practice in Santa Clara County for home buyers to provide a lender approval letter if they are financing the purchase and provide proof of funds. Some home buyers use a mortgage calculator to determine if they can afford to buy a home. While that may be helpful for the buyer, they also need to apply for a loan with a lender.
If the home buyers are buying “all cash” they also need to provide proof they have the funds.
In the County of Santa Clara, the initial deposits and funds to close the sale sent by wire transfer. A cashier’s check is also acceptable.
The executor or administrator must keep the home insurance current until the home is sold!
Not all representatives end up selling the house. Most do yet some will keep houses for rent and keep them as an investment property.
Probate sales in California provide an opportunity for home ownership or investors seeking an investment property.
California Probate Disclosure Laws
- All homes, including mobile homes, must comply with agency disclosure laws if the real property is the subject of a sale, exchange, land contract, or lease which exceeds one year. This includes homes sold through probate.
- A Transfer Disclosure Statement (“TDS”) is a required disclosure in California.
- An executor or administrator is exempt from the requirement to provide home buyers with a completed TDS.
- The exemption does not relieve the representative from disclosing all known material facts regarding the desirability and value of the property.
- Executors and administrators have to disclose what they know about the property with an Exempt Seller Disclosure form.
- California probate exemptions are one of the most misunderstood facts in probate sales in California.
- The TDS exemption only applies if there is no actual knowledge about the real property sold through probate.
- Excluding applicable exemptions, probate sales in California must comply with all disclosure laws.
Agent Disclosure Duties
Probate real estate experts hired to sell the property owned by the decedent’s estate need to complete a competent and diligent visual inspection of the property.
The home buyers’ agent also needs to complete a visual inspection of the property.
The visual inspection is to include all accessible areas to the property.
Agents must disclose all known facts that may impact the value and desirability of the property.
The listing agent’s disclosure includes facts known about the property that were gained from the estates representative or the decedent before they died.
The findings of the visual inspection are written on an Agent Visual Inspection Disclosure form.
Executor and Administrator Duties
After an estates representative appointment to manage the decedent’s estate, they become an officer of the court with many duties and obligations.
The decedent’s assets are managed with prudent care. Prudent is defined as “Careful or wise in handling practical matters; exercising good judgment or common sense.”
Hiring experienced real estate experts to sell the property owned by the decedent’s estate is prudent.
The probate real estate experts experience, knowledge, and extensive training ensure homes sold through probate are managed following the probate process.
It is prudent to hire probate attorneys versus personal injury lawyers to manage a California probate.
It is prudent to hire probate real estate experts to sell the property versus an agent does not understand the California probate process.
We require our team to have experience in probate sales to ensure the home is sold following the probate process.
As probate real estate experts we can assist with probate sales in California and across the nation. Our primary focus is Santa Clara County. If you need help in Los Angeles, San Francisco, Foster City, or anywhere, we can help.
For more information on how to best navigate uncharted probate waters, you may request a copy of 10 Tips to Avoid Probate Headaches here.
Probate is avoided by hiring a probate and trust estate planning attorney to create a Will and a living trust.
If you have additional questions and need to speak with a probate professional contact me for a consultation.