What is probate?
Probate is the court-supervised process of transferring the assets of a deceased person to the heirs or beneficiaries defined in his or her will.
Most often, the will names an executor to handle the process through the court system. The executor takes charge of the assets, pays any remaining debts and, with court approval, distributes the remainder of the estate to the heirs.
When someone dies without a will (known as “intestate”) a relative or other interested party may begin the probate process. In this case, the court appoints an administrator to handle the estate.
The probate process includes:
- Proving the validity of the will if there is one
- Inventorying the deceased’s property
- Appraising the property
- Paying remaining debts and taxes, and finally,
- Distributing any remaining property as directed by the will (or by state law, if intestate).
Often, probate requires lawyers to prepare paperwork and make court appearances. Lawyers and court fees come from estate property proceeds before the rest is distributed to the beneficiaries.
Buying a home in probate
Unless otherwise designated, or if there are funds from other sources to pay the taxes and fees, the court sells the real estate to satisfy the estate’s debts. Properties in probate awaiting sale typically sell “as is” and without contingencies. The court often regulates the sale’s timing and the amounts of an acceptable offer, so don’t expect the owner to lower the price. Additionally, there are special disclosure documents associated with properties in probate. Be sure to read these carefully.
Work with a probate expert when purchasing real estate in probate. We can help you navigate the transaction to get the best possible outcome from your real estate purchase.
Selling property in probate
If you’re the executor of an estate and need to sell the associated real estate, there are steps you need to take first:
- Have the property appraised by an independent certified appraiser. We can help you find an appraisal professional, so contact us and we’ll get you connected.
- Obtain the court’s permission to sell the real estate. This requires filing a petition with the court along with the independent appraisal. The petition typically includes all information about the property and the intended method of sale (auction, open market sales, etc.).
- Place the property on the market for sale. When we market your property we make sure the buyer knows that acceptance of an offer is conditional on court confirmation.
- Petition the court for a confirmation hearing. The wait time for a hearing depends on the court’s available schedule, but can be between 14 and 40 days.
- Once the court accepts the offer, the buyer must deposit a portion (typically 10%) of the purchase price into escrow.
- The sale, along with the offered price from the buyer is announced in the local newspaper in order to allow for open bidding among any other interested parties. This is necessary since the purpose of the sale is to appropriate the best price for the estate.
- Attend the court hearing where the bidding process takes place. All bids are unconditional (including the original buyer’s offer) and the winning bidder must present a cashier’s check to the court.
- If the original buyer did not win the bid, escrow returns his deposit. If the original buyer wins the bid, the deposit is applied to the purchase price and the court confirms the price.
- The sale is complete when financing is arranged, and the contract is closed. The court then delivers the monies to the estate to distribute to the heirs.
Ways to avoid probate
Talk to your lawyer or estate planner about ways to avoid probate. These can include:
- Transfer-on-Death Deeds for Real Estate
- Joint property ownership
- Revocable Living Trusts
- Pay-on-Death Accounts
Want to buy or sell property in probate?
We can help you navigate the potential pitfalls and reap the rewards of buying or selling property in probate. We understand the court and marketing procedures and how to garner the best price in the most efficient time.
Contact me today to get started.