1. File Petition for Probate

The decedent (deceased person) names a person in their will as the Executor. If there is no will then a representative will volunteer to be the Personal Representative (who will then be called the Administrator once approved by the court). This person could be the surviving spouse, an adult child of the deceased, an heir, someone recommended by an heir or a Public Administrator. The Executor, and generally most of the heirs, will meet with a real estate attorney and fill out a Petition for Probate. The Petition for Probate includes the deceased person’s name, the address, the attorney’s information, request for Full Authority, mortgages and debtors, the heirs and a will (if there is one). The attorney will fill the Petition for Probate and a hearing will be set in about 30 days.

2. Notice of Court Hearing is published

Your attorney will place a Public Notice ad and send a Notice of Petition to Administer Estate to all the heirs listed on the Petition of Probate.

3. Court Hearing and Court Issues Letters & Orders

At the court hearing the judge will issue Letters and Order for Probate, will determine if the Administrator will have Full or Limited Authority, and if a bond is required. At this point a Probate Referee will file an Inventory & Appraisal form that will include the value of the property. Your attorney will send a Notice to Creditors and any creditor other than a mortgage must reply with a demand in writing.

IMPORTANT:

With Letters & Orders the Administrator or Executor can legally sign a Listing Agreement and accept an offer. 

When the Probate Referee does the appraisal it is based on comparable sales and a drive by inspection. They do not enter the home and do a full inspection. If the property needs repairs or updates it is really important to have me, your Realtor, provide your attorney with a Broker’s Price Opinion BEFORE the Probate Referee does their appraisal. If a property is appraised too high by the Probate Referee it can create problems for the sale and drag out the probate process. 

4. Property Listing & Accepted Offer

With Letters and Orders, you can sign a listing agreement and accept an offer. Eric McCormick will work with the Executor or Administrator to determine the best offer and negotiate the terms.

If the Executor has Full Authority under the Independent Administration of Estates Act (IAEA) a Notice of Proposed Action is mailed all heirs. The heirs have 15 days to review and object. If there are no objections, then the transaction proceeds just like any traditional real estate transaction.

If the Executor or Administrator has Limited Authority then:

• The accepted offer MUST BE within 90% of the Probate Referee’s appraised price
• The buyer MUST have a 10% Earnest Money Deposit
• Notice of Proposed Action is mailed to all heirs
• Your attorney places a public notice ad
• Your attorney schedules a Court Confirmation hearing where the judge will review the offer

At this point we have the buyer inspect the property and remove all contingencies, except the Court Confirmation contingency. It’s important to understand that there is a huge difference between Full and Limited Authority:

• With Limited Authority the buyer needs a 10% deposit, which is very high and can limit the number of offers you receive.
• IF the Probate Referee appraises the house too high AND the offers must be at least 90% of the appraised price, this might also limit the number of buyers.
• If a buyer has a loan their rate lock might expire and they will have a pay a fee to extend their rate lock.

The buyer obviously is looking to move. With Limited Authority you are asking the buyer to make an offer, remove contingencies (which costs money), possibly extend their rate lock (which costs money), then sit and wait for Court Confirmation. Now, some buyers might do this for a great price on a house, but remember the offer has to be 90% of the Probate Referee’s appraisal so it will be at or close to market value.

5. Court Confirmation for Limited Authority

After the buyer has removed all contingencies, I send the offer and the Contingency Removal to your attorney. Your attorney then schedules a Court Confirmation hearing, which usually takes between 30 to 45 days for the application date. A copy of the petition and details of the sale are mailed to all interested parties, and a Public Notice ad is placed by your attorney. At the Court Confirmation the judge will review the offer and details and approve or amend items.

6. Confirmation Hearing & Overbid

At the Court Confirmation hearing, the property is subject to overbid from new buyers. The minimum overbid is 10% of the first $10,000.00 plus 5% of the balance (less $10,000) of the accepted offer. A cashier’s check for at least 10% of the minimum overbid price must be shown to the court in order to make an overbid. The check is given to the Executor at the hearing. If no one does an overbid, and the judge approves the offer, then you can proceed with escrow.

Overbid example:

Original offer: $300,000
+10% x $10,000 = $1,000
+5% x $290,000 = $14,500

First overbid minimum: $315,500

x 10% = $31,550 amount due at hearing with cashier’s check.

7. Petition for Final Distribution

After the Court Confirmation we can close escrow, the buyer can move in, and the Realtors are paid their commissions. However, you do not get paid at this point. Your attorney will set up a Tax ID # for the property and assets and the money is held in escrow. Your attorney will then schedule a Petition for Final Distribution. At the final court hearing the judge will review everything and approve (or not) for the monies to be disbursed to the heirs.

Remember #3 above … the Probate Referee Appraisal? At the final distribution the judge will review the sale price vs the appraisal price. With Limited Authority it needs to be at least 90% of the appraisal price. However, with both Full and Limited Authority the judge will want to see that the appraisal and the sale price are approximately the same. If the property sold for a lot less than the appraisal price, the judge will want to know why and will want to make sure that you, the Executor or Administrator, had the best interest of the estate in mind. This is why it is really important to have me, your Realtor, involved from the very beginning. Many times I get called AFTER the Probate Referees appraisal, which if wrong, can delay your probate for months. Or what also happens is the Administrator or Executor picks a Realtor who is a friend or family member, and not familiar with the probate process. Don’t make this mistake. If you are need to start the probate process, give me a call and your attorney and I will guide you through the process.