Probate Real Estate...

Quite often there is, as part of the Probate Estate, a home or other real property which the heirs or beneficiaries may want to sell during the Probate process. There are many good reasons to sell the real property during the Probate process. There are many advantages to selling a home during the Probate process versus waiting until the Probate has concluded. If the bottom line is to sell the home or property that is going through Probate, it should be done as soon as possible during the Probate. Below, you will find some of the reasons why selling the property during Probate is a good idea.

REASONS TO SELL A HOME DURING PROBATE:

Reason: Explanation:
Pay Administration Costs: There are always Administration costs of going through Probate. These can range from a reasonable cost (if you use The Probate Source) to tens of thousands of dollars (if you use an Attorney). There will be Court filing fees, the Probate Referee's fee, Court copy/certification fees, and possibly others. Sometimes the Estate does not have a lot of other resources besides the home, and selling the home makes sense in order to be able to pay for these costs.
Pay Creditors: During the course of the Probate, there may be various creditors that file claims against the Estate. Creditors such as credit cards, funeral expenses, medical bills, personal loans, State & federal taxes, Department of Health Care Services (Medi-Cal) claims, and etc. You may need to have enough cash on hand to help take care of some or all of these debts of the Estate.
Ease of Distribution: It is much easlier to distribute a sum of money to the heirs/beneficiares than a home or other real property. For example if you have five (5) heirs to the Estate, it would be far easier to divide the sales proceeds from the sale of the Probate home than having all five (5) heirs be placed on title as co-owners of the property at the conclusion of the Probate.
Less Complications By Selling During Probate: There is less to go wrong during the sale of the home in Probate because only the Executor/Adminstrator will need to sign off on the real estae documents to complete the sale. If you wait until the Probate is over, and (using our example above of five (5) heirs to the Estate) then you decide to sell, it will then take the signatures and agreement of ALL of the heirs to the Estate to complete the sale. Think about that...all of the heirs would have to be in complete agreement on everything, and on every aspect of the sale. They would all have to sign off on the massive amount of real estate transaction documentation that is part of the normal real estate transaction process in California. Waiting to sell the home until after Probate is just setting up a situation where potential problems can be greatly compounded.
Less Disclosures & Requirements: Probate real estate sales are "as is", and there are less disclosure requirements. In addition Probate real estate sales are exempt from some of the legal requirements that non-Probate real estate sales are not. Once the Probate is over, and legal title transfers into the names of the heirs/beneficiaries, those exemptions and lessened legal requirements are lost. It is also much easier to impress upon a buyer of a Probate home that you (the Executor/Administrator) never (or at least not recently) lived in or occuppied the home and have limited knowledge on it. This facilitates buyers in being more understanding about purchasing a Probate in an "as-is" condition. It also helps the buyer to realize that the likelyhood of getting the seller (the Estate) to pay for extensive repairs, upgrades, etc. is much less likely than in a normal real estate sale.

WHAT DOES THE PROBATE SOURCE DO THAT OTHER REALTORS, WITH LITTLE TO NO EXPERIENCE IN PROBATE, DON'T WHEN LISTING & SELLING PROBATE REAL ESTATE?


As A Licensed Realtor Specializing in Probate Real Estate: As A Registered and Bonded Legal Document Assistant:
1.   Work with the Estate Aministrator/Executor to help decide if selling the Probate home "as-is" or spending limited amounts of money on repairs/maintenance makes more sense in an attempt to bring in a top dollar sales price. 1.   Prepare the Notice of Proposed Action Probate documentaion for the sale, make sure they are served at least 15 days prior to the scheduled sale date, file the proof of service with the Court, and make Title Company has Court filed copies on hand for the close of escrow.
2.   Marketing of the home not only on the Multiple Listing Service and all of the top Internet real estate sites such as Zillow, Realestate.com, Redifin, etc., but also marketing the home to local Realtors, San Francisco Bay Area Realtors, investors, and our own private list of investors that have expressed specific interest in Probate homes and properties. We have a designated list of investors that have asked us to keep them apprised of Probate homes and properties that have come onto the market. 2.   Make sure that the Title Company has Court certified copies of any Probate related documents they may need or require in order to close escrow on time and without delays. These include, but are not limited to the Letters of Administration or Testamentary, Order for Probate, and/or copies of any Ex-Parte Orders which may be related to the sale of the Probate home or property.
3.   When Court confirmation of the sale is required or needed:   Follow up to make sure that all parties (Seller, Buyer, Title Company, Lenders, etc.) are informed as to the time line for the confirmation hearing, changes (if any) due to information about possible over-bids from other Buyers at the confirmation hearing, and the obtaining of the certified copy of the Court Order for the sale to present to the Title Company to facilitate a quick and prompt escrow closing immediately after the Court confirmation hearing concludes. 3.   When Court confirmation of the sale is required or needed:   Make sure that the Petiton to Confirm the sale gets filed expiditiously and the hearing date is scheduled as soon as possible. Make sure that all parties entitled to notice receive notice, make sure that the required publication of the hearing gets completed in a timely manner, file the proof of publication with the Court, prepare the Order for Sale and present it to the Court clerk prior to the confirmation hearing, and check on the Probate Examiner's notes prior to the hearing to take care of any loose ends or last minute requirements the Court may have.
4.   Make sure that all potential Buyers, their Agents and Brokers, are fully informed that the sale is a Probate sale, and not a regular real estate sale. Make sure that all potential Buyers, their Agents and Brokers, use the special "Probate Purchase Agreement" (PPA) form for all offers and not the standard Residential Purchaase Agreement (RPA). Most Realtors will submit offers on the standard RPA form which is not correct. The Probate Purchase Agreement (PPA) form has specific references and addresses certain issues that are special and unique to Probate real estate sales. Failure to use the proper form and its special Probate related language may cause problems for both the Seller and Buyer at a later point in the transaction and even possibly after the transaction has closed. 4.   Make sure that the Seller (the Estate) has the proper taxpayer id number for the Estate in place. The Estate MUST have this in place in order for escrow to close. Many Realtors and Brokers not familiar with Probate sales miss this entirely, and it is a very important element of the real estate sale that needs to be taken care of prior to close of escrow. The Title Company must have this number in their file prior to close of escrow.
5.   Work with potential Buyers and their Agents to make sure that they are fully informed that the sale is a Probate sale, and the property is being sold "as-is". Help them to undestant the nature of Probate home sales and that they should not expect the Seller (The Estate) to be willing to do much, if anything, in terms of repairs and/or maintenance to the property other than what may have been done in preparing the home to list for sale. It is important that Buyers and their Agents understand the special circumstances of most Probate home/property sales. 5.   Make sure that the Seller (The Estate) has set up the Estate bank account, and it is ready to receive the sales proceeds from the Probate home sale. This is another unique requirement of Probate, and the Title Company will not be able to wire funds into just any account. They must have a propertly set up Estate account to wire funds into.
6.   When selling a Probate home, there are a number of exemptions that the overall real estate sale is exempt from and not required to comply with. Most Realtors are unaware of these exemptions, and that can end up costing the seller additional time and money because of the Reator's lack of knowledge here. 6.   Make sure that the Seller (the Estate) receives a copy of the final, certified, statement from the Title Company after close of escrow. It is very important that the Administrator/Executor of the Estate recieve a copy of this as he/she will need it for tax purposes later.
7.   There are many other issues and variables that are unique to each Probate home/real estate sale. We make sure that any issues that come up are taken care of and resolved in a timely manner. 7.    Make sure that proper Probate related records for the entire Probate home/real esate transaction are kept and made ready for when the time comes to prepare the Petition for Final Distribution, and that they can all be correctly incorporated into the final Probate documenation to the satisfaction of the Probate Court.

Common Questions About Probate Real Estate Sales:

  • Any Broker/Realtor can handle a Probate home sale, right?
    (Ans: Yes, but I wouldn't recommend it. There are many faucets of a real property sale that takes place during Probate which do not during a regular non-Probate sale. To hire a Broker/Agent who has little to no experience in Probate sales is setting yourself up for some potential major problems.)
  • My Probate Attorney takes care of selling the Probate home, right?
    (Ans: No. In almost all Probate cases, the sale of the Probate home or real estate is handled by an independent Broker/Agent chosen by the Executor/Administrator, not the Probate Attorney. The Executor/Administrator is free to interview and choose whomever they wish to in order to place the Probate home on the market and sell it during the Probate process.)
  • The Court has to confirm the sale of the Probate home, right?
    (Ans: Normally no. In uncontested Probate cases, the Executor/Administrator normally has what's called "Full Authority" under a Probate law/code known as the "Independent Administration of Estates Act (IAEA). As long as the Executor/Adminstrator has these powers (which they most always do), the home can be sold without the necessity of having to go to Court to confirm the sale.)
  • When can I sell the home during Probate?
    (Ans: You need to have your official appointment as the Executor or Administrator of the Estate first. This normally occurs at the first Probate hearing, although in certain emergency situations, it can be otained quicker and without a formal hearing.)
  • Can the home be sold to a friend or family member?
    (Ans: Yes, but be careful with that. Often friends and family members who want to purchase the Probate home want to do so at a discount. If you do sell the Probate home at below market value to that friend or family member, be sure everyone is in complete agreement. When you sell at a discount, you are essentially taking money from the heirs/beneficiares that they would have otherwise realized if the Probate home had been sold on the open market at fair market value. You as the Executor/Administrator might find yourself in "hot water" at a later time from a disgruntled heir or beneficiary.)
  • What happens to the money from the sale of the home?
    (Ans: The money from the sale of the home is deposited into a special Estate checking account that has been previously set up specificaly for the depositing of any funds/monies that come in during the course of the Probate.)
  • A home in Probate can't be foreclosed on, right?
    (Ans: Incorrect! A home in Probate can be foreclosed on in the same way any home can be. There are things that can be done to try and prevent the foreclosure on a Probate home, and the Probate Source team has lots of experience working with families in this situation.)
  • Our Probate home is in foreclosure. We should just let it go back to the bank, right?
    (Ans: No! There is a lot that can be done to either (a) pull the home out of foreclosure, (b) get the home onto the market and sell it before the foreclosure so that the Estate realizes the equity remaining in the home, (c) perform a short sale with the home if there is little to no equity, and perhaps realize some amount of cash for the Estate via the short sale process, (d) recover the overage (if any) after the Trustee's Sale and bring that back to the Estate, or (e) some combination of these potential solutions. The Probate Source has a lot of experience working with Probate homes and properties in the foreclosure process. The key in these situations is to get moving on things quickly. The longer you wait, the less chance there is of realizing any monies for the Estate and heirs.

© The Probate Source 2018, William C. Hayman - Licensed & Bonded California Legal Document Assistant, Placer County Registration #16-004. NewVision Realty Group, 951 Reserve Drive, Ste 140, Roseville, CA 95678, California BRE #02000748. I (William C. Hayman) am not an attorney. I can only provide self help services at your specific direction.