The probate process notoriously takes a long time. In many states, probate takes at least one year if not more. What many heirs, and sometimes even real estate agents, don’t know is that probated property can be listed and sold in very little time. In some cases, the property being sold, the buyer taking possession, and the agent gaining commission can happen in as little as three months.
The key differentiation on how quickly a probate property can be sold is the type of authorization given to the personal representative of the estate. Keep reading to learn about the differences between limited authority and full authority in California probate, and what it means for probate sales.
What is Full Authority in California Probate?
When the probate court issues an Order for Probate, it also issues Letters Testamentary that appoints a personal representative of the estate to their role (Executor) and thus authorizes them to conduct their duties in relation to the estate. Here, the Letters will clarify whether the representative has full authority or limited authority.
Once these documents are received, the Executor can work with a real estate professional to put a probate listing on the market and begin fielding offers. An Executor with full authority is not required to obtain court confirmation, meaning that they can accept any offer they’d like, as long as all heirs agree to the selling price. This can be a selling point for the property, since buyers don’t have to wait for their offer to be confirmed by the probate court.
Once the buyer and the personal representative both sign the Probate Purchase Agreement, a Notice of Proposed Action (NOPA) is drafted by the probate attorney. This document contains pertinent data regarding the sale such as the purchase price, name of the buyer, and the purchase agreement. Then, the NOPA is filed with the probate court and copies are sent to each beneficiary of the estate. Here, the beneficiaries are given a 15-day window to object to the agreed-upon sale price. Once the 15 days conclude, escrow can close.
If for some reason the Executor determines that the 15-day window cannot be afforded, they can request for all beneficiaries to sign a waiver. If all of the heirs are in agreement, the waiting period is waived and escrow can close immediately. The probate sale deposit can be as low as 3 percent.
What is Limited Authority in California Probate?
A limited authority probate case begins the same way as any other: the court issues the Order for Probate and Letters Testamentary. Here, the difference is that the Executor is issued limited authority instead of full authority.
In this case, the property must be sold for at least 90 percent of the appraised home value. The court appoints a probate referee to conduct a valuation of the home and provide an Inventory and Appraisal form.
Through this process, which can take up to 60 days, the referee provides the court with two different valuations of the home. The first valuation is the property’s value at the date of the decedent’s death (Final Inventory and Appraisal). The second valuation, called the Reappraisal for Sale Inventory and Appraisal, is the property’s current fair market value. This figure is used for the sale. Mentioned earlier, the home cannot be sold for less than 90 percent of this reappraised value. Because the court must confirm the sale, the reappraisal must take place within one year before the confirmation hearing.
Last but not least, the personal representative is responsible for publishing a Notice of Sale of Real Property in a local publication, on at least three occasions at least 10 days before the sale. Additionally, the third notice must be published at least a week following the first notice. The notice allows potential buyers to have the opportunity to bid for the property by attending a court auction.
The winning bidder must put down a deposit of 10 percent. They also must clear all contingencies in order for the sale to go through.
What is Full Authority vs Limited Authority?
In the prior two sections, we defined how full authority probate case works, as well as the same for a case with limited authority. Here are the key differences summarized below:
A probate case with full authority provides the Executor more autonomy over estate decisions
Limited authority cases require more supervision by the probate court
The sale of a probate property requires less time, paperwork, and administrative process
An Executor with full authority can sell real estate for any price, while one with limited authority must sell the property for at least 90 percent of the appraised value
The appraised value must be valuated by a court-appointed probate referee, which extends the sale timeline
The probate court must also confirm the sale in the case of limited authority, making a probate sale take much longer overall
Get Your Assets in Order - Update Your Estate Plan Today
When understanding the difference between limited authority and full authority, the latter is clearly more desirable. Probate takes a long time as it is, and a limited authority case will drag things out longer.
Here, you may be wondering how to ensure a personal representative of your estate will gain full authority, such that they have more autonomy and can settle your estate much sooner. Although this decision is up to probate court discretion, limited authority is typically issued to estates with more issues and complexities and require more supervision.
Therefore, the surest method of ensuring your estate’s probate process meets the least resistance possible is to create an ironclad Estate Plan. Further, you may want to opt to set up and fund a Trust for the majority of your property, which will then avoid the probate process altogether.
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