What is a Probate, Estate or Conservatorship Real Estate Sale?
Estate administration allows the sale of real estate and personal property owned by a person who is:
The majority of these sales are referred to as “Probate” sales and some are supervised by the probate court, either within the jurisdiction of the county where the real estate is located, or the county where the probate is filed.
Find information how to best buy and sell probate, estate, and trust properties here.
What is a Personal Representative or Fiduciary?
A personal representative is the person or entity who administers the sale of a property. A personal representative is either:
In each of these cases the court generally appoints fiduciaries.
What are the duties of the Fiduciary?
The fiduciary collects the assets and pays the debts in such a way that protects the best interests of conservatee, minor, or the heirs of the deceased (beneficiaries).
Reasons for selling a probate or conservatorship property:
There are several reasons why a fiduciary may find it necessary to sell real property in an estate:
The Two Types of Probate Sales:
There are two types of probates sales that personal representatives should be familiar with:
Sales requiring Court Confirmation
Certain types of sales, including guardianships, conservatorships and trusts, require appraisal and approval by the probate court. The goal of the court proceeding is to protect and promote the interests of all beneficiaries. These sales take longer than standard sales due to the additional court process.
The representative of the estate, with court permission, may grant an exclusive right to sell the property for a period not to exceed 90 days. Acceptance of an offer by the estate representative is subject to probate court confirmation. An offer to purchase must be made at a price no less than 90% of the property's appraised value.
When an offer is accepted, subject to court confirmation, the representative will petition the court to confirm the sale. Depending on the calendar, the court generally sets a date for the hearing between 20 and 40 days after the petition is submitted. All interested persons or parties may bid at the time of the hearing.
To open the bidding, there must be an increase over the original bid of at least five percent of the original bid plus and additional $500. Once the bidding has been opened, the court may permit the bidding to continue until it declares a bid to be the highest and best obtainable. Bidders must make an unconditional offer (the court will not accept conditional offers based on inspections of the property or financing).
The court will then confirm the sale to the highest bidder. The bidder/buyer must be prepared to deposit 10% of the purchase price on or before the date of the hearing. Ordinarily, after court confirmation of a sale, normal escrow procedures consummate the transaction on the terms and conditions approved by the court.
Sales without Court Confirmation: If the fiduciary has been granted full administrative powers under the Independent Administration of Estates Act (IAEA), or the property is held in a non-court supervised trust, court confirmation may not be required. These timing of these sales resembels that of a regular real estate transaction. The executor-administrator, however, is exempt from disclosure, unlike an ordinary sale. All heirs must be notified in writing of the sale, and have 15 days to object to the sale (45 days for some trusts). If an objection does occur, and it cannot be overturned by the fiduciary or attorney, the sale would most likely need to go to court for confirmation.
The Probate Process Explained For Court Confirmed Sales:
For additional guidance visit the Professional Fiduciary Association of California’s (PFAC) website.