Probate Process

During COVID court confirmed sales were handled via Zoom. Attending the process, other than the Court Personnel, is the Attorney, the PR, the Probate Realtor representing the PR, and hopefully buyers with their real estate agent who intend to place overbids during the confirmation process. Each party must follow the terms and deadlines on the purchase agreement, which must conform with the state and local probate codes and process.

The confirmation process is foreign to 99.9% of agents. It’s important to avoid mishaps that your Probate Realtor has the knowledge to coach buyer real estate agent through the process, vocabulary (see probate glossary), disclosure documents, and contracts that are not used in other real estate transactions.

The stress of the confirmation process can be offset by choosing to work with an experienced Probate Realtor in probate and trust sales and able to explain the language, documentation, and steps in the process. Clear communication is vital.

The sale of the property can only move forward once a Personal Representative has been appointed by the court. The personal representative, i.e., administrator, executor, or conservator, is the person who has the authority to list and sell the property.

If there is no Will, or if an executor is not named in the Will, then the court must appoint someone referred to as the Administrator, to handle the distribution of the decedents’ estate.  If the decedent has named a person in the Will to administer the estate, this person is referred to as the Executor.

Upon confirmation of the Personnel Representative, the court will issue Letters Testamentary or Letters of Administration. These “Letters” are the Golden Ticket. They are evidence of the executor/administrator’s authority to administer the Estate with the court’s supervision. (See power & duties of Executors / Administrators)

Once Letters are issued the PR can start the process of getting the real property ready for the market. For PR’s with full authority, (see probate glossary) the IAEA was enacted to allow personal representatives of probate estates to handle appropriate routine actions, such as sales of real and personal property, without court approval. While court supervision is not required for certain acts under the IAEA, the executor/administrator is required to notify anyone who would be affected by an independent action by providing them with an “Advice of Proposed Action” no less than 15 days prior to taking the action.

90% rule: The process of establishing an asking price for the real property is different from a regular sale. The asking price must consider the 90% rule as it pertains to the Probate Referee’s valuation (see probate glossary). If the Referee’s valuation comes in high, which happens, the Probate Realtor’s experience with the referee is important when an adjustment is necessary. Note: Under no circumstance should the referee’s valuation be advertised. 

Once the parties have settled on an asking price, the next step is to set an offer date to present, and review offers which will be included in the marketing of the property. This involves several approaches, including an aggressive asking price, maximum internet exposure, “coming soon” signage, regional MLS postings (multiple listing service), broker tours for real estate agents, evening and weekend open houses, private showings, and exposure to large company’s relocation departments.

While some buyers of probate and trust real estate may be looking for a bargain, minimum offers are limited by the court. An accepted offer must be 90% or more of the Probate Referee’s appraised value, but once in a blue moon this isn’t possible and it’s in times like these that your experienced Probate Realtor is worth their weight in gold.

Upon acceptance of an offer, a Notice of Proposed Action (NOPA)(see probate glossary) is prepared by the attorney and is mailed to all heirs, simply stating the terms of the proposed sale. The heirs have 15 days to review the notice and pose any objections. If there are no objections, the sale may proceed without a court hearing.

In the event the PR does not have full authority to sell the property under the IAEA (see probate glossary), and court confirmation is necessary, or if one of the heirs’ objects to the NOPA, a notice of the sale (see probate glossary) must be published in a generally distributed local newspaper. Note: When an heir objects, making court confirmation necessary, the buyer has the right to cancel the contract at no cost to them. This rarely happens, but it has.

The property is advertised as a Probate Sale subject to Court Confirmation.  In this scenario upon acceptance of an offer subject to court confirmation the attorney petitions the probate court to confirm the sale, that is, “to get the court’s approval”.  Prior to COVID the court date is usually within 30 to 45 days of the date the application is filed. A copy of the application and details concerning the sale are mailed to all interested parties. 

Leading up to the court date for confirming sale, the real estate agent should continue to show and market the property to potential buyers in the hope of securing an “over-bidder” resulting in a higher selling price.

During the court confirmation hearing, the previously accepted bid may be overbid by other interested buyers. The Court atmosphere is like an auction. During the proceedings the judge will ask if anyone in the courtroom, Zoom or in person, would like to make an overbid on the property; sometimes there are several potential buyers who would increase the originally accepted bid. In such a case, the overbidding party must appear at the hearing via Zoom or in person with a cashier’s check (no personal checks accepted!) in an amount totaling at least 10% of the minimum overbid price to be considered a legit overbidder. 

The minimum overbid, set by the court, must equal or better 5% of the accepted offer plus $500. If there are multiple overbidders, subsequent minimum overbid amounts are set by the Judge and are normally in $5,000 increments. The successful bidder gives a cashier’s check to the PR or PR’s Probate Realtor or the Probate Attorney outside the courtroom and escrow is opened immediately. (Cashier checks for bidders attending via Zoom must be delivered to the Probate Realtor 24 hours in advance to be considered a bona fide bidder.)  Escrow will close approximately 30 to 45 days after delivery of the Judge signed Court Order Confirming Sale.