Estate administration provides for the orderly distribution of real and personal property owned by a decedent. More specifically, any property which the decedent owned or in which the decedent had an interest at the time of death is collected into the estate and distributed to those entitled to it after all debts and expenses have been paid. The process of administering a decedent‘s estate is referred to as “probate,” and is generally supervised by the probate court. A personal representative is the person or entity charged with the responsibility of administering a decedent’s estate (Cal. Prob. Code § 58(a)). A personal representative is either:
- An executor (executrix) who is named in a will; or
- An administrator (administratrix) who is appointed by the court when there is no will, when the will does not name an executor or when the named executor is unable or unwilling to serve.
The personal representative is charged with the fiduciary responsibility of gathering the assets and paying the debts of the decedent in such a way that the beneficiaries or heirs of the decedent receive the maximum inheritance. The personal representative usually will hire an estate attorney to handle the legal aspects of the probate. Most business dealings are through the estate attorney.
Estate property may be sold by the personal representative when:
- The sale is necessary to pay debts, devises (gifts to persons named in the will), a family allowance, expenses of estate administration, or taxes;
- The sale is to the advantage of the estate and in the best interests of the interested persons;
- The property must be sold according to the terms of the will; or
- Authority is given in the will to sell the property.
(Cal. Prob. Code § 10000.) A decedent’s will may designate the manner in which estate real property is to be sold or identify the particular property to be sold. Absent a court order based upon the best interests of the interested parties to the contrary, the personal representative shall comply with the decedent’s instructions. If the will is silent on these matters or there is no will, the personal representative may select the method of sale and the particular property to be sold. Estate real property may be sold by private sale, public auction, or a different method specified in the will of the decedent (Cal. Prob. Code §§ 10000.3, 10303). A private sale is one in which bids or offers are independently solicited, while a sale by public auction invites concurrent competitive bidding.
The personal representative may legally market and sell real property without the services of a broker, as if he/she were the owner of the property. The personal representative is considered the “seller” in the transaction. However, the personal representative may list the property with a real estate broker. The process of listing, marketing and selling probate real property is much the same as any sales transaction with some exceptions discussed below. Unless the personal representative has full authority under the IAEA, a sale is subject to confirmation by the court.
The sales price of a private sale of estate real property subject to court confirmation must be at least 90 percent of its appraised value set within one year prior to the sale (Cal. Prob. Code § 10309). All terms of a sale, including the minimum required deposit, are generally subject to court approval and local rules of court which vary from county to county. Generally, offers with contingencies of any sort (e.g., financing, sale of home) are not approved by the court. Sales of real property by the personal representative with full authority under the IAEA do not have the same restrictions and may contain all of the same contingencies and provisions as non-probate sales of real property (Cal. Prob. Code § 10503).
California law does not require a 10% deposit. Some personal representatives may request such a deposit which reflects the preference of those persons and the traditional practice in many areas. When listing a property an agent may wish to discuss with the personal representative the pros and cons of asking for a lower deposit amount which could possibly result in more and/or higher offers.
A Notice of Sale must be published prior to the sale of estate real property unless the will directs the real property to be sold or gives authority to the personal representative to sell the real property or the personal representative has full authority under the IAEA. The Notice of Sale provides the public with required information concerning the sale and will typically be handled by the attorney for the estate. The contents of the Notice of Sale can be found in Probate Code Section 10304.
A Notice of Sale of real property must be published at least three times over a period of not less than 10 days before the sale, with the third publication at least five days after the first (Cal. Prob. Code § 10300; Cal. Gov’t Code § 6063a). All publications must be in a newspaper published at least weekly in the county in which all or some of the property is situated.
Certain sales are exempt from this requirement, most importantly, sales by a personal representative with full authority under the IAEA (Cal. Prob. Code § 10503—the property may be sold with or without notice).
The personal representative is required to report the sale and petition the court for confirmation of the sale within 30 days of accepting an offer (Cal. Prob. Code § 10308). Should the personal representative fail to perform these acts in this time period, the purchaser may do so on his or her own behalf (Cal. Prob. Code § 10308(b)). All estate real property sales must be confirmed by the court except for sales of property by a personal representative with full authority under the IAEA.
At the confirmation hearing, the original sale may be subject to being overbid by another purchaser (Cal. Prob. Code § 10313). The court will confirm the sale to either the original bidder or to an overbidder and normally approve payment of the brokerage commissions. Title will pass to the successful buyer only after the terms of sale have been met, the court has confirmed the sale and the personal representative has executed a conveyance to that buyer (Cal. Prob. Code § 10314).
