In most circumstances the estate representative (executor or administrator of the estate) has the authority to sell the property through powers granted by the Independent Administration of Estates Act (IAEA).
When the estate representative has full powers under this act, he/she may elect to sell the property without the need for a court confirmation hearing. (see an attorney for details)
Unless there are objections by interested parties to the estate, which could require the sale to be confirmed in a hearing, the sale can usually be completed with a minimum of additional requirements. Most estate sales sold under IAEA are completed in a similar manner to other real estate transactions.
In some cases, the estate representative sale of property in probate may be granted only limited powers through IAEA, in which case a confirmation hearing is required. Even if the estate representative has full powers, he/she may elect to have the sale confirmed in court.
When court confirmation is either chosen or required, certain procedures are to be followed, as required by law:
- An offer is presented and conditionally “accepted” by the estate representative. This purchase agreement is not binding on the estate.
- After all buyer contingencies are removed from the accepted offer, a petition for the court hearing is made. The date of the court hearing depends upon the court calendar at the time, but is generally 20-40 days from the date of the petition.
- The buyer needs to deposit 10% of the purchase price prior to or on the date of the court confirmation hearing.
- The sale, together with the accepted offering price, is advertised for a statutory period in a local newspaper.
- There is open, competitive bidding at the court hearing. The minimum first overbid price shall be an amount equal to the accepted purchase price of the accepted offer, plus five percent of that amount, plus $500. In the event of such an overbid, the court shall determine any further incremental overbidding amounts - for example, $1,000 or $2,000. The bidding stops with the final bid.
- Any person who bids in court must make an unconditional offer (i.e., obtaining financing and approving inspections should not be a condition of the offer) and if confirmed must present a cashier’s check deposit for 10% of the purchase price as described above, or as determined by the court.
- In the event a buyer defaults after a court confirmed sale, the buyer may lose his/her deposit.
- If the court confirms the sale to an over-bidder rather than the original buyer, the original buyer’s deposit shall be refunded. If the sale is confirmed to the original buyer, the deposit shall apply to the purchase price.
- The purchase price accepted must be at least 90% of the probate referee’s appraised or re-appraised value of the property.
- Real estate commissions are subject to approval of the court.
This discussion pertains to the State of California domiciled estates proceeding through the probate process only. Probate proceedings are different for each state. This information is not intended to be legal advice. This information is not guaranteed to be accurate or complete. Contact a lawyer for information regarding your personal circumstances. |
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