The short answer is yes, you can. Many people think that you have to wait until the Probate is over before you can sell it. That is simply not true. You normally only have to wait until the initial (first) hearing date to occur, and someone gets appointed by the Court to be the Executor or Administrator. Once that happens, you can then place the home on the market and sell it. There are a few caveats to that however. Most of the time, the person who is appointed to be the personal representative for the Estate (Executor or Administrator) is appointed with “Full Authority” under the Independent Administration of Estates Act (IAEA). When that happens, the the personal representative can list and sell the Probate home pretty much like a normal real estate sale. Although there are a number of additional forms and procedures that need to take place with the Probate case to accomplish the sale. However those additional steps are ones that the Court generally is not overly involved with. On the other hand, if you have “Limited Authority” under the IAEA, then you must go through a Court hearing, and the sale must be confirmed by the Court. We have been involved in many of those types of sales, and they are quite a bit more involved, and time consuming as well as the additional Court hearing. I will cover Court Confirmation sales in another blog post. For now we will assume the personal representative has “Full Authority”. Everything will generally go smoothly with the sale unless one of the heirs or beneficiaries of the Estate objects to the sale. If that happens, then yep, you guessed it, you MUST go through the longer, more drawn out Court Confirmation process to get the sale done.
Many people will ask why not just wait until the Probate is over to sell the home? There are many, many reasons and advantages to selling the home during Probate rather than wait until it is over. If the family plans to sell the Probate home, then it is far better to sell it sooner rather than later. Here are just a few of the many reasons to sell the Probate home during Probate rather than wait until it’s over:
- Let’s say you have a Probate situation with six children, and all of them are going to receive equal shares of the Estate (one-sixth (1/6)) each. Four of them want to sell the house, one of them does not, and the other is not sure. If you sell the house during the Probate process and the personal representative has that “Full Authority”, then only the personal representative (Executor/Administrator) needs to sign off on all of the real estate paperwork and Probate paperwork to complete the sale. The others don’t need to sign anything as long as they’re not going to object. In a situation like this, if you wait until the Probate is over, then there will be SIX PEOPLES’ NAMES ON THE DEED TO THAT HOUSE. Now to sell the home, you have to have all six of those people sign off on all of the real estate paperwork to complete the sale. If just one of them refuses, then the property cannot be sold without further Court litigation and Attorneys getting involved.
- Many people do not know this, but when you sell a home during Probate, it is EXEMPT from certain disclosure requirements. In addition to that, the disclosure that are done, don’t usually contain much as the personal representative completing those disclosures often never lived in the home, and has little to no knowledge about the home’s condition. It is more difficult for a buyer to come back later and claim something wasn’t disclosed to them when the seller (The Estate) had little to no knowledge about the condition of the home, and indicated such to the buyer in writing. It is also much easier for an Estate to sell a home “as is” than in a regular non-Probate type sale. If you wait until the Probate is over, then the owner(s) of the home are not exempt from any disclosure requirements and must comply fully with all such. Obviously it seems apparent that there is a much lesser degree of liability when the Estate sells a Probate home rather than the heirs/beneficiaries after the Probate has concluded.
- If you sell the Probate home during the Probate rather than wait until after the Probate is over, you are likely to pay less in capital gains taxes. This is especially true if your loved one passed and then you waited years to do the Probate. If a home needs to go through Probate, then you want to do it as soon as possible after the person has passed away. I know of some situations where a family waited 10 years or more to start the Probate process, and the amount of capital gains taxes and escaped property taxes they had to pay was enormous.
These are just a few of the reasons that if the plan is to sell the Probate home, you really want to do so during the Probate process, and you want to do it as soon as possible.
Disclaimer: I am not an Attorney, and cannot provide legal advice. I am a licensed Professional Fiduciary in the state of California (Lic. No. 1277) as well as a registered and bonded California and Nevada Legal Document Preparer/Assistant. Any information provided on this blog and/or website IS NOT legal advice and should never be used or considered as such. Any information provided on this blog and website is based on my 30 years of experience working in the Probate area. Only a licensed Attorney can provide legal advice, and you should seek out an Attorney of your own choosing if you have legal questions and/or need legal advice.