What is a probate sale?
A probate sale is any sale of estate real estate made by a court-appointed personal representative. If there’s a will, that person is usually called the executor; if there isn’t, the administrator. The property is still titled in the decedent’s name, so nobody can convey it until the court issues letters giving the representative authority.
Not every inherited building goes through probate. Property held in a living trust, in joint tenancy or under a transfer on death deed passes outside it. This page is about the buildings that do go through probate, and the rules for selling them.
Who has the authority to sell probate real estate?
Only the personal representative can sign the purchase contract and deed in a probate sale. Heirs may have strong opinions, and in many states they get notice and a chance to object, but they don’t sign as sellers while the estate is open.
The representative’s power comes from two places: the will, which may grant a power of sale, and the state’s probate code. California’s Probate Code Section 10000 lets a representative sell estate property when the sale is needed to pay debts, expenses or taxes, when it benefits the estate and the people interested in it, or when the will directs or authorizes the sale.
Court confirmation vs independent administration
The biggest question in any probate sale is whether a judge must approve the deal before title passes. Under court confirmation, the court reviews the price at a hearing and can accept a higher bid from the courtroom. Under independent administration, the representative sells more like a normal owner, with notice to heirs instead of a hearing.
California offers both. Under the Independent Administration of Estates Act (IAEA), a representative granted full authority can sell real property without court confirmation, and Section 10503 says the 90% of appraisal rule, published notice and the confirmation hearing don’t apply. A representative with only limited authority must still get court supervision to sell real property under Section 10501.
| Court confirmation | IAEA full authority (California) | |
|---|---|---|
| Who approves the price | Probate judge at a hearing | Representative, after notice to heirs |
| Minimum price | At least 90% of a recent appraisal | No statutory minimum |
| Overbids in court | Yes, under Section 10311 | No hearing, so no courtroom overbid |
| Notice | Hearing notice to interested persons | Notice of proposed action, at least 15 days |
| If an heir objects | Raised at the hearing | Sale must go through court supervision |
How a California court-confirmed probate sale works
A court-confirmed sale in California follows a set order, and it usually takes longer than a regular escrow. Section 10308 says every sale outside the IAEA must be reported to and confirmed by the court before title passes, even if the will directs a sale.
Two price rules matter most here. Section 10309 says the property must have been appraised within one year before the confirmation hearing, and the accepted offer must be at least 90% of that appraised value. Section 10311 then lets anyone make a higher written offer at the hearing.
- The representative gets the property appraised, often by a probate referee.
- The representative accepts a written offer at or above 90% of the appraised value.
- The representative files a report of sale and petition for confirmation; if they don’t file within 30 days, the buyer can.
- Notice of the hearing goes to interested persons and the purchaser.
- At the hearing, any responsible bidder can overbid by the statutory minimum.
- The judge confirms the sale to the highest qualifying bidder, and escrow closes on the confirmed terms.
How the California overbid rule is calculated
Under Probate Code Section 10311, an overbid must be at least 10% more on the first $10,000 of the original bid and 5% more on the part of the original bid above $10,000. For any bid over $10,000, that works out to $1,000 plus 5% of the amount above $10,000.
The court can turn down an overbid and order a new sale instead. When the original sale or the overbid is on credit terms, the court can consider the higher offer only if the representative tells the court it’s acceptable.
Texas independent administration: selling without court approval
In a Texas independent administration, the executor can usually sell real estate with no court order at all. Texas Estates Code Section 402.002 says an independent executor can take any action a court-supervised representative could take, without a court order, unless the code specifically says otherwise.
Section 402.052 gives independent executors and administrators the same power of sale as a supervised representative, but without court approval, unless the will limits it. Under Section 402.053, a good-faith buyer who isn’t an heir doesn’t have to look into that power if the will grants it, the court order grants it or the executor records a sworn affidavit that the sale is necessary or advisable. Expect the title company to ask for one of those documents.
Florida: what the will says decides a lot
In Florida, a personal representative can sell real property without court authorization when the will gives a specific power to sell real property or a general power to sell any estate asset, under Florida Statutes Section 733.613(2). The sale doesn’t have to be justified by necessity.
If the decedent died without a will, or the will gives no usable power of sale, Section 733.613(1) still lets the representative sell at public or private sale, but no title passes until the court authorizes or confirms it. Section 733.612 lists what a representative may do without a court order, and selling real property isn’t on that list.
Worked example: an overbid on a 14-unit building and net to heirs
For example, suppose a California estate holds a 14-unit building appraised at $2,400,000. It carries a $900,000 loan, and three heirs share it equally. The executor accepts a $2,250,000 offer, which clears the 90% floor of $2,160,000, and petitions the court for confirmation.
The minimum overbid is $2,250,000 plus $1,000 (10% of the first $10,000) plus $112,000 (5% of the remaining $2,240,000), or $2,363,000. A second bidder opens at that number in court, bidding continues, and the judge confirms the sale at $2,400,000.
Using $60,000 of closing costs and transfer taxes in each case, the original bid would have netted $1,290,000, or $430,000 per heir. The confirmed $2,400,000 price nets $1,440,000, or $480,000 per heir, before other estate expenses. And because the heirs’ basis stepped up to about $2,400,000 at death, the sale shows no taxable gain.
| Original bid | Minimum overbid | Confirmed price | |
|---|---|---|---|
| Price | $2,250,000 | $2,363,000 | $2,400,000 |
| Loan payoff | $900,000 | $900,000 | $900,000 |
| Closing costs and transfer taxes | $60,000 | $60,000 | $60,000 |
| Net to estate | $1,290,000 | $1,403,000 | $1,440,000 |
| Per heir (3 heirs) | $430,000 | $467,667 | $480,000 |
Stepped-up basis and taxes on a probate sale
Property included in a decedent’s estate generally gets a new basis equal to its fair market value at death under Internal Revenue Code Section 1014. That stepped-up basis is why many probate sales produce little or no capital gains tax, even on a building the decedent bought decades ago.
The date-of-death appraisal does double duty. The court may rely on it, and the estate’s CPA uses it to set basis. Our step-up in basis guide covers depreciation, community property and what happens if the building sells for more than the appraisal.
Managing tenants during probate
Leases don’t end because the owner died, and the representative is now responsible for running the building until it’s sold. That means collecting rent into an estate account, paying the mortgage, taxes and insurance, handling repairs and keeping track of security deposits.
Tell the lender and insurance company about the death early, and keep a current rent roll and a copy of every lease. Buyers will ask for both, and a clean rent roll backed by estoppel certificates makes for a firmer offer. State landlord-tenant law and any local rent control apply to the estate the same way they applied to the decedent.
Offers and as-is sales in probate
Most probate buildings sell as-is, because the representative has no personal knowledge of the property’s history and doesn’t want to make repairs with estate money. As-is doesn’t remove the duty to share what the representative actually knows, so pass along inspection reports, violation notices and tenant disputes.
When you weigh offers, look past the headline price. A buyer who can close in cash, accept court-confirmation timing and skip a financing contingency is often worth more than a higher bid that might fall through, especially when an overbid hearing or an heir’s objection can reset the process.
How this works for a 5+ unit apartment building
A 5+ unit building is a business, and it doesn’t stop for probate. Rents, vacancies, deferred maintenance and loan covenants keep moving while the court file does, so the representative’s first job is to stabilize operations and document NOI for the last 12 months.
Commercial loans on apartment buildings may have their own default triggers when a borrower dies, so read the note early. Buyers will price the building on actual NOI and cap rate, not on the date-of-death appraisal, and a court-confirmed sale gives every serious bidder a second chance at the hearing.
Selling a probate apartment building to Skyline
Skyline Capital Investments buys 5+ unit apartment buildings nationwide, including buildings in probate, and we’re used to court-confirmation timelines and IAEA notice periods. We buy as-is, can close with cash, and can offer seller financing terms when the estate or heirs want income instead of a lump sum.
Send the address and unit count through the form on this page or call (469) 660-2977. We typically respond within 48 hours, and we’ll work with the estate’s attorney on whatever approvals the court requires.
