When a property owner dies, what happens to their property? In most cases, their estate must go through probate before the property can be transferred to any heirs. This leaves many surviving relatives wondering how to probate real estate in California.

Real estate subject to probate must go through the probate process before it can be transferred to the intended beneficiaries and relevant closest living relatives. The probate process can be lengthy and expensive, so it’s important to understand what it is and how it works before you inherit any probate real estate.

If you are an heir to a property in probate, you may wish to sell or buy property from the estate. If you are interested in purchasing or selling during the probate real estate process, there are a few things you should know.

In this article, we review how to probate real estate in California for informational purposes and can help you decide if you need a probate attorney’s help. We also discuss the basics of probate real estate in California, including how to find properties, the bidding process, and what to expect after the sale.

When Can Property Be Sold Through Probate

If a will indicates that a property should be sold through probate, a court order may be necessary to ensure that the best interests of all beneficiaries are met. If the will does not mention any order for the property to be sold, or if no valid will exists, then the executor will decide whether to sell the property.

It is most common for an executor to sell a property to be sold by the executor to pay debts, taxes, and other expenses needed for the administration of a decedent’s estate. To obtain the authority to act on these decisions, the executor or personal representative must submit letters testamentary or letters of administration to the court.

These letters specifically name the personal representative and convey whether they have full or limited authority under the Independent Administration of Estates Act. The executor is then required to obtain a court appraisal before any sale may take place. Once the appraisal is complete, the executor will need to file a petition with the court for the sale of the property. They will also have to state the probate price for the real property. The court will then hold a confirmation hearing, after which the executor can formally list the property for potential buyers.

How Is Probate Property Sold in California?

Most probate properties in California follow traditional methods (all of which are fairly straightforward):

Real Estate Agency

The most common method to sell a property is through a real estate agent. In most cases, the estate representative has to choose the real estate agent or probate broker. A probate attorney can recommend a real estate agency to a personal representative. However, the personal representative is not obligated to do anything and can choose to use the services of a different agency.

Private Sale

Private sales are usually found in newspapers and are administered by attorneys. Confidential bids are placed with the attorney at a specific time and date. The attorney will then evaluate all bids and grant the highest bidder the sale.

Public Auction

Public auctions are generally announced in legal newspapers. They are also hosted at a specific date and time. Bids are verbally announced and the highest bidder is granted the sale.

Private Auction

These auctions are hosted by auction companies. The auction company notifies potential buyers of what properties will be available for the bidding process. Once again, the individual with the highest bidder is awarded the sale.

Trust Department

The Trust Department can act as a personal representative and sell the probate property.

What to Expect After the Sale of Probate Real Estate in California

It’s official: you’ve successfully sold or bought probate real estate in California! But what comes next? Here’s what you can expect in the days and weeks after the sale:

  1. The buyer and seller exchange payment for the property. How and when the seller receives money depends on the terms of the sale. Typically, the escrow company cuts a check within a few days of the sale.
  2. The new owner assumes their role. The escrow company will take care of this for you.
  3. The seller files a final accounting for the real property sale and pays the accounting fees to the court. This is required in most probate cases. Careful accounting must show how much money was raised from the sale of the property and how it was spent during the probate procedure.
  4. The seller may need to pay taxes on the sale and report them on their personal income tax return. If the property was owned by a deceased person, there may be estate taxes due as well. The new owner may also be responsible for paying property taxes.

The sale of your probate real estate can be challenging on its own, but it’s important to remember that it’s just one step of the probate process. With a little bit of planning and knowledge, you can make it through with ease. Read our article on simplified probate procedure for more information. Learn more about simplified probate procedures here.

What Price Can a Probate Property Be Sold For?

The California court requests a confirmation when it comes to the sale of probate property. According to the California Probate Code 10309, the sale price for the property must be at least 90% of the property’s market price, within a year of the sale. The California court will then need to evaluate and approve the terms of the sale.

If the executor receives an offer worth 90% of the probate property’s estimated value, and the executor is content with the offer, they will schedule a court hearing to approve the sale.

Probate real estate sales by the personal representative with full authorization under the IAEA are not subject to these restrictions. Sales with full authorization under the IAEA may have the same restrictions as with non-probate sales.

Depending on the county courthouse from which the personal representative chooses to process the sale, it can take two to eight weeks to schedule a hearing. During this time, the original buyer is responsible for handling all responsibilities for the court to confirm the sale. The buyer will need to oversee property inspections, appraisals, and so on. These contingencies are crucial to have the court approve the sale.

How Can I Avoid the Probate Real Estate Process?

You may want to avoid sending property through probate due to appraisal fees and the lengthy process associated with probate administration. To avoid probate after death, however, your loved one would have had to do some estate planning during their lifetime.

If you want your heirs and beneficiaries to bypass the legal duty of probate real estate selling and skip straight to ownership or a non-probate sale, you have a few options:

  • Transfer the personal property to a revocable living trust while you’re alive. A living trust is a legal entity that can hold property on behalf of its beneficiaries. You can also specify the distribution of property to a living trust document after your death.
  • Put your real estate in Payable on Death accounts (PODs) or joint tenancy assets. These assets cannot go through probate.
  • You can also transfer your assets as a lifetime gift, also known as a vivos gift to avoid probating property on death.

Without this kind of careful transfer of title or trust administration work prior to death, your heirs will need to go through the probate process to sell the property.

The Help You Need

If you’ve been appointed as a personal representative by the court, you may benefit from working with a legal document assistant. They can prepare the documents relevant to your legal case and guide you through the process. Working with a legal document assistant is an inexpensive alternative to retaining a probate attorney.

Consider A People’s Choice. We strive to provide our clients with the best service and can meet all of your probate needs. Don’t hesitate, contact us today!