If you look up the definition of probate in a dictionary, you will get an explanation that it is the process of validating a Will. We were surprised at the brevity of it. There is so much more involved with probate, but why don't we start by taking a look at why there is a probate process to begin with.
When a person dies, State laws regulate the process of:
A probate case starts when a Petition to Administer An Estate is filed, which asks for a personal representative to be approved by the court. This is usually an executor/executrix named in a Will. A notice of petition is then published three times in a local newspaper of general circulation, which acts as a notice to creditors. Probate is necessary for a fair process of making sure valid creditors are identified and paid, and remaining assets are distributed to heirs and beneficiaries per the wishes of the decedent.
The answer to this is, it depends. Jointly owned (with survivorship) real property will pass directly to the survivor, such as a spouse or a child. If the property is solely owned and it does not need to be sold in order to settle debts with creditors, an heir may become the new owner. Oftentimes though, the decedent instructs the executor to sell the property upon their death, with the proceeds going to the estate for later distribution to heirs and beneficiaries.
The difference in selling probate real estate depends on whether or not the personal representative has been granted full authority under the Independent Administration of Estates Act (IAEA). This authority allows the personal representative to take many actions without obtaining court approval.
If the personal representative is granted full authority, they can hire an experienced probate real estate broker who will work closely with the representative as well as the attorney on the case. If the decedent asked that a notice of proposed action be sent to all heirs once a purchase offer is signed, a 15 day seller contingency is created by the broker to allow time for the heirs to approve or contest the terms of the sale. If none of the heirs objects to the sale within 15 days, the contingency can be removed and the sale can proceed. One way to alleviate this seller contingency is for the heirs to sign a waiver notice.
If the personal representative is granted only limited authority, or if one of the heirs mentioned above rejects the terms of the sale, court confirmation will be required. A date will be set for the hearing, usually 30 to 45 days out, and a notice of sale is published in a local newspaper of general circulation. Oftentimes, court confirmation is subject to overbid, where the Judge will solicit offers from the audience during the hearing. The overbid offers must start at 10% of the first $10,000 plus 5% of the balance of the accepted offer price, with subsequent increments set by the Judge. We see overbids happen when the market value of real estate is on the rise at a very fast pace.
There are a couple of other options, a private sale where sealed bids are sent to the probate real estate broker or attorney, and a public auction. These are not as common and both require court confirmation.
That's where we come in. We are Certified Probate Real Estate Specialists. We have experience with probate and trust sales and have gained the confidence of probate attorneys in Sonoma County. A probate real estate sale needs to be handled with extra care and requires a broker that has knowledge of the probate real estate forms and court documents required to comply with the law.
This is just a brief summary of what all is involved in a probate real estate sale. We would be happy to talk to you about the probate process and how we may be able to help you.