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I Own It Outright. Probate

5/25/2014

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People sometimes don't know what's going on with their properties.

I had asked the seller if there were any outstanding debts against the properties. She said no. "I own it outright."

We list the house and accept an offer.

We got the preliminary title report* as usual. In a couple of days I get a call from the escrow agent. "What about the $45,000 personal loan on the prelim?" I react, "huh?"  the escrow agent said, "We need a payoff demand. It looks like it's a personal loan. Can you get the contact information from the seller."

So I called the seller.
Me: "Do you know anything about this loan? It looks like it's 30 years old. It's owed to a man."
Seller: "That was a long time ago. Just tell them that debt no longer matters. Please."
Me: (Really?!) "That's not the way it works. The loan has to be paid off or the title company won't insure the property. The buying bank won't make the loan because banks don't lend on clouded titles. Do you know where the person is?
Seller: "No. He passed away a long time ago."
Me: "He's dead? Oh, no."

So I called the escrow agent.
Me: "Jamie, the person who made that loan has passed away."
Jamie: "You're gonna have to do a probate."
Me: " I knew you're were gonna say that."
Jamie: "I know a good probate lawyer."
Me: "Yeah, me too."

And that's how we ended up in a probate sale situation. Guess what? It''ll be a few months to resolve it. So the sale is cancelled. Oh, my.

Me: "What's this about defaulted property taxes? It says $10,114!"
Seller: "Really? I don't know anything about that."


* Preliminary Title Report: A report done by a title company before issuing title insurance coverage. The report shows the ownership of a specific property along with the liens and encumbrances that will be paid off and covered.

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16189 Yale Ave. San Lorenzo CA 94580 is Confirmed

4/17/2013

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There were no over bidders for Yale. I met with the listing and buying agent in court just to say hello. They asked me if I was bidding or if I was bringing someone to overbid. I told them neither.

The first over bid was $300,800 so I estimated the winning bid must have been around $286,000 [($286,000 + 5%) + $500].

The house went pending Jan 25, 2013 and went to court on April 11. 2013. That's not too bad. But, oh, I heard that this was the second time for them being there because there was some problem the first time.

The confirmation was nice and boring. No one bid up and no one opposed the sale. The buyer looked happy and relieved.

As usual, the court confirmation was in Berkeley at 2120 Martin Luther King Jr. Way, Dept 201.

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1525 Blake St. Berkeley 94703 Was Confirmed

3/28/2013

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1525 Blake St. Berkeley CA 94703 was confirmed (auctioned) in court. The original bidder was not present only his agent, who also happened to be the listing agent. A new bidder showed up with his agent.

The original list price was $399,000. The house was a 3 bed, 2 bath home with 1,356 sq. ft. of living space, and a lot of 4,950 sq. ft. The house needed work but the location made it a nice buy. Fixed up, the house may go as high as $650,000.

The house was listed January 25, 2013, went pending February 5, 2013, and went to court March 26, 2013. That was fairly fast. Many people dislike probate sales because they think the process may be lengthy...and sometimes it can be.

Back to court. The first court overbid was set at $515,000. Yikes! The winning bid must have been around $490,000. Jeeesus. Almost $100,000 over or 20%. The new bidder made his offer at $515,000 and that was it. The buyer's agent did not try to bid. So the winner was the new bidder.






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Advertising Issues Stop Confirmation

8/21/2012

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We were waiting for court confirmation. The judge said to our lawyer, "I'm having a little problem with the advertisement. There was no property address in it." I said to myself, “Uh, oh.”
I don't know the rules exactly, but the probate sale must be advertised three times (once a week) in the local newspapers. The ads inform the public of the sale and offer price to encourage bidding in court to gain the best price for the estate.
The judge said, "I don't see any other bidders in court. Could it be that the public was not aware of the sale because there was no address?”
Our lawyer explained and argued, but the judge kept coming back to, "Without the address what good is the ad?"
No confirmation.
OK, so we show up the following month. Guess what? No confirmation again. Lawyer failed to advertise the sale in the local newspaper. Advertising in the nearby newspapers was not good enough.
Aaugh! It’s a do-over…again!
These are the little things that make probate a more difficult sale.



Advertising Issues Stop Confirmation

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Asset Erosion Due to Probate

6/3/2012

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PictureEast Bay Probate Sales
A probate sale erodes the family assets in two ways:
  1. Less buyers. Buyers usually don't understand the probate process so they get scared. They are afraid of losing their earnest money deposit if they back out. A buyer usually has to put 10% earnest money up front. (Some people are afraid to go to court.)
  2. Legal fees. The lawyer handling the estate has to be paid. The courts have to be paid. The probate appraiser has to be paid too.
These two losses can potentially cost the estate 20% of the the asset.

Something else:
  1. Loss of time. A probate sale takes longer to sell than a regular sale, specially if the offer is financed as the buyer has to remove all contingencies before the seller can request a court date.
  2. Break Up Loss. Sometimes the best thing to do is to keep the assets whole as they are worth more together than separately.
For these reasons, I'm suggesting to homeowners to prepare a will and a living trust if possible.


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No Probate Sales Over Bidders

11/5/2011

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Superior Court County of Alameda, Berkeley
There were no probate sales over bidders at two court confirmations Thursday, 11/3/11 at the Berkeley Superior Court of Alameda, 2120 Martin Luther King Jr. Way. One thing I tell buyers is that someone can show up at the court and over bid, one of the problems with probate court confirmation sales. But nobody showed up.

I had a small property, listed at $75,000. The Attorney was Richard Karlsson, Interim County Counsel. One of his assistants took care of the matter. It was confirmed by the the Hon. William McKinstry at $68,500, within the 90% minimum requirement.

The overbid formula was a) Original bid $68,500 + b) 10% first $10,000 of original bid $1,000 + c) 5% of (original bid - $10,000) $2,925,00 = a+b+c= $72,425.

The good news for me was that I also had the buyer. Both seller and buyer were happy with the sale.

Both sales were confirmed without muss or fuss. Neither the representatives for the seller nor the buyers showed up. I was there just in case something came up. The attorney got up and announced the sale of real property and asked if anyone wanted to bid. Silent reply. CONFIRMED.

The responsibility to make sure deal closed transferred to the buyer.

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    Author

    Ernest is an experienced agent with Better Homes & Gardens in Oakland CA. This is his specialized website for probates.

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