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Probate Process

Court Confirmation -vs- No Court Confirmation

If the  Personal Representative (“PR”) is granted Full Authority they can proceed with the property sale without prior court approval. That’s not to say they won’t be subject to later questioning by the Court or a beneficiary but they can take care of business without delay.

All heirs must be notified in writing of the sale, and have 15 days to object to the sale (in some cases it may be longer). If an objection does occur, and it cannot be overturned by the fiduciary or attorney, the sale would most likely need to go to court for confirmation.

In the case of a Court Confirmed Probate Sale, Personal Representative has been granted Limited Authority. An offer must be accompanied by a 10 percent deposit. The estate representative will then accept or counter the offer, just like any other sale. The offer is subject to the court’s confirmation. Even though the seller may have accepted a buyer’s offer, the seller is not committed to that buyer or their offer. The estate representative, through their probate attorney, will then petition the court to confirm the sale. A future date is chosen for the sale to be confirmed in the court.

Once the sale date is determined, the parties now must wait a minimum of 30 to 45 days. During this time, the court requires that the property be properly advertised and marketed with the new accepted price. In California, for example, that is set in accordance to Probate Code. The court will take that accepted offer and it will be 10% of the first 10K and 5% of the remaining balance. The total becomes the new probate price to be marketed.

EXAMPLE: A property is listed at $500,000. The accepted offer is $575,000.

The minimum overbid is calculated as follows:

Accepted offer = $575,000

+.10 x $10,000 = $1,000

+ .05 x $565,000 = $28,250

Minimum overbid = $604,250

x .10 = $600,425 amount of cashier’s check

In order for the sale to be confirmed, the court requires that the new buyer, plus any other interested party, come to probate court to confirm the sale. The property is then sold auction style with the opening bid being (in the case of California) at the new probate price.

Sometimes multiple buyers show up to bid on the property. Once the overbid is reached, the judge typically starts bidding in increments of $5K. If nobody shows up to bid on the home, the first buyer gets the property for their original offer price. If the property is sold to one of the bidders, they must immediately hand over a deposit of 10 percent.

There are some things for buyers to be aware of when moving forward on a probate sale. Many times, the 10 percent deposit that’s required with the offer is not refundable unless the original buyer isn’t the final court confirmed buyer.

Any person who bids in court must make an unconditional offer. Obtaining financing or approving inspections should not be a condition of the offer. In the event the buyer defaults after a court confirmed sale, the buyer may lose the deposit. If the court confirms the sale to an over bidder rather than the original buyer, the original buyer's deposit shall be refunded.

 

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