Guide to Buying Probate Property in Los Angeles

Navigating the probate property market in Los Angeles can be daunting, but with the right knowledge and preparation, it can also be a lucrative opportunity. Here’s a comprehensive guide to help you understand the process and avoid common pitfalls when buying probate property in Los Angeles.

What is Probate Property?

Probate property refers to real estate owned by a deceased person that must go through the legal process of probate before it can be sold. This ensures that the decedent’s debts are paid and the remaining assets are distributed to the rightful heirs.

Key Points:

• Property goes through probate if it’s not in a trust or held by an entity.
• Probate is required whether a will exists or not.

The Role of the Court and Personal Representatives

In most probate cases, the court confirms the executor or appoints an administrator with authority to manage the estate. These individuals, known as personal representatives, handle the sale of probate properties.

Two Types of Authority:

• Full Authority: Allows the personal representative to sell property without court approval.
• Limited Authority: Requires court approval for the sale, leading to a confirmation hearing and possible overbidding.

Making an Offer on Probate Property

When making an offer on a probate property, certain conditions must be met:

1. Non-Contingent Offers: Offers cannot be contingent on property inspections, loan approvals, or appraisals.
2. 10% Deposit: A customary deposit of 10% of the purchase price is required, typically in the form of a cashier’s check payable to the estate.

Common Contingencies in Regular Sales (Not Applicable Here):

• Property condition inspections
• Document reviews
• Appraisal contingencies
• Loan contingencies

The Confirmation Hearing and Overbidding

After submitting your offer and deposit, the personal representative files a report of sale and petition for order confirming the sale. This triggers a confirmation hearing, usually within 30 days, where overbidding can occur.

Key Points about Overbidding:

• Anyone can attend the hearing and place a bid if they meet specific criteria.
• The initial overbid must be at least 10% more on the first $10,000 and 5% more on the amount over $10,000 of the original bid.
• The original bidder has the right to increase their bid.

Example:

• If your original offer is $1,000,000, the first overbid would be $1,050,500 (5% plus $500 of the original offer amount).

Completing the Sale

Once the court confirms the sale and issues the order, the standard California Association of Realtors contract stipulates that the sale must be completed within 10 days. However, the actual timing may vary as the judge must sign the order, and it must be delivered to escrow and the title company. This process typically takes 3-4 weeks.

Working with a Knowledgeable Agent

Given the complexities of buying probate property, it’s crucial to work with an experienced real estate agent familiar with the process. They can guide you through each step, ensuring you meet all legal requirements and helping you navigate potential challenges.

Important Advice:

• The likelihood of someone overbidding depends on your initial offer relative to the property’s market value. An offer too low may attract overbidders, which is why the probate code exists to protect the decedent’s estate.

Key Takeaways

Here are the most important aspects to consider when buying probate property in Los Angeles:

• Understand Probate Requirements: Property must go through probate unless in a trust or held by an entity.
• Non-Contingent Offers: Offers must be non-contingent with a 10% deposit.
• Confirmation Hearings: Be prepared for potential overbidding at the hearing.
• Work with Experts: Partner with an agent experienced in probate sales.

Buying probate property can be a rewarding investment with the right preparation and guidance. Understanding the process, meeting all requirements, and working with knowledgeable professionals will help you navigate the complexities and secure the best possible outcome.

I am Matias Baker Masucci, your trusted Los Angeles realtor. Thank you for reading, and I look forward to helping you with all your real estate needs in Beverly Hills.