In this post we will continue to discuss how to sell a house or other real estate in a California probate decedent’s estate court proceeding (or “probate”). This is the second post of a two-part post series.
We previously discussed why and how to sell probate real estate based on the default rules. That default track has no Independent Administration of Estates Act (“IAEA”) authority.
Sale Based on Limited IAEA Authority
The real estate sale process with limited IAEA authority is nearly identical to the default process with no IAEA authority. There is 1 exception. With limited IAEA authority, you don’t need to obtain prior court approval to enter into an exclusive listing agreement with a real estate salesperson and to list the real estate for sale.
As the executor or administrator, you will instead mail a Notice of Proposed Action to all interested parties. That Notice of Proposed Action pertains to entering into the listing agreement and listing the real estate for sale. The executor or administrator also needs to file that Notice of Proposed Action with the court.
If nobody objects to this notice, you may enter into the listing agreement and list the real estate for sale. No court order is needed.
In other words, the Notice of Proposed Action replaces the court approval to enter into an exclusive listing agreement with a real estate salesperson and to list the real estate for sale.
It may not even be necessary to mail and file a Notice of Proposed Action.
Sale Based on Full IAEA Authority
The real estate sale process with full IAEA authority differs from the process with no IAEA authority in 3 ways.
First, you don’t need to obtain prior court approval to enter into an exclusive listing agreement with a real estate salesperson and to list the real estate for sale. This is the same as with limited IAEA authority. Second, there is also no need to obtain prior court approval of the sale.
In place of each court approval, you will mail a Notice of Proposed Action to all interested parties. If nobody objects to either Notice of Proposed Action in time, then you can take the action described in it. (Again, for more information about the Notice of Proposed Action process, see this prior post of ours.)
In other words each Notice of Proposed Action replaces obtaining 1 of the 2 court approvals in the default process. That saves a lot of time and effort!
Surety Bond (Revisited)
Before we continue, you will need a basic understanding about bonds. If you don’t have that, then see our prior post about bonds.
With no or limited IAEA authority, the court likely won’t approve the sale until the increased bond is filed with the court. We discussed this in our prior post in this series.
Real estate doesn’t need to be included in the bond amount calculation with no or limited IAEA authority, but cash does. Real estate is converted to cash when you sell it. Now that you have more cash, the original bond amount is insufficient. The total bond amount needs to increase accordingly, as will the annual bond premium amount.
Not so when selling real estate with full IAEA authority. In the beginning of the probate proceeding when the court appoints an executor or an administrator with full IAEA authority, the bond amount includes the value of real estate. So when selling real estate with full IAEA authority, normally there is no need to increase the surety bond amount.
Converting the real estate to cash doesn’t make a difference because the value of the real estate is already included in the bond amount, even before converting the real estate to cash.
Fewer court hearings minimizes fees. “Extraordinary fees” are one component of the total fee for the executor or administrator and her attorney.
Extraordinary fees are fees payable with court approval for services in addition to the standard “statutory fee” that is based on a percentage of the assets. Real estate sales are extraordinary services.
All of the aforementioned steps of selling real estate generate additional fees for the executor or administrator and her attorney. They will earn fewer extraordinary fees if the real estate sale is based on limited IAEA authority. They will earn even fewer extraordinary fees if they sell the real estate based on full IAEA authority. The reason is because less work is required to sell the real estate with fewer court hearings.
Fewer fees means more assets will be available at the end of the probate to distribute to the beneficiaries.
Get Help from an Experienced Probate Attorney
The rules for selling real estate in a probate are complex. They contain many variables. Each of them is a potential pitfall for the unwary.
Hiring an attorney experienced with probates can help the process to run smoothly and avoid trouble. The guidance of an attorney experienced with probate court cases is also invaluable for attaining your goals in these cases.
At Meinzer Law Firm, P.C., we have over 20 years of experience helping clients achieve their goals in probate cases. Contact Meinzer Law Firm, P.C., in Torrance to assist you with your California probate court case.