How can you get a property in California sold fast when it’s in probate? Philip Ma here with eXp Realty and SVsellingsolutions.com – certified probate and trust specialist. In this video, I want to give you an overview of the probate process in California and show you how it’s possible to sell a property held by the estate quickly even when it’s in probate. Let’s see how this works.
Let’s say you’ve got an estate that owns a house in San Jose with an appraised value of $1 million, and at the time that the owner passed away, there was an outstanding mortgage balance of $200,000 on that house. And let’s say that the heirs are either not able or willing to make those continued mortgage payments. The cleanest solution is going to be for the heirs to sell the house and pay off the mortgage as quickly as possible so that the house does not go into foreclosure.
First, let’s take a look at what triggers the probate process in the first place. Unfortunately, it always begins with the death of a loved one. Let’s say that both parents have passed away and they had no living trust holding the house in trust, and there are no low value exceptions to probate that apply here. Now I do have a separate video on ways to avoid probate altogether, so be sure to check that out below:
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Usually the heirs, let’s say they’re siblings, will get together and hire a probate attorney who can help them identify the assets and liabilities of the estate and also identify who can be the executor or administrator of the estate. If there is agreement among the heirs as to who will serve as the executor, then the attorney will go ahead and put together a petition for probate, which is filed in the probate court in the county where the property is located. So in our example, if the property is in San Jose, then the petition for probate would be filed in Santa Clara County.
After about two to three months, the court will issue an order for probate, which grants either full authority or limited authority. I’ll get into the differences between these two in a minute, but hopefully the court grants full authority to the executor of the estate. The court will also issue letters of testamentary or administration, which names the executor, also known as the personal representative of the estate. With full authority, the personal representative can sell the property in probate without restriction. The whole process takes about six to seven months, including that first two to three months to get the court order appointing the executor, plus about another four months to actually sell the property and get through other court processes, including paying off any debts of the estate.
With limited authority, the personal representative must get court confirmation to sell the property. It first has to be appraised. If the property gets into contract, it has to be within 90% of the appraised value and during court confirmation of the sale, third parties can come in and overbid for the property. The whole process takes at least a year, if not more. So it’s definitely more advantageous to have a full authority probate.
What are the keys to obtaining full authority from the court? Well, hopefully there’s no dispute among the heirs over who will be the executor of the estate. Hopefully, there’s peace and harmony among the heirs and they can reach consensus on who should serve as the executor. Also, it’s advisable to work with an attorney who can guide you through any family dynamics and the probate process. Sometimes having a neutral third party can help resolve any disputes or tensions between family members. And then of course, the attorney will prepare those court filings in a way that positions you best to get that full authority granted by the probate court.
Finally, if the heirs want to sell the property, it’s important to work with a real estate agent who understands the probate process and can get the house sold quickly during probate, including having cash buyers who have been vetted and can close quickly with a no hassle sale.
The remaining steps to getting to a final distribution of the estate’s assets to the heirs include having the attorney provide notice to all known creditors and allowing four months for the creditors to file claims against the estate, having an inventory and appraisal of all the estate’s assets done by a court appointed probate referee. In this case, it’s important for the real estate agent to be in close touch with that probate referees. The referee doesn’t always go inside the property. So if there is work that needs to be done, damage to the property, it’s important to have photos taken and to send those to the referee so that they can incorporate that into their appraisal.
Finally, once all creditor claims have been resolved, the attorney will go ahead and file the final petition with the court, and the court will issue the order for final distribution of the remaining assets of the estate to the heirs.
Here are some proposed next steps. Go to the URL below. You can download my free sellers guide, buyer’s guide, I have regular market update slides that you can access there, and these probate overview slides.
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Reach out to me if you’d like a free consultation on buying or selling a home in Silicon Valley. If you have a probate situation, I’d be happy to work with you on that. If you need a referral to a probate attorney, I can definitely provide that for you. I’m Philip Ma with eXp Realty and SVsellingsolutions.com. I look forward to talking with you very soon.