What Is Probate – San Diego Real Estate Probate Sales

What is Probate?

Probate is a legal proceeding where a state court looks over the process of identifying a deceased person’s heirs, real estate and any debts. The main goal is to make sure the deceased debts are paid in full by the real estate or real property that remains. If there is a will, the executor or representative of the property will work with a probate attorney to sort through the will. If there is no will the courts will apoint an executor.

Probate works only on debts and real estate and is not tied to life insurance, 401k accounts, IRAs, and other types of retirement accounts as these are passed directly to the decedents or beneficiaries.

The Three Issues Involved With Probate

TIME – the fastest that an executor and beneficiaries can decipoher and legally address the probate process is about 6 months to 1 year. These time issues take into consideration family issues, situations, finances and asset dispertion.

MONEY – Because there are court fees, attorney fees, executor fees, appraisal fees, and possible loss of market value on assets the probate process can be expensive. The true cost of going though the probate process can be as high as 10% to 15% of the gross market value of the assets in the estate.

LOSS OF CONTROL – The family that is dealing with probate may suffer a loss of control over family assets. In some cases income producing assets or needed cash reserves have to go through the probate process. The courts typically accommodate family petitions for preliminary distributions or payment of an allowance to family members. Although this may help, the loss of control over their own finances can be a strain on the entire situation.

Issues Involved With Real Estate

There is a defined procedure for disposing of the decedents real estate, here is are the basics:

An offer is presented and conditionally “accepted” by the estate representative. This purchase agreement is not binding on the estate.

After all buyer contingencies are removed from the accepted offer, a petition for the court hearing is made. The date of the court hearing depends upon the court calendar at the time, but is generally 20-40 days from the date of the petition.

The buyer needs to deposit 10% of the purchase price prior to or on the date of the court confirmation hearing.

The sale, together with the accepted offering price, is advertised for a statutory period in a local newspaper.

There is open, competitive bidding at the court hearing. The minimum first overbid price shall be an amount equal to the accepted purchase price of the accepted offer, plus five percent of that amount, plus $500. In the event of such an overbid, the court shall determine any further incremental overbidding amounts – for example, $1,000 or $2,000. The bidding stops with the final bid.

Any person who bids in court must make an unconditional offer (i.e., obtaining financing and approving inspections should not be a condition of the offer) and if confirmed must present a cashier’s check deposit for 10% of the purchase price as described above, or as determined by the court.

In the event a buyer defaults after a court confirmed sale, the buyer may lose his/her deposit.

If the court confirms the sale to an overbidder rather than the original buyer, the original buyer’s deposit shall be refunded. If the sale is confirmed to the original buyer, the deposit shall apply to the purchase price.

The purchase price accepted must be at least 90% of the probate referee’s appraised or re-appraised value of the property.

Real estate commissions are subject to approval of the court.