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Probate Sales

What is a Probate Real Estate Sale?

The state of California and the city of San Francisco have rules and regulations which determine the handling of a person's real property after he or she passes away. The real property of the deceased, or decedent, then becomes part of a probate estate which is reviewed and distributed or sold accordingly.

If the decedent has not left this real property in a trust*, then typically a formal probate court process follows. A personal representative (executor or administrator) is named by either the decedent's will or by a probate court; it is the personal representative's responsibility to represent the probate estate through court processes and to keep track of all probate assets. This requires the grouping of assets, management of outstanding debts and liabilities, and distribution or sale of residual probate assets. Generally, the personal representative must attain permission from the court to sell the property(s) in question, after relatives and will beneficiaries (interested parties) have been informed of the court proceedings. The property must then be sold at a price at least worth 90% of the home's appraisal value.

This 90% rule affects all probate sales except when the personal representative has applied for and been granted authority by the court under the Independent Administration of Estates Act (IAEA), in which case no court supervision is (generally) required. IAEA granted powers do not waive the personal representative's obligation to notify interested parties of details from hearings or subsequent transactions.

What is the IAEA?

The Independent Administration of Estates Act (IAEA), enacted in 1987, has changed and streamlined the way in which probate sales may proceed. Any personal representative (unless otherwise prohibited in the will) may apply for court granted authority to sell the estate without the usual court supervision. Note that interested parties may legally object to this petition for granted authority. If the court awards authority through Letters of Testamentary, several steps to the probate process change and the court relinquishes supervision of the property sale and other actions regarding the estate.

Under the typical probate sale process, the property in question will be court-appraised. Potential-buyers then make an offer within 90% of the home's appraisal-value. At this point the personal representative's acceptance of an offer is "subject to court confirmation," but the buyer must make a down payment deposit of 10% by the time the court confirmation hearing begins (usually a cashier's check is required). The court hearing typically occurs 30-60 days after a request is filed. A Notice of Confirmation of Sale will be released providing information to potential over-bidders, who may then bid on the property during the court confirmation hearing. The lowest starting bid must be equal to the conditionally accepted offer plus roughly 5%, and all overbids must be unconditional and accompanied by a 10% deposit (usually non-refundable). If the final highest bidder is not the original buyer, then the court will refund the original 10% down payment.


Court Description of Trust

Local and State Probate Rules

SF Court's Glossary of Probate Terms