Real property. Real property bears the most careful consideration because of the potential complexities involved.
Power of sale in will. If the decedent's will authorizes the executor to sell property, there is no need to publish legal notice. If there is no will or authority in the will, then publication of a legal notice is required.
Publication. If legal publication is required, the executor or administrator must publish a special notice called a "Notice of Intention to Sell Real Property at Private Sale." This notice must be published at least three times in a newspaper in the county where the real property is located. This notice contains an invitation for people to make an offer on the property. It is a legal notice, not an ad to sell the property. The notice must contain the legal description of the real property; the terms of the sale, the date as to when offers will be accepted, and the place to submit offers. The executor or administrator may refuse all offers submitted. Sale can be made for cash or part credit by way of carrying back a deed of trust. Whatever terms are put in the legal notice must be carefully followed.
After the publication is completed, a declaration of publication signed by a newspaper representative is filed with the court. The property cannot be sold until after the date set in the publication, but must be sold within one year of that date or a new notice must be published.
Executive Listing. If the executor or administrator is not selling the property under the Independent Administration of Estates Act, then an exclusive listing agreement with a real estate broker may not be signed without a court order. This can only be for a maximum of 90 days, but can be obtained without a court hearing. The terms of such listing vary among the various counties.
Inventory Value. If the real estate is sold by the executor or administrator order than under the provisions of The Independent Administration of Estates Act, it cannot be sold for less than 90% of its appraised value. Before the court hearing to confirm the sale, an inventory must be prepared and the probate referee must appraise the real estate. If the real property is sold more than one year after the decedent's death, a new inventory and appraisal must be prepared. The real estate cannot be sold for iess than 90% of the referee's valuation.
The 90% figure is the gross value for the property. Thus, if the referee values the property at $200,000, the real estate cannot be sold for less than $180,000. The $180,000 does not include the real estate commission, if any, costs of sale, balance due on the deed of trust, and other costs.
Contract for Sale of Real Property. To sell real estate, there must be a written contract between the potential buyer and the estate as the seller. The contract should specify a down payment of at least 10%, which has already been deposited with the executor. Although this 10% figure is not listed in the Probate Code, it is specified by most court rules.
The contract should provide that it is subject to approval by the Superior Court in the estate proceedings, with the possible bid up in court and that the real estate commission is subject to court approval.
The property does not have to be sold totally for cash. The estate may carry back a first or second deed of trust on the property. This is generally not done unless there are very unusual circumstances.
The executor is not required to fill out a disclosure statement which is normally completed in connection with the sale of real estate. The property is sold "as is," but the executor is required to disclose any defects of which the executor is personally aware.
Confirmation by court. Unless it is sold under the provisions of The Independent Administration of Estates Act, the executor-must file a petition with the court within 30 days of the sale of the property. All contingencies on the buyer's part must be met, and the buyer is legally obligated to complete the purchase if the court approves the sale.
A petition is prepared and filed with the court. This petition, entitled "Report of Sale and Petition for Order Confirming Sale of Real Property" is set for hearing within 30 days of the filing date. The petition sets forth the names of the buyers and information with regard to the sale. A notice of the court hearing must be sent to all estate beneficiaries as well as the buyers and real estate broker at least 15 days prior to the hearing date and a copy of the notice showing mailing must be filed with the court. Notice of the hearing must also be posted at the courthouse by the county clerk.
At the time of the court hearing, if all other requirements have been met, the court will call for anyone who wishes to offer a higher bid on the property to stand up in court ard make the required minimum increased bid on the property. Anyone who wishes may offer a larger amount for the real estate being sold. This "overbid," as it is described, is a minimum increase of at least 10% of the first $10,000 offered, and 5% for everything over $10,000. Thus, if a sale is being returned for $200,000, the minimum overbid is $210,500.
If no one offers an increased bid on the property, the court will then approve the sa.e and sign an order to that effect. If someone offers an additional amount, he or she comes to the front of the courtroom, identifies himself or herself, and presents the minimum 10% deposit in the form of cash or a certified check. Once the minimum overbid has been met, the court then allows anyone to bid on the property, in essence auctioning it off, usually in increments of $500 or $1,000. The original buyer is free to increase his or her offer. The property is sold subject to the same terms and conditions. If there is an "overbid" in court, even if the property is sold to the original buyer for a higher amount, a real estate contract must immediately be signed by the parties. After everyone completes bidding, the court approves the sale and the judge signs an order.
The court order specifies the real estate commission and its division if there are two brokers involved. After the order is signed, the executor can complete the sale by signing a deed and the necessary escrow documents. The title company will require a certified copy of the court order approving the sale. If a surety bond was not waived but was originally required, then the surety bond will have to be increased by the net proceeds the executor receives from the sale.
Source: Orange Coast Title Co.
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