Court Confirmation

The sale of Real Estate under the rules of Probate in Los Angeles can be a little trickier than regular sales.  When the Executor or the Administrator of a Probate Estate does not have ‘Full Authority’ from the Court, they may be required to obtain Court Confirmation, with an opportunity for other potential buyers to Overbid, before closing escrow on the sale of property. 

Even when the Executor does have full authority, he or she may choose to require Court Confirmation to assure all interested parties that the Estate has received the highest price for the property.

Before any of that court confirmation business starts, the Property is prepared, photographed, listed, marketed and sold as usual.  Escrow is opened and the Buyer wires into Escrow an Earnest Money Deposit of at least 10% of the selling price which is refundable if Buyer is overbid in court.

In most cases, the attorney will request that the Buyer perform any inspections and remove any contingencies before petitioning the court for confirmation. 

When the attorney files a Petition with the Court for a Confirmation Hearing, the Court schedules the hearing on the Court Calendar for the next available date – usually 3 to 4 weeks out.

The calculation for first overbid is set by statute in the Probate Code and is stated on Page 1, 3. B. of the C.A.R. Probate Agreement Purchase Addendum, “PA-PA,” signed by the Buyer and the Representative of the estate:

"Court Confirmation Required: The sale is contingent upon court confirmation, which is a court hearing that allows for open competitive bidding for the property. The minimum overbid price shall be an amount equal to the accepted purchase price, plus five percent of that amount, plus $500. The court shall determine any further incremental overbidding amounts."

Here is how that arithmetic works.  Let’s say the estate has accepted an offer from a buyer for $535,000.  

equal to the accepted purchase price      535,000.00          

plus five percent of that amount                  26,750.00

plus $500                                                           500.00

The first overbid would then be               $562,250.00

Anyone wishing to make an overbid will show up early to the Stanley Mosk Courthouse, on the appointed date, with a Cashier’s Check for at least 10% of the First Overbid amount, plus Proof of Funds needed to complete the transaction.  

Over-bidders agree to take the property as is, with no contingencies, no repairs including no retrofitting or wood pest (termite) repairs or abatement.

A schedule is posted on the doorframe of each courtroom and lists the names of each case being heard that day.  Prospective over-bidders connect with the real estate listing agent in the hallway prior to the hearing to notify her of their intention to overbid.  They will be asked to show their Cashier’s Check and Proof of Funds.

After the court deputy invites all into the courtroom, the Judge will enter and be seated.  He or she will review the case files in front of them, then start calling the cases.  When he or she calls your case, the attorney(s) will approach the bench and answer any questions the judge might ask. The judge will then ask if there is anyone in court who wishes to overbid on the property.  The over-bidders will make themselves known, and approach the bench as well.

The judge will announce the amount of the first overbid and ask if the bidders would agree to that price.  If there is at least one person agreeing to the overbid, the Buyer who was named in the original sale, will be asked if he or she would agree to that increased price, and, if so, he or she will become one of the bidders.

From then on, the judge will raise the price incrementally, and each bidder will agree to the new price, or drop out.  The judge has full discretion on what those increments will be.  This raising of price and asking for agreement from bidders will continue until only one bidder is standing.  The winning bidder delivers a non-refundable Cashier’s Check in the amount of 10 percent of the sale price to the Estate then and there in the courtroom.  Soon after, Escrow is informed of the winning buyer. 

But, unfortunately, there are a few things still to take care of before the buyer takes possession of the property.  On the day of the court confirmation the efficient attorney will submit to the court the Report of Sale and Petition for Order Confirming Sale of Real Property, and it will then wend it's way through the court system for a couple of weeks before being returned to the attorney as a fully confirmed document.  The Escrow company will now complete all necessary paperwork, has all required documents signed properly, then requests funding from the Buyer.  Once funded, the escrow will close and the winning bidder will take Title to the property, and funds will be wired to the Estate.

*C.A.R = California Association of Realtors