Selling a home during probate and trust in Santa Barbara has its own unique set of challenges and can be daunting for those who are unfamiliar with the process. If you or someone you know is preparing to sell a home during probate, this guide will help prepare you with a general understanding of the probate process.
While each of these types is different in its own right, all include some form of estate administration. Estate administration allows the sale of real estate and personal property owned by a person who is incapable of managing his or her own financial affairs. This can include someone who cannot meet his or her own basic needs (food, clothing, shelter, medical care), a minor or child (under 18 years old), or someone who is deceased.
What is a probate sale?
Probate Sale is a court-administered process that distributes a deceased person’s estate/assets according to their will. If there is no will, then assets are distributed usually to that person’s closest of kin. This includes immediate spouse, children, siblings or other relatives. Probate is the only way to transfer real property from the deceased to their heirs if a trust was not set up prior to their death.
What is a trust sale?
Trust Sale is the sale of a property that is held by a Trust. The original trustee is either under a conservatorship due to an inability to handle his or her affairs, or the original trustee is deceased. The assigned trustee of the property is directed to sell the property and to hold the proceeds from the sale in a trust account for its beneficiaries.
Why sell a Santa Barbara home in probate or trust?
Before we discuss selling a home during probate in Santa Barbara, lets first address the basic question: Why would you sell a home in probate or trust? There are many reasons, but the majority of probate sales are for these reasons:
- To pay for bequests, debts, family allowances, administration expenses, taxes, or care of the property owner
- The will of the deceased demands that the property is to be sold
- The property is a financial drain on the rest of the estate
- The nature of the estate requires it because the property cannot be easily divided between more than one person
- Dissension (a disagreement that leads to discord) among the heirs
2 types of probate sales in Santa Barbara
1) Sales without Court Confirmation
If the fiduciary has been granted full administrative powers under the Independent Administration of Estates Act, or the property is held in a non-court supervised trust, court confirmation is seldom required. The timeline of sales like these closely resemble that of a typical real estate transaction. However, the executor is exempt from disclosure (the requirement to document any known defects of the real property to potential buyers), which is not a characteristic of a typical sale.
All heirs must be notified of the sale in writing and have 15 days to contest the sale (object). Some trusts allow for 45 days. If an objection occurs, and it cannot be overturned by the fiduciary or attorney, the sale would then go to court for confirmation.
2) Sales Requiring Court Confirmation
The Probate Court requires appraisal of the property and must approve the buyer’s purchase offer. The goal of the court proceedings is to protect and promote the interests of all beneficiaries. They take much longer to complete than standard sales due to the court process.
The representative of the estate may grant an exclusive right to sell the property to a real estate broker for a period not to exceed 90 days, if the court permits it.
When a probate property goes on the active market (listed on the MLS and other forms of advertising), buyers can begin to make offers on the property.
When an offer is made, it must be no less than 90% of the property’s appraised value. When an offer is accepted, the representative (Realtor or other legal representative) will petition the court to confirm the sale. However, there is still an opportunity for another interested party to buy the property during a hearing that is set by the court. Depending on the calendar, the court will set a date for a hearing between 20 to 40 days after the petition (for confirmation of the original offer) has been submitted. All interested persons or parties may bid at the time of the hearing. A good Realtor knows this and will continue to market the property after the original offer has been confirmed to hopefully receive a higher offer at the hearing.
Are repairs necessary before selling a probate home in Santa Barbara?
No. California probate properties are generally sold “as-is”. If you make repairs, you may unintentionally conceal a defect in the condition of the property. Even a coat of paint can cover up a major problem. Buyers should be allowed to see the property in its present state to have a good understanding of the expenses they might incur while fixing the property. Because buyers must do all of their inspections upfront, concealed defects could be perceived as unfair and cause problems after the sale.
What should I do to prepare the home for sale?
It’s best to remove all personal possessions, clean out any trash, and clear out the yard and entry way. You may want to hire a professional cleaning crew to deep-clean the property. Conducting an inventory of the property for sale and preparing a comprehensive property profile are advised.
How do you market a home in probate in Santa Barbara?
Zia Group pursues a number of strategies to expose your property to prospective buyers. Placing for sale signs on the property, internet and print advertising, direct mail, open houses, and personal networks of buyers and agents. We will conduct showings for interested buyers and their agents, answer questions about the property, and promote the property continuously in order to secure the highest and best offer. Feel free to ask us for more detail about our marketing plan and how different marketing strategies work better for certain types of properties.
Restrictions on the sales price of a home during probate
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. 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.
Formal Probate Court Proceeding Checklist
Basic Step | Timeframe or Deadline | |
| 1 | File Petition for Probate; obtain hearing date | Anytime after death |
| 2 | File original will and codicils, if any | Filed with Petition for Probate as separate filing |
| 3 | Publish Notice of Petition to Administer Estate | Three times before hearing date; first publication must be at least 15 days prior to hearing |
| 4 | Mail Notice of Petition to Administer Estate | At least 15 days prior to hearing date |
| 5 | File proof of publication and proof of mailing Notice of Petition to Administer Estate | As early as possible before hearing date |
| 6 | File proof of will, if required | As early as possible before hearing date |
| 7 | Check calendar notes | Two days or more before hearing |
| 8 | File Order for Probate (and probate bond, if required) | Time requirements vary between counties; check with court |
| 9 | File letters and Duties and Liabilities of Personal Representative form | At same time or after filing Order for Probate (Check local rules.) |
| 10 | Apply for Taxpayer Identification Number | As early as possible after letters are issued |
| 11 | Notify government agencies | Within 90 days of death |
| 12 | Open estate bank account | After letters are issued |
| 13 | Arrange for preparation of income tax returns | As soon as possible after letters are issued |
| 14 | Prepare Inventory and Appraisal and send to Referee | As soon as possible after letters are issued |
| 15 | Mail Notice of Administration to creditors; pay debts without requiring formal claims | Within four months after letters are issued or within 30 days after first discovering a creditor |
| 16 | File Approval or Rejection of formal Creditors’ Claims | Anytime before Petition for Final Distribution |
| 17 | File Inventory and Appraisal with court | Within four months after letters are issued |
| 18 | File Change in Ownership Statement with county assessor if Inventory lists real property | When Inventory and Appraisal is filed with court |
| 19 | File federal estate tax return if necessary | Within nine months of date of death |
| 20 | File Petition for Final Distribution | From four months to one year after letters are issued (within 18 months, if federal estate tax return is required) |
| 21 | Mail Notice of Hearing to beneficiaries | Within 15 days of hearing date on petition |
| 22 | File proof of mailing Notice of Hearing | As soon as possible before hearing date on petition |
| 23 | File Order for Final Distribution | Procedures vary between counties; check with court |
| 24 | Transfer assets and obtain receipts | Anytime after Order for Final Distribution is signed |
| 25 | File receipts and Petition for Final Discharge | After assets are distributed and all matters concluded |