Marin County Probate Sales Requiring Court-Confirmation

Posted by Lisa Mallon on Tuesday, September 21st, 2010 at 6:21pm.

Having recently assisted buyers in the successful purchase of a probate sale involving court confirmation in Marin County, I feel sufficiently well-versed to share my knowledge about the process, which can be daunting for those buyers who are unfamiliar with it.

By way of background, the Marin County Public Administrator Michael J. Smith maintains legal responsibility for the full administration of a person's estate when there is no appropriate person (family member or other designated administrator) available to: claim the property, make funeral arrangements, protect the assets and manage the affairs of a deceased Marin County resident. In order to carry out these responsibilities, the Public Administrator maintains a professional staff of Deputies and also works in tandem with the Marin County Counsel, who are experienced in Probate matters.

When an estate being administered by the Public Administrator's office is brought to the active market for sale it is designated on the internet as being a probate sale with court-confirmation required. Licensed local real estate brokerages are selected as listing agents and through private auction, which is open to the public, after publishing legal notices and advertising the property. The real estate sales commission is paid entirely by the Estate. The bid ("OFFER TO PURCHASE REAL ROPERTY") must be accompanied by a 10% minimum deposit by cash or certified check, or it will not be accepted by the Public Administrator. The Public Administrator accepts bids by a designated date and about 30 days prior to a Court confirmation hearing being set. It is at that Court confirmation where multiple bidders are given an opportunity to bid over the highest and strongest bid previously submitted to the Public Administrator.

In my recent probate transaction experience, there were no other bidders. My buyer clients submitted a bid directly to the Public Administrator who accepted it immediately. A court confirmation hearing was established 30 days later. That date provided an opportunity for other prospective bidders to attend and to submit their bid directly to the court but fortunately for my clients, there were no others. The County Counsel was present, along with my buyers and myself and the agent for the Estate. The judge effectively rubber stamps the bid as recited by the Deputy County Counsel present and issues an Order confirming the sale to the buyers. This Court Order serves as the Purchase contract for purposes of securing financing.

I found the most distressing part of this process to be the due diligence, i.e., the inspections and investigations component to this property. You see, as a potential bidder and buyer for a probate property requiring court confirmation, you must be prepared to submit your bid contingency-free. This meant that my buyers had to conduct all inspections PRIOR to submitting their bid. They also worked with Nicholas Ballard, a highly seasoned mortgage broker in Marin with California Mortgage Advisors, who pre-approved them and assisted them in finalizing a loan application. He shopped the bid form around to various targeted lenders in advance, so that he knew which ones would and wouldn't accept it and what specific conditions for funding might be anticipated. From the financing perspective, I should mention that I learned during this process that there is a dwindling pool of lenders willing to underwrite a Court Order in lieu of a standard purchase contract.

The importance of this pre-bid due diligence is highly significant for several reasons but most of all, the 10% minimum deposit that acommpanies a bid, is non-refundable. A buyer on a probate property requiring court confirmation needs to inspect the property and be pre-approved for financing PRIOR TO submitting a bid.

Admittedly, the contingency-free status amounts to a good deal of risk for any buyer. However, given the considerable deals to be realized from a probate property, almost always priced far below comparable properties, the rewards can be tremendous, as they have been for my clients.

Finally, after speaking with the Public Administrator's office recently I learned that there is an effort to expedite this process to the complete benefit of any heirs to an estate and buyers. This process as it currently exists can take a minimum of 90 days from the time a probate property is brought to the market, recieves a bid, and has a court date set 30 days thereafter. This process then allows a buyer another 21 to 30 days to secure their financing. The Public Administrator's office is looking to circumvent the court confirmation and hopes to be able to ratify bids directly at the time they are accepted. I imagine this shorter timeframe from a buyer's perspective to be a more desirable process and would certianly lend itself in my opinion, to more buyer's wanting to participate in it.

Call me at 415.601.7281 if you would like more information on probate sales in Marin County or wish to discuss your home buying or selling needs.