The process for selling California real estate owned by estates in probate has subtle differences compared to standard residential property sales. Sometimes, executors have leeway to conduct a sale on behalf of an estate with processes similar to what they might use to sell their own home. For more complex estates, executors may find themselves subject to a considerable amount of legal red tape and complicated court requirements. Most often, the selling process falls somewhere in between these two extremes. Developing the administrative constraints of a probate sale to comply with the former owner’s will, if any, and probate law is the purview of experienced probate attorneys employed by the executor. For our discussion here, we’ll focus on just what a real estate broker will do differently when selling California real estate owned by estates in probate compared to a standard home sale.
Once an executor has gone through the legal preparations to sell a property and has selected a broker, the subtle changes compared to a standard sale begin with the listing contract. As indicated in the table below, we’ll use the Probate Listing Agreement in place of the standard Residential Listing Agreement. We’ll also complete a Probate Advisory and a Court Confirmation Addendum that will be signed by the executor and the broker.
An important feature of the Probate Advisory is that it explains to the executor the statutory exemptions that apply to probate sales that don’t apply to standard sales. These exemptions may include that the seller is not required to provide a Real Estate Transfer Disclosure Statement or a Mello-Roos district lien disclosure. In general, however, the executor is required to disclose much of the same information about the property that any other seller would need to provide, although the forms used may vary.
Also shown in the table, potential buyers will use the Probate Purchase Agreement form to submit their offers instead of the standard Residential Purchase Agreement. Buyers will also submit a Court Confirmation Addendum with their offer. Section 2 of the Probate Listing Agreement requires the executor to disclose if court approval will be required before an offer can be accepted. If court confirmation is required, buyers use the Court Confirmation Addendum to set a deadline for expiration of their offer if court approval is not obtained by a certain date. Buyers will submit another Probate Advisory form to acknowledge the disclosure limitations applicable to probate sales, plus a Probate Signature Addendum that confirms the authority of the executor to sign sales documents as a representative of the estate.
These are the primary form differences between a probate sale and a standard sale. Brokers who specialize in probate sales work with their seller to create a marketing plan and negotiating strategy that is tailored to the probate environment. These strategies must take into account local market conditions, the features and condition of the property, and the administrative process requirements established by the executor and attorneys representing the estate. In other words, the forms are just the starting point for selling California real estate owned by estates in probate.
Although not discussed here, it’s important to note that land and commercial sales involving probate properties share many of the same administrative requirements as homes. Sale of property held in trust may also have some of the same disclosure requirements, but they have another set of forms specific to the trust environment. For more information on trust sales, read my article Selling California Real Estate Owned By A Trust or visit my web page that describes our related services for real estate in probate or trust.
If you have any questions about selling California real estate owned by estates in probate, please send me a note below.