Whether it be probate, trustee, divorce or bankruptcy sales, the involvement of the court system severely complicates most arms-length transactions. My experience includes handling real estate litigation in each of these types of transactions and can serve to assist you as you navigate the sale of property under court supervision.
As a licensed real estate agent now working with Sotheby’s International Realty, I assist attorneys (for buyers and sellers) in the sale of properties that must undergo the additional scrutiny of creditors, judges, and beneficiaries.
I can help you jump through hoops: Generically called “due-diligence” in the judicial process, the legal procedure of selling properties subject to court oversight requires additional assurance that proper notice, marketing, and maximal value is derived from a transaction. The additional layer of scrutiny is satisfied with painstakingly prepared disclosures and declarations that are typically filed with the court. Having successfully completed property sales, settlements and exchanges involving litigation, mediation, arbitration and court-sanctioned auctions, I can help your attorney complete a property sale efficiently.
The are the legal procedures that typically involve attorneys working with qualified real estate agents:
Sale of Property after Death of a Property Owner (with or without a will):
Call for assistance in the post-mortem process of selling properties on behalf of an estate. California’s Probate Code and local court rules require attorneys to timely process declarations and form-driven petitions. I can assist your attorney with this process as I have ready-knowledge on all aspects of the probate process.
Appointment of the Administrator or Executor of the estate. In most cases, the decedent’s will names an executor who is designated to handle the distribution of assets, including real property. If no executor is named, if the named executor is unwilling to serve, or if there is no will, the court appoints an administrator to carry out these duties. The executor or administrator is the person who has the authority to list and sell the property. A sale cannot proceed until that person has been identified.
As provided in the Independent Administration of Estates Act (IAEA), the executor establishes a list price for the real property. The price takes into account the appraisal by the Probate Referee and is usually determined with the assistance of a real estate agent experienced in probate and trust sales. The property is then listed for sale through that agent. Let my experience help to ensure that any property sale will be completed competently.
I will then market the real property to the public as aggressively as possible to attract the highest offer. This generally involves a number of approaches, including signage, newspaper advertising, listing on several real estate websites and hosting open houses for other real estate agents and potential home buyers. This is where the Sotheby’s association comes in handy.
Sotheby’s has established affiliations with a world-wide array of marketing outlets including Google, Zillow, The Huffington Post, Elle Decor, Architectural Digest, The Los Angeles Times, The New York Times, The Washington Post, Realtor.com, and many more.
I also schedule and attend appointments to show the property to interested parties who inquire directly.
While buyers of probate and trust real estate may be looking for a bargain, their range of offers are limited by the court. An accepted offer must be 90% or more of the Probate Referee’s appraised value. Once a buyer is found, the real estate agent assists the seller in negotiating terms that are satisfactory to both parties.
When the property has an accepted offer, a Notice of Proposed Action is mailed to all heirs, simply stating the terms of the proposed sale. The heirs have 15 days to review the notice and pose any objections. If there are no objections, the sale may proceed without a court hearing.
If the executor/administrator does not have full independent powers under IAEA, or if one of the heirs poses an objection to the Notice of Proposed Action, notice of the sale must be published in a generally distributed local newspaper (unless the will does not mandate such action).
The attorney for the estate then applies for a court date (the “confirmation hearing”) when the sale will be executed. The court date is usually within 30 to 45 days of the date the application is filed. A copy of the application and details concerning the sale are mailed to all interested parties.
Even after the court date has been set, I will continue to show the property and advertise the home to potential buyers in the hope of securing an “over-bidder” and thereby raising the sale price.
During the court confirmation hearing, the previously accepted bid may be overbid by another interested party. In such a case, the overbidding party must appear at the hearing with a cashier’s check in an amount totaling at least 10% of the minimum overbid price in order to successfully overbid. The minimum overbid is determined by the following formula: 10% of the first $10,000 plus 5% of the balance of the accepted offer.
If there is more than one over bidder, the highest bid ‘wins.’ The winning bidder gives a cashier’s check to the Executor/Administrator and escrow is opened. Escrow will close approximately 30 to 45 days from the court hearing.
Frequently Asked Questions
What is a trust?
A situation in which one person (or entity) holds the legal title to a property for the benefit of another.
What is a probate?
Probate is the court-supervised administration of a decedent’s estate. The probate proceeding involves “proving the will” (if there is a will), appointing the personal representative, determining the decedent’s assets that are subject to probate, paying outstanding debts and disbursing funds to the beneficiaries. In some cases, the decedent’s estate includes real property that must be sold under the court’s supervision.
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.
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.)
What is a Property Profile?
A Property Profile is a report that provides details on a specific property. It contains information such as square footage, number of bedrooms and bathrooms, lot size, zoning information, use code, tax information and ownership information. Additionally, the profile has the recorded documents, such as the grant deed, quitclaim deed and copies of deeds of trust. The report can also contain sales comparable, school information and neighbourhood information. A complete, current property profile is essential for setting the price of the real property and for determining problems that may interfere with the sale.
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 entry way 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?
I can recommend a number of qualified specialists to help you prepare the property for sale, including removing belongings and obtaining professional cleaning. Also, I have a list of appraisers and other professionals that can help you assess the value of personal belongings that may require liquidation. I can 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?
I will help with detailed market data, called a Market Value 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, I will help you determine a listing price that is appropriate for the market and will attract the greatest number of qualified buyers.
Once a property is listed, how will it be marketed?
I will pursue a number of strategies to expose your property to likely buyers. They include signage on the property, newspaper and internet advertising, direct mail, open houses for agents and the public and personal networking among successful agents who may represent qualified buyers. I will conduct showings for interested buyers and their agents, will answer questions about the property and will continue to promote the property in order to secure the highest offer. I will also communicate with neighbours in the immediate area, keeping them informed about the price and other details about the property.
Do I have to pay up front for all this marketing and advertising costs?
No, there is typically no advertising or marketing up-front fees.
Is the paperwork different in a probate sale than 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 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.
How do you determine the minimum bid in court at the 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 over bidder. In that case, an overbid above the minimum would be to the advantage of the potential buyer. Here’s an example of how the overbid and deposit amount are determined:
I recommend hiring a sales agent that has experience with these legal matters.
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. I will represent your interests throughout the transaction; being able to understand and explain the process is essential. I work well with probate and estate lawyers who speak the same technical language and are sensitive to the legal restrains and obligations to ensure a timely transaction.