Probate prospect and court approval ?

Question

Hello BiggerPockets community ! I recently came across a selling prospect who has his property for sale in probate. The probate was recently initiated in Illinois and he is wanting to sell to me at below market value. My intentions with this property is to update it and flip it. It needs about 20k in updates. Am I in for a long arduous process requiring court approval and/or an independent appraisal of the home ? I'm asking so I know and can be prepared with how to handle and be a step ahead...

Guy Olds · Answer

@Jorge Rodriguez Every state has different probate laws and/or handles probate using different terms but some things are similar. I'm in California, you're in Illinois so some of the terms may be different.

For starters I'd head over to Google and start researching probate in your state. I've found that estate and probate lawyers have a wealth of articles explaining probate to potential clients so you should get a well rounded but basic understanding of probate and its terms in Illinois. You won't have to read read legal code just yet.

For your issue specifically, you want to make sure that the Personal Representative (PR) has the authority to sell assets without court approval. The PR is either an executor or Administrator. If the heirs disagree or are fighting the court will require that the PR get court approval for all actions. But If the heirs are happy campers the court will give the PR full authority to execute their job to sell assets and pay debts. The court will give the PR authority for this in some form of "Letters". In California, executors will receive Letters Testementary and Administrators will receive Letters of Administration. Selling a house with these Letters means it's a standard sale and you, the investor, are free to make a deal and buy the house without court approval. Usually though, the heirs will need to OK the sale.

So, ask your PR if they have full authority and can they show you their "Letters". If there are Letters, make an offer.  If your offer is accepted make sure you get a escrow company, closing agent or lawyer or whatever is used in Illinois, that is familiar with probate.If your PR has limited authority and needs court approval to sell assets make sure you understand the court confirmation process and auction if there is one. That's usually not a good way to go.

Good luck.

Account Closed · Answer

Hi Jorge,

You should ask the seller if he has a form from the court called the Letter of Testamentary. I'm from CA, but I'm sure it's pretty much the same there. In the middle of the page there are 2 boxes and 1 will be checked. It will either be Full Authority or Limited Authority. If the Full Authority box is checked, that means the Administrator has the right to sell the home, without needing to go back to the probate court for approval, for the price you agree upon. If Limited Authority is checked, you WILL need to go to court for approval. There's a person in the court called the Probate Referee. This person will have an appraisal done on the subject property and then your offer will have to be within 10% of what he appraises it at. I hope this answered your question.

George Rodriguez · Answer

Thanks Brian! I'm asking him to see any paperwork from the probate !

George Rodriguez · Answer

Thank you Guy! Yes I've read some of the articles posted online from probate attorneys. It seems like there are times when court approval is needed and other times when it's not. I guess depending on each situation. I've still have to read more.. But not over read ! I'm reaching out to a local probate attorney as well! Yes I agree if the sale is going to require many hurdles and independent appraisals then it would extend not only the sale but also kill the deal !