Probate Real Estate – What is Probate Real Estate?
Probate is simply the legal process that settles a deceased person’s debts and formally passes their property’s legal title to the intended heirs.
Real estate probate is the legal process following a homeowner’s death, where the property either transfers ownership to someone or is sold.
Oftentimes, the real estate held in the estate is sold to help pay off the remaining debts. Probate is overseen by the Court in the County the decedent resided in, although they can own Real Estate in different Counties or even States.
The Probate Process is conducted one of two ways:
- Full Authority
- Limited Authority
Full authority basically allows the personal representative to do almost anything without Court Approval. That’s not to say they won’t be subject to questioning later by the Court or beneficiaries, but they can take care of business without delay. This includes selling Real Estate, personal property, and even stocks.
Full authority is particularly important when Real Estate needs to be sold, especially when the proceeds of the sale will go to paying off debts. A Real Estate transaction that requires Court Approval is not ideal and can delay the ability to sell quickly.
Limited Authority requires Court Oversight and Confirmation over all actions the Personal Representative intends to do.
The Probate Process:
1. Assignment of Personal Representative
The first thing a probate court does is assign a personal representative, also known as an executor, or administrator of the estate.
This is the person either designated in the will or assigned by the court to maintain and distribute all of the deceased person’s assets. The Executor/Administrator will either have full authority or limited authority.
2. Inventory
The personal representative will gather an inventory of all the descendants assets. This can include real estate, stocks, personal property including but not limited to: jewelry, vehicles, art, furniture, etc.
3. Appraisal
If the personal representative decides to sell the property, they will first need to have the property appraised for its value as of date of death, and add it to the estate inventory that must be submitted to the court. The list price is determined after an official appraisal.
3. Listing
Once a personal representative is assigned the real estate can then be listed on the open market. Real estate agents that work with probate properties conduct business as usual to try and attract a high offer. The property needs to sell for no less than 90% of the appraised value that was submitted to the court.
4. Approval & Sale
Once there is a strong offer on the table, and terms are agreed upon by the buyer and the seller, then an official notice of sale is sent to the heirs of the estate.
The Notice of Sale of Real Property must also be published in the local newspaper. The Notice is required to contain: 1) the mode of sale; 2) place, date and time of sale; and 3) description of the property. If no one objects to the sale and term within 15 days then the escrow can proceed. If there is an objection to the sale by a beneficiary, then a “auction process” will be conducted by the Court.
There are important terms and conditions for probate sales — terms that make them different from other real estate transactions. While you should always check the terms prior to making an offer, in general, the terms of the sale are as follows:
- The property is sold “as-is”
- No contingencies
- No repairs, including no termite or retrofitting
- 30-day escrow
- Seller pays for the escrow fees and title insurance fees
The selling of a Probate Real Estate Property is largely the same as a regular sale, i.e. photography, marketing, showings, open houses, however, there is one big difference.
Since the person selling is deceased or incapacitated and the representative of the Estate has never owned the property, there is limited disclosures that will be produced.
If you find yourself needing to open a Probate or Sell Probate Real Estate, it is important to surround yourself with professionals who know and understand all the steps required.
Although the marketing is largely the same as a regular sale, the legal understanding of the Probate Process and the tools necessary to make a Probate Transaction run smoothly are Why you Need a Probate Real Estate Specialist.
