Probate FAQ
What is a trust?
A trust is a fiduciary relationship in which one party, known as a trustor, gives another party, the trustee, the right to hold title to property or assets for the benefit of a third party, the beneficiary. Trusts are established to provide legal protection for the trustor’s assets, to make sure those assets are distributed according to the wishes of the trustor, and to save time, reduce paperwork and, in some cases, avoid or reduce inheritance or estate taxes.
What is probate?
Probate is the legal process through which a deceased person’s estate is properly distributed to heirs and designated beneficiaries and any debt owed to creditors is paid off. In general, probate property is distributed according to the decedent’s last will and testament, if there is one, or according to state law if no will exists. In some cases, the decedent’s estate includes real property that must be sold under the court’s supervision.
Should I use the same agent who helped me sell my own house?
You are free to choose any real estate agent you like, but it is important to remember that probate real estate sales are complicated legal matters. Most real estate agents are not experienced or well-versed in the probate process. It makes sense to choose an agent who specializes in probate and trust real estate, and who understands the intricacies of pricing, marketing and presenting such properties. Your agent will represent your interests throughout the transaction; being able to understand and explain the process is essential.
Is the paperwork different in a probate sale than in a traditional real estate transaction?
Yes. In most real estate transactions, the seller is required to disclose information about the property, including defects, construction conducted without a permit, evidence of pest or water damage, etc. Because of sellers of real property through probate, trust or conservatorship may never have lived in the property that’s being sold, special disclosure forms take this into account. Probate and trust sales require special disclosures, listing agreements, and purchase contracts. In California, the California Association of Realtors has standardized forms specifically for probate transactions.
Why do some probate properties not require court confirmation?
If a probate property is a Trust Sale or if the Executor/Administrator of the estate has been granted “full independent powers” under the Independent Administration of Estates Act (IAEA), the sale may not require court confirmation.
There are two levels of IAEA powers, “limited” and “full”. Full authority gives the personal representative the power to buy, sell, or borrow against real property without court approval. Limited authority does not give authority over real property; a personal representative with only limited powers will have to request court approval before moving forward with a purchase, sale, If the Administrator has full independent powers, he or she may elect to list the property for sale.
Once an offer is accepted, the estate’s attorney mails out a Notice of Proposed Action stating the terms of the proposed sale to all the heirs. The heirs then have 15 days to object to the sale. If there is no objection within 15 days, the sale goes through without any court hearing required. (Regardless of the details of the probate transaction, sellers are strongly encouraged to work with a professional probate attorney to protect the estate’s best interests.)
Should I make repairs before listing a probate property for sale?
No. In California, probate properties are sold “as-is.” If you make repairs you may inadvertently conceal something about the condition of the property. Even a coat of paint can unintentionally conceal a defect. Except for removing personal possessions, clearing out trash and cleaning up the entryway and yard, it is important to leave the property in its present state and let the buyers do their inspections and satisfy themselves as to the condition of the property.
What do I need to do to prepare the property for sale?
Your agent should be able to recommend a number of qualified specialists to help you prepare the property for sale, including removing belongings and obtaining professional cleaning. Your agent should also assist you in conducting an inventory of the real property for sale and in preparing a comprehensive property profile.
How can I choose the best list price?
Your agent should provide you with detailed market data, called a Comparative Market Analysis. This includes the selling prices of similar properties in the neighboring area. It will also include in-depth information on recent sales in the area, such as price per square foot and the number of days the property was on the market. Taking into consideration the information in the analysis as well as other intangibles of the market, your agent will be able to help you determine a listing price that is appropriate for the market and will attract the greatest number of qualified buyers.
How do you determine the minimum bid in court if there is a court confirmation hearing?
The minimum first overbid price is set by a statute in the Probate Code. Calculating the overbid assumes that there is an accepted offer on the property. The minimum overbid amount is 10% of the first $10,000 plus 5% of the balance of the accepted offer. The overbid must be presented in person by cashier’s check (no personal checks). If a property is highly desirable, there may be more than one overbidder. In that case, an overbid above the minimum would be to the advantage of the potential buyer.
Have more questions? We’re always available to answer them. We are sensitive to the need for confidentiality, clear thinking, timely explanations, great marketing, and strong negotiations.