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Elder Law Today Newsletter | March, 2018


Probate for Realtors - What To Do When The Preliminary Report Says Probate Required

I am a probate and estate planning attorney in Walnut Creek, CA. I sold real estate in a prior life, and was in house counsel for 10 years for two title insurance companies in the Bay Area. When I was in house counsel for the title insurance companies, I would often be asked by the escrow officers to talk to their realtor clients, who would want to know why the preliminary report stated that a probate is required. The realtors, who would have time and money invested in the listing, would want to know exactly what is required to fix the title, and how long that would take.

So, the first thing not to do is to panic and give up on your listing. You want to keep your listing, and you want to be the expert, armed with the answers to the title questions, so that you can explain to your client exactly what is required by the title company.

You should then call the escrow officer and ask her for the last several deeds of record for the subject property. Also ask her if it is ok for you to talk to the title officer to get a better understanding of the title problem. Then ask your client, who you took the listing from, to give you all of the documents she says give her the power to enter into the listing.

A full probate may not even be required! If the underlying power to list comes from a revocable living trust wherein the listing person is the successor trustee, check to see if the last deed of record transfers the subject real property to the trust. If it does not, look at the Schedule of Assets attached to the end of the trust, to see if the subject property is identified as an asset of the trust. The schedule of assets should be signed and dated by the trustors of the trust.

The problem could be that the property was removed from the trust for a re-finance, and then not transferred back into the trust before the trustors died. If this is the case, a Probate Code §850 petition, also known as a “Heggstad Petition” from the appellate court case called “The Estate of Heggstad” may be all that is required to fix the title.

Although controlled by the probate code, this petition is more of declaratory relief action, and does not take as long to complete as a full-fledged probate. For this petition, the court requires that somewhere in the “four corners” of the trust document, it is evident that the subject real property was intended to be an asset of the trust.

The courts have become more lenient in granting these petitions in past years, but the courts’ technical requirements to obtain the final order still need to be adhered to. If my office handles the PC §850 petition, we will be able to give you and your client a good idea of the cost and time involved to obtain the final order from the court to correct the title. We always confirm on an ongoing basis what we are doing with the title officer involved, to be sure that the title company is satisfied with our procedures and final court order.

If a full probate is required, there is still no need to panic. Your focus as the realtor should be on your client obtaining the “Letters Testamentary” from the court to give your client full authority to list the property with you on the “CAR” probate form.

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