The probate process can be very confusing during one of the mot stressful periods of your life. That’s why we are here…to answer all of your questions and help you navigate through it with the least stress possible. Below we have included some of the most frequently asked questions we get. If you have a question you don’t see here then feel free to submit it using the form below or just give us a call at (800) 804-0540. We welcome all calls no matter how big or small the question!
The personal representative has the power to grant an exclusive right to sell property for an original period not to exceed 90 days. Any extensions are also limited to a 90 day time period. ( Cal. Probate Code § 10538(a).)
However, when the combination of the original listing period and all extensions exceed 270 days, the personal representative shall provide a Notice of Proposed Action to all interested parties to the will. Further, a licensee is still required to comply with the agency disclosure laws and conduct a visual inspection of all accessible areas of the property and disclose what the inspection reveals. Additionally, under the IAEA, a broker and a personal representative can contract as to the amount due the broker as a commission without court approval. ( Cal. Probate Code § 10538(c).)
No. Even though the court has granted the personal representative the authority to administer the estate under the IAEA, the representative is not required to sell the property in this manner. The determining factor of whether a representative exercises the authority to sell the property under the IAEA is what is best for the estate, taking into consideration many factors including:
- The process of sale under the IAEA is usually quicker than a court supervised sale;
- There is no requirement of overbidding or court confirmation of the sale under IAEA;
- The personal representative can agree to any terms and contingencies deemed necessary to close the sale;
- The general economic and market forces; and that
- Overbidding in court often times increases the purchase price of the property and the proceeds to the estate;
- Which manner of sale likely produces maximum estate assets.
Anyone entitled to receive the Notice of Proposed Action can object to it by delivering or mailing a written objection to the personal representative at the address in the notice. (Cal. Prob. Code § 10587(b)).
Alternatively, the objecting party may request from the probate court an order restraining the personal representative from taking the proposed action without court supervision. Here the court has broad powers in response to the objection of an interested party. The court must grant such a request even without the obligation of giving notice to the personal representative and without cause being shown for the order. Once a restraining order has been issued or the personal representative has received notice of written objections to the Notice of Proposed Action, court supervision is required in order to take any action pertaining to that property. (Cal. Prob. Code § 10589.)
The Notice of Proposed Action must be mailed or personally delivered to all persons entitled to receive it at least 15 days before the date the proposed action is to take place. If mailed, the notice must be addressed to the interested person‘s last known address and sent first class mail. The personal representative or the estate‘s attorney will typically handle preparation and delivery of the Notice of Proposed Action to all appropriate parties. (Cal. Prob. Code § 10586.)
The personal representative notifies the required parties, mentioned in the previous question, of the pending sale with a form called the “Notice of Proposed Action.” This form describes the terms upon which the personal representative proposes to take action on behalf of the estate, such as selling estate real property. The Notice of Proposed Action must include all of the following information:
- The name and mailing address of the personal representative;
- The name and telephone number of the person to contact for additional information;
- A reasonably specific description of the action to be taken, including a description of the property and the material terms of the sale, exchange or granting of an option to purchase property, including the price and amount or method of calculating any brokerage commissions; and
- The date on or after which the proposed action will occur.
(Cal. Prob. Code § 10585.)
Yes, the personal representative must give a “Notice of Proposed Action” when selling estate real property without court supervision (Cal. Prob. Code §§ 10510, 10511). The personal representative must inform the following persons and entities with an interest which may be affected by the proposed sale, unless they have waived in writing such notice or have provided written consent to the sale:
- Each person named in a will;
- Each known heir entitled by law to property of a decedent dying without a will;
- Other interested persons requesting notice, such as creditors or beneficiaries of a trust; and
- The Attorney General, if any portion of the property is to go to the State.
(Cal. Prob. Code § 10581.)
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.
Generally the probate court will not interpret an agreement between cooperating brokers regarding the split of commission. If upon request the court does not specifically split the commission, the cooperating brokers should resolve their dispute through the Board/Association arbitration system like any other commission dispute.
If the estate fails to pay the broker a commission awarded by the court after the escrow has closed, the broker becomes a creditor of the estate. The broker may then institute proceedings to require payment. The court may at any time order an accounting by the personal representative of estate monies received and expended, including data on claims filed or presented to the estate.
It should be noted, however, that the commission is not earned until the sale is fully consummated. Thus, if the buyer defaults, no commission is payable and the broker is not entitled to file a claim against the estate.
If the broker’s commission is not ordered on the court record at the confirmation hearing, the broker may request it in writing and the court may modify the order to award a commission. If a licensee is present in court at the time of the hearing and fails to ask for a commission, or is not present in court and could have been, the court may choose not to modify the order. (Cal. Prob. Code §§10313(b); 10310(c).)
Yes. The C.A.R. legal article titled California Probate Code Commission Schedule is a chart that specifies the amount of commission a broker is entitled to whether the property is exclusively or not exclusively listed, and when confirmed to the original bidder, or confirmed to an overbidder. The chart also specifies a broker’s amount of commission in the event of a successful bid or overbid as obtained by the estate‘s personal representative.
Yes. An offer of compensation in a MLS normally creates an enforceable commission agreement between brokers, but only if the cooperating broker is a member of the same MLS (or an MLS with reciprocal privileges) and accepted the offer of compensation relying on the MLS listing. The listing broker may specify in the MLS that the offer of compensation goes only to the successful cooperating office. According to the California Model MLS Rules:
For estate sale or probate listings, the compensation offered through the service under these rules and this section shall be considered an agreement as referred to in California Probate Code Section 10165 and will therefore supersede any commission splits provided by statute when there is no agreement. This section contemplates that estate sale, probate and bankruptcy judges have broad discretion and therefore are not intended as a guarantee of a specific result as to commissions in every probate or bankruptcy sale.
The listing office may also specify the amount of compensation going to the first cooperating office (unconfirmed cooperating broker compensation-“ucb”) if the accepted offer is overbid at the court confirmation hearing. (Cal. Model MLS Rule § 7.15.1.).
No. Oral agreements between brokers concerning commission splits can be enforceable. However, mere verbal terms are often disputed and difficult to prove. A separate, written commission agreement between the brokers is highly recommended to avoid any misunderstanding.
Yes. The court must honor an agreement between brokers concerning the division of a commission (Cal. Prob. Code § 10168). However, the court has discretion to limit the total amount of commission paid by the estate.
The estate becomes liable for the listing broker‘s commission only after all three of the following have occurred:
- An actual sale is made;
- The sale is confirmed by the court unless the sale is conducted under IAEA; and
- The “sale is consummated.”
(Cal. Prob. Code § 10160.)
Hence, brokers are never entitled to a commission in a probate sale until the estate receives the purchase price, the deed is transferred to the buyer and a mortgage or deed of trust is taken for payments due in the future (Cal. Prob. Code § 10160 (Law Revision Comm’n Comment)).
The listing agreement usually specifies the amount of commission as a percentage of the sales price. The court will determine, in its discretion, what is a reasonable commission (Cal. Prob. Code §§ 10150((b), 10161(a)). However, the court may not approve an amount in excess of the maximum percentage established by local court rules. This amount can be determined by contacting the clerk of the probate court of the county in which the estate is being administered.
Local court rules do vary. For example: Los Angeles County Superior Court Rule 10.93 limits commission to 5% except in the case of vacant land; Orange County Superior Court Rule 606.06 limits commission to 6% unless justified by exceptional circumstances.
If a sale is confirmed by the court and subsequently closes, the listing broker has earned the commission specified in the listing contract, not to exceed the maximum percentage allowed by local court rules. The commission, also, may not exceed the amount provided for in the listing contract (Cal. Prob. Code § 10161(c)).
For Example : If the maximum under local rules is five percent and the broker‘s listing contract specifies four percent, the broker is limited to a four percent commission. Conversely, if the commission in the listing contract is six percent and the maximum under local rules is five percent, the listing broker‘s fee is limited to five percent.
Yes. A licensee involved in the transfer of residential one-to-four unit estate real property interests (including mobile homes) is required to conduct a reasonably competent and diligent visual inspection of all accessible areas of the property and to disclose to prospective buyers all facts materially affecting the value or desirability of the property that the inspection reveals (Cal. Civ. Code § 2079(a)). Although not required by the statute, the disclosure should be made in writing.
Sellers of estate real property (and mobile homes) are exempt from the requirement of providing prospective buyers with a transfer disclosure statement (Cal. Civ. Code § 1102.2(b)). This does not, however, relieve the seller from disclosing any known material facts regarding the value or desirability of the property.
Furthermore, probate sales must still comply with other disclosure laws. For a complete list of required disclosures for probate residential one-to-four sales transactions, please refer to the following online chart: Sales Disclosure Chart for REALTORS®.
Yes. If the estate real property consists of one to four residential units (including mobile homes) and is to be the subject of a sale, exchange, land contract, or lease exceeding one year, compliance with the agency disclosure laws is required. (Cal. Civ. Code § 2079.13(j).)
No. For sales under the IAEA any exclusive authorization and right to sell form is acceptable such as California Association of REALTORS® (C.A.R.) standard form listing contracts: RLA, RLAA and RLAN.
However, in the event court confirmation is required, C.A.R. Standard Form PL is appropriate, but it may also be used for probate sales under the IAEA.
Yes. However, any extension of the listing given requires prior court approval unless the personal representative is acting under IAEA. Each extension shall not exceed 90 days (Cal. Prob. Code § 10150(a)). Under IAEA authority, the personal representative may give discretionary 90 day extensions to the original period as long as the total time is less than 270 days. Once 270 days are exceeded, the IAEA personal representative must give a Notice of Proposed Action of such further extension (Cal. Prob. Code § 10538(c)). (See Section VII below for more information about the IAEA.)
Yes. The personal representative may enter in to an exclusive right to sell contract with a broker for an original period of not more than 90 days plus one or more extensions each limited to the same periods (Cal. Prob. Code § 10150(c)). This real estate broker may cooperate with other brokers and may advertise the property on the MLS (Cal. Prob. Code § 10150(a)). Prior court approval must be obtained for each extension unless the personal representative is acting under IAEA. However, even here, if the personal representative has obtained only “limited” power rather than “full” power to administer the estate, court supervision of the sale of real property is required (Cal. Prob. Code § 10501(b)).
There are restrictions on the sales price of property in probate It must be at least 90 percent of its appraised value set within a year prior to the sale.
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 generally subject to confirmation by the court.
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.
You can sell property in probate when you’re instructed to do so in the will or when there’s a need to do so that’s recognized under probate law. As the executor or administrator, you’ll have to request to file letters testamentary or letters of administration and that they’re issued to the personal representative. These are what give you the power to sell the property. (If you don’t have them, do not sign a listing agreement!)
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