Probate Sales (of Real Property)- I’ve Heard Those Are Good
Probate sales of Real Property can be complex. Here is an overview of what they are and an idea of what you can expect. But, keep in mind that there are plenty of specifics that will still need to be looked into with a trusted attorney for your individual situation. When someone petitions for a probate, usually they don’t have a trust or that an asset was not included in the trust. When they then go to probate, the judge will ask whether that person who is in charge can be bondable (qualify for insurance). In other words, can this person get insurance in case they commit some wrong action? If they are bondable, then they probably have good finances and there shouldn’t be an issue. In this case, they’ll receive what is called full authority. Full authority allows them to sell any piece of property in the probate without a probate sale.
Otherwise, the Court will likely grant limited authority, which means that the representative could not qualify for a bond. Now, in order to sell real property, Court confirmation is needed. This is what we refer to as “Probate Sales”.
Can a House in a Probate be Sold Without Any Court Interference?
Yes, that’s usually what happens because the person in charge has full power. Where you tend to see issues is when someone cannot be bondable so the court puts them on limited authority or limited powers.
When you want to sell a piece of property in a probate with limited authority, you must list the property and put it on the market. Once you have accepted an offer, you must provide the Court with notice and get it approved. The Court then sets a date for a bidding war in Court. This is where overbidders come to Court to outbid the accepted offer. This is what a typical Probate Sale looks like.
Overbidding rules can vary by state, but you should note that California does have its own set of rules. To outbid someone, your offer has to go up $1,000 in addition to 5% of the sale price of the property, minus $10,000. The process keeps going until the highest bidder wins, and the original bidder is allowed to continue bidding. Obviously, the numbers can be challenging to keep up with, so this is a process you’ll want to go into with your attorney by your side. As a side note, some people assume probate sales are where they’re going to make a killing off of buying a great house for next to nothing, but that’s not always the case. In California, it is against the law to sell a house in probate for less than 90% of what it’s worth according to its appraisal.
If you are considering a probate sale, contact us today at Aliav Law. We understand the ins and outs of this complicated process. We can be especially helpful whether you are looking to purchase from a probate sale or you are in the role of selling within a probate sale.
Your next step is to join our facebook group called “Parents Protecting Assets in California”. We provide valuable information on protecting assets from future in-laws and creditors!