One question regarding the Probate Process that comes up: Are purchasers in a probate transaction required to submit a deposit of 10% of the purchase price in Los Angeles County and Orange County?
The answer depends on whether you, as the executor or administrator, have full authority or limited authority:
If you are afforded full authority under Independent Administration of Estates Act (IAEA) there is no minimum deposit required when selling real property of the estate. You basically would handle the sale like a non-probate or standard type real estate transaction. The only difference is that a notice of proposed action must be sent to all estate beneficiaries so they can have the opportunity to review the terms of the sale, and object or approve the sale.
If you have limited or no authority under IAEA then you must petition the court to approve the sale of real property. There is no statute delineating a minimum deposit when selling real property. However, it is customary and advisable to require a deposit of typically 10%. A 10% deposit seems to be the unspoken rule in sales of real property in Probate. Also under limited authority, you basically need Court Approval for anything to do with the real estate sale.
The Independent Administration of Estates Act (IAEA), enacted in 1987, has changed and streamlined the way in which probate sales may proceed. Any personal representative (unless otherwise prohibited in the will) may apply for court granted authority to sell the estate without the usual court supervision. Note that interested parties may legally object to this petition for granted authority. If the court awards authority through Letters of Testamentary, several steps to the probate process change and the court relinquishes supervision of the property sale and other actions regarding the estate.
Under the typical probate sale process, the property in question will be court-appraised. Potential-buyers then make an offer within 90% of the home’s appraisal-value. At this point the personal representative’s acceptance of an offer is “subject to court confirmation,” but the buyer must make a down payment deposit of 10% by the time the court confirmation hearing begins (usually a cashier’s check is required). The court hearing typically occurs 30-60 days after a request is filed. A Notice of Confirmation of Sale will be released providing information to potential over-bidders, who may then bid on the property during the court confirmation hearing. The lowest starting bid must be equal to the conditionally accepted offer plus roughly 5%, and all overbids must be unconditional and accompanied by a 10% deposit (usually non-refundable). If the final highest bidder is not the original buyer, then the court will refund the original 10% down payment.