Q How should an offer be submitted on estate real property?
A Offers or bids on estate real property must be in writing. (See, for example, C.A.R. Standard Form PPA, Probate Purchase Agreement and Joint Escrow Instructions.)Many other purchase contracts are not specifically tailored to probate sales, but may be used. However, the contract should indicate that:
- The title to be conveyed is whatever the estate holds;
- The sale is subject to court confirmation;
- If applicable, the property is sold “as is”; and
- The total commission will be in an amount set by the court and will be paid only from the sale proceeds, whatever sum may be allowed by the court.
Q To whom should an offer be submitted?
A The offer received by the listing licensees should be submitted to the personal representative or anyone else listed in the Notice of Sale as the appropriate recipient. Many times the personal representative will designate the estate attorney as recipient of offers for initial review. (Cal. Prob. Code § 10307.)
Q Who has the power to accept an offer concerning estate real property?
A The personal representative of the estate has the power to accept an offer. However, any acceptance is subject to court confirmation, unless the sale is made under the Independent Administration of Estates Act by a personal representation having full authority to administer the sale.
Q When may offers be submitted on the sale of probate estate real property?
A Offers may be submitted at anytime. An offer received by the listing broker at any time before a sale closes must be presented to the personal representative, unless the personal representative has expressly instructed the broker not to present it, or unless the offer is patently frivolous. Whether the offer is patently frivolous depends on the facts and circumstances at the time of the offer. The licensee’s safest course of action is to submit all offers of this type to the personal representative for his/her own determination.
Q Will credit offers (subject to a loan) or other contingent offers on estate real property be confirmed by the court?
A Acceptance of a contingent offer is quite rare in probate sales. Acceptance of a credit offer is subject to court approval (Cal. Prob. Code § 10315). In addition, the court may also permit seller financing (by the estate) (Cal. Prob. Code § 10315). An offer with any contingency may be accepted by the personal representative, subject to court confirmation, which will usually require a demonstration of evidence that the property cannot be sold without the contingency. The personal representative may also consider accepting an offer with a contingency provided the prospective purchaser removes the contingency before the offer is submitted to court. Under IAEA full authority, no rules specifically prohibit a contingent sales contract.
Q Is there a minimum price for which estate real property must be sold?
A Generally, yes. Without full authority under IAEA, the minimum offer price for a private sale of real property must be at least 90 percent of the appraised value of the property (Cal. Prob. Code § 10309(a)(3)). The appraisal must have been made within one year prior to the date of the confirmation hearing (Cal. Prob. Code § 10309(a)(2)).
Q Is there a minimum deposit required on the sale of estate real property?
A Generally, yes. Except under IAEA full authority, all terms of a sale including the minimum required deposit are subject to court approval and local rules of court which vary from county to county. Many courts require a 10 percent deposit at the confirmation hearing in the form of cash, cashier’s check, or a certified check.
Q How soon must the accepted offer be returned to the court for confirmation?
A The personal representative is required to file a report of the sale and petition the court for confirmation of sale within 30 days after acceptance of the offer unless acting under IAEA full authority (Cal. Prob. Code § 10308). If the representative refuses or fails to do so within the 30 day period, the buyer may proceed to file the report and petition the court for confirmation of the sale. The buyer, of course, should consult a personal attorney if the buyer feels it is necessary to petition the court. (Cal. Prob. Code § 10308).