When a home or estate owner is deceased the property can go into probate if there are numerous heirs, properties or debts. Once this is the case a personal representative and executor are issued to the estate or acknowledged by a will. The executor can sell the property immediately and then the sale is much like a typical sale, but if there are heirs and beneficiaries that object, then the process must go through the courts to be settled.
When court confirmation is either chosen or required, certain procedures are generally followed, as required by law and/or custom:
- 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 is typical for California. Every state may have different rules and regulations to be followed when dealing with probate. The best way to gain advice for your situation is through the help of a real estate lawyer.
If you may be facing this issue now or in the future, please send me some details so I can assist you to sort out the present and future issues. Deepak@HousesInSoCal.com