Dealing with a decedent’s real estate can be the most overwhelming part of the probate process. For example, is there a risk of foreclosure? Is there a reason to sell immediately? Does an executor or beneficiary or heir intend to purchase the real property out of probate?

Is There a Risk of Forecloscre’?

An administrator of the estate has not been appointed by the court. By the time an administrator is appointed the house may have been lost to foreclosure. What should you do?

One option is to try to get the lender to postpone the foreclosure proceedings. You or your probate attorney may be fortunate enough to get the lender to agree to a postponement. If so, the postponement should be confirmed with the trustee sale company that is handling the foreclosure sale.

A second option is to have the beneficiaries pay the outstanding mortgage arrearage to get the property out of foreclosure. The beneficiaries can agree to borrow money from one of the various lenders who specialize in lending to probate estates.

A third option, and one that should be considered once a notice of trustee sale has been recorded against the property, is to request that the probate court enjoin the foreclosure sale. An injunction, which is a writ or order requiring a person to refrain from a particular act, (Code Civ. Proc. §525) is available when a claimant can show that, among other things, the commission of an act would produce waste or great or irreparable injury to a party, or where pecuniary compensation would not afford adequate relief to the claimant. The underlying argument for such an injunction is that the probate court has the discretion to enjoin the sale based on equitable principles, where there is no harm to the lender and no harm to the estate if the injunction is granted.

Is There Another Reason to Sell Immediately

The appointment of a personal representative takes time. A petition must be filed, a hearing must be held, the hearing might be continued if there are probate notes that cannot be cleared promptly, and even once the petition is granted, it can take weeks for the letters and order of appointment to be returned by the court. In some cases, there is a need to sell a property quickly to avoid harm to the estate. This may be because escrow has been opened but a seller dies before the sale closes, and a representative needs to be appointed immediately. It might also occur when a person has filed a petition to be appointed representative and then learns, upon inspection of an estate property, that the property is in danger due to hazardous conditions, such as faulty wiring.

In such a case, the court can be asked to appoint a special administrator of the estate so that the property can be sold immediately, instead of waiting a few months until formal appointment of the personal representative and return of the order and letters of administration from the court. (See Prob. Code, §§ 8540, et seq.) The court must be convinced that the circumstances require the immediate appointment of a personal representative with the power to take possession of the estate’s real property to preserve it from damage, waste, or injury. (See Prob. Code, § 8544, subd. (a)(l).)

Purchase of the Property by the Personal Representative

It is quite common for a child of the deceased to be appointed personal representative. That child may wish to purchase the late parent’s home. A personal representative may not purchase estate property, unless an exception applies. (See Prob. Code, § 9880.) The Probate Code provides exceptions, however, where, for example a representative petitions the court, files written consents by each heir and devisee, the sale is shown to be advantageous to the estate, and a noticed hearing is held. (See Prob. Code Prob. Code, §§ 9881, 9883.)

In many probate administrations, it will be advisable for estate properties to be listed on the open market, so that the highest sales prices may be obtained. It is often difficult to show that a purchase by a personal representative would be preferable to exposing the property to the open market. In some cases, however, the property in question may be one that holds sentimental value for the family members, who do not wish for it to be sold to a third party. As referred to above, if the family member in question is the representative, because of the prohibitions of Section 9880 and 9881, in addition to obtaining and filing written consents from each heir and devisee, the representative will need to petition the court and explain why the sale is advantageous to the estate. (See Prob. Code, § 9881, subd. (c).

Understanding the issues discussed in this article, which commonly arise when handling real estate probate cases, requires the assistance of a qualified probate attorney who can better assess the appropriate course of action. If you have a California probate matter please contact me. You can reach me by phone at (760) 501-2713, by email at [email protected]  or through my online contact form.

I handle probate matters in all California counties in all California probate courts, including Southern California Counties, such as Imperial County, Los Angeles County, Orange County, San Bernardino County, and San Diego County. I represent parties residing in California and outside of California, including foreign countries.

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