A probate sale we are preparing to close reminds me how complex they can be and the importance of using team members with expertise in this area!
A probate sale occurs when a homeowner passes away without a joint tenancy (spouse or domestic partner). If there is a will that identifies an Executor, this individual must still obtain court approval to act as a representative of the estate.
The homeowner’s estate is assigned to an “Executor” or an “Administrator” by a Probate Court who then has the authority to negotiate and sign documents related to the sale. This individual can be a family member.
To determine if you have a possible probate transaction, ask your favorite Escrow Officer to pull a copy of the vesting deed and compare the legal owner’s name on the document to the individual who is signing the listing/purchase agreement contract.
If they don’t match, this is a red flag and may be a trust or probate sale.
Wait to list probate transactions until after an Executor/Administrator is assigned. Use contracts/disclosures that are specific to probate sales.
There will most likely be an attorney assisting the Executor/Admin. Be sure to have their contact information (and provide it to the Escrow Officer).
Action items needed for California Probate sale (may vary for each state). These details and more are coordinated amongst the Escrow Officer, Executor/Admin. and their Attorney;
1. Title company’s approval of the probate sale (they will NOT issue title insurance without approval!). Ask the Escrow Officer to communicate directly with the Executor/Admin./Attorney for all necessary paperwork needed.
2. Tax ID for the estate.
3. Certified copy of Letters of Testamentary or Administration; A document from court approving the seller’s petition to authorize them as the legal Executor/Admin. of the estate plus a copy of the death certificate. It also identifies if the seller has limited (purchase contract requires court approval) or full authority to sell.
4. Notice of Proposed Action. A form mailed/delivered notifying anyone who might have an interest in the property that it’s being sold (newspaper posting is also required). The property cannot close until after 15 days of delivery of the notice. Once completed, the Attorney typically prepares a letter to the Escrow Officer confirming that the Notice has been completed and there were no objections to the sale.
5. Sufficient assets to pay off any federal/state taxes due and/or payable.
6. Bank account established in the name of the estate (assets from sale must be deposited into a bank account matching the name of the estate).
Agent Timeline Action Items;
- Letters of Testamentary/Administration received?
- Probate approved by Title Company?
- Court Approval of the Purchase Contract (if needed for limited authority) received?
- Notice of Proposed Action completed?
- Any Objections to sale?
Understanding these steps helps you explain to your client how the process works and set up reasonable timeframes/expectations between buyer and seller.
EscrowCoord.com Transaction Coordinators offer expert services on probate and other transaction types, from identifying possible trust/probate sales and coordinating team efforts, to determining disclosure/contract requirements. Call us today to find out how we can help you!