Probate Real Estate California: Complete Guide to Handling Property

Real estate is often the largest and most complex asset in a California probate estate. As executor, you're responsible for protecting, maintaining, and ultimately selling or distributing property worth hundreds of thousands or millions of dollars.

Handling probate real estate involves unique challenges: securing vacant property, maintaining insurance, paying ongoing expenses, deciding whether to sell, navigating court approval requirements, and ultimately transferring title to beneficiaries or buyers.

As a Glendale probate attorney who regularly advises executors on real estate issues, I've seen how proper property management protects estate value while mismanagement can result in property damage, liability, and loss of value.

This comprehensive guide explains everything executors need to know about probate real estate in California: initial property responsibilities, maintaining property during probate, selling estate real estate, court confirmation requirements, property tax issues, and distributing property to beneficiaries.

Types of Real Estate in Probate

Property That Goes Through Probate

Probate required for:

• Property in decedent's name alone
• Property held as tenants in common (decedent's share)
• Property with no beneficiary designation

Property That Avoids Probate

Passes outside probate:

• Joint tenancy property → To surviving joint tenant
• Community property with right of survivorship → To surviving spouse
• Property in living trust → Per trust terms
• Property with transfer-on-death deed → To named beneficiary

See our guide: What Assets Go Through Probate California

Executor's Initial Property Responsibilities

Step 1: Secure the Property

Immediately after appointment:

Vacant property:

• Change locks
• Install security system if needed
• Board up broken windows
• Secure all entry points
• Remove valuables

Occupied property:

• Determine who's living there
• Establish their legal rights
• Consider cash-for-keys agreements if needed

Failure to secure property = Potential liability for vandalism, theft, or damage.

Step 2: Obtain Property Insurance

Required: Probate property must be insured.

Coverage needed:

• Homeowner's insurance (if occupied)
• Vacant property insurance (if empty)
• Liability coverage
• Sufficient replacement value

Vacant property insurance:

• Different from regular homeowner's insurance
• More expensive
• Specifically covers vacant properties
• Required by most carriers if vacant over 30-60 days

Change named insured to estate name.

Step 3: Inventory and Photograph Property

Document property condition:

• Photograph every room
• Document any damage
• Note repairs needed
• Inventory personal property in home
• Check for hazards

Protects executor from claims property was damaged during probate.

Step 4: Arrange Property Appraisal

Required: California probate requires professional appraisal by probate referee.

Probate referee:

• Appointed by court
• Determines fair market value
• Value included in inventory
• Affects probate fees

Additional appraisal:

• Consider independent real estate appraisal
• Helps determine listing price if selling
• Provides second opinion on value

Step 5: Determine Property Status

Key questions:

Mortgage:

• Is there a mortgage?
• What's the balance?
• Are payments current?
• Who's making payments?

Property taxes:

• Are taxes current?
• When is next payment due?
• Is property tax exemption in place?

HOA:

• Is property in HOA?
• Are dues current?
• Any liens or violations?

Tenants:

• Is property rented?
• Is there a lease?
• Are tenants current on rent?
• When does lease expire?

Maintaining Property During Probate

Executors must maintain property from date of appointment until sale or distribution.

Ongoing Property Expenses

Executor must pay from estate funds:

Required:

• Property insurance
• Property taxes
• HOA dues
• Utilities (at minimum levels)
• Security monitoring

As needed:

• Maintenance and repairs
• Landscaping
• Pest control
• Pool service
• Vacant property visits

Making Mortgage Payments

If property has mortgage:

Executor's duty: Continue making payments to avoid foreclosure.

Options:

1. Pay from estate funds
2. Rent property (use rent for mortgage)
3. Sell property quickly
4. Beneficiary makes payments (credited against inheritance)

Don't let property go into foreclosure unless:

• Property is underwater (worth less than debt)
• Estate cannot afford payments
• Court approves

Property Maintenance Standards

Executor must maintain property in reasonably good condition.

Required maintenance:

• Roof repairs (prevent water damage)
• HVAC functionality
• Plumbing repairs
• Electrical safety
• Structural issues
• Pest infestations
• Code violations

Not required:

• Upgrades or improvements
• Cosmetic repairs
• Luxury improvements

Balance: Protect property value without unnecessary spending.

Dealing with Property Hazards

Common issues:

Mold:

• Must be remediated
• Can reduce property value
• Health hazard liability

Foundation problems:

• Disclose to potential buyers
• May need repair before sale
• Affects marketability

Code violations:

• Must be addressed
• Can delay sale
• May require permits

Environmental issues:

• Lead paint
• Asbestos
• Underground storage tanks
• Soil contamination

Get professional assessments for major issues.

Winterization (If Vacant)

For vacant property:

• Drain water pipes
• Turn off water main
• Set heating to minimum
• Prevent freeze damage
• Check regularly

Deciding Whether to Sell or Distribute

Executor must decide:

• Sell property and distribute cash
• Distribute property to beneficiaries

When to Sell

Sell if:

1. Will directs sale
2. Beneficiaries agree to sale
3. Estate needs cash for debts, taxes, or expenses
4. Property cannot be divided fairly among multiple beneficiaries
5. Beneficiaries don't want property
6. Mortgage exceeds value (short sale)

When to Distribute Property

Distribute if:

1. Will directs distribution to specific person
2. Single beneficiary wants property
3. Beneficiaries agree on who gets property
4. Property can be divided (multiple parcels)
5. No estate debts requiring property sale

Multiple Beneficiaries, One Property

Options:

1. Sell and divide proceeds (most common)
2. Award to one beneficiary who compensates others
3. Create co-ownership (rarely advisable)

Co-ownership problems:

• Beneficiaries must agree on all decisions
• One owner can force partition sale
• Maintenance disputes
• Financial disputes

Selling Probate Real Estate

See detailed guide: How to Sell a House in Probate California

Step 1: Obtain Authority to Sell

Two types of authority:

Full Authority (IAEA):

• Independent Administration of Estates Act
• Executor can sell without court confirmation
• Much faster and easier
• Granted at initial hearing if will waives bond

Limited Authority:

• Court confirmation required for sale
• More complex process
• Takes longer
• Standard if IAEA not granted

Step 2: Prepare Property for Sale

Recommendations:

Necessary repairs:

• Fix obvious defects
• Address safety hazards
• Complete required inspections

Cleaning:

• Deep clean property
• Remove personal belongings
• Clear clutter

Staging (optional):

• Consider professional staging
• Increases sale price 5-10% typically
• Cost: $2,000-$5,000

Balance: Invest enough to maximize price, but not excessive improvements.

Step 3: Set Listing Price

Factors:

• Probate referee appraisal (baseline)
• Current market conditions
• Property condition
• Comparable sales
• Days on market goals
• Probate sale requirements

If court confirmation required:

• Minimum sale price is 90% of appraised value
• Cannot accept offer below 90% without court approval

Step 4: List Property for Sale

Hire real estate agent experienced in probate sales.

Disclosures required:

• Property sold "as-is" in probate (in many cases)
• Estate doesn't know property history
• Transfer Disclosure Statement (TDS) exemption
• Natural Hazard Disclosure
• Lead paint disclosure (if pre-1978)

Step 5: Accept Offer

With IAEA authority:

• Executor accepts offer
• Standard escrow process
• No court approval needed
• Close in 30-45 days typically

Without IAEA (court confirmation required):

• Accept initial offer
• File petition for court confirmation
• Court hearing scheduled
• Overbidding at hearing possible
• More complex process

Court Confirmation Process

Required without IAEA authority.

Process:

1. Accept initial offer (minimum 90% of appraised value)
2. File Petition for order confirming sale
3. Notice to beneficiaries and interested parties
4. Court hearing (4-6 weeks later)
5. Overbidding may occur at hearing
6. Judge confirms sale to highest bidder
7. Close escrow

Overbidding rules:

• Opening bid is 105% of accepted offer + $1,000
• Subsequent bids increase by set increments
• Highest bidder wins

Property Disclosures

Required disclosures:

• Natural Hazard Disclosure: Flood zone, fire hazard, earthquake fault
• Lead Paint Disclosure: If built before 1978
• Death on Property: If within past 3 years
• Neighborhood Noise: If applicable
• Pest Inspection: Typically required by lender

Exemptions:

• Transfer Disclosure Statement (TDS) not required for probate sales
• Estate doesn't provide warranty of condition

Property Tax Issues

Ongoing Property Taxes

Property taxes continue during probate.

Executor must:

• Pay taxes from estate funds
• Don't let taxes go delinquent
• Penalties and interest add up quickly

Payment schedule:

• First installment: November 1 (due December 10)
• Second installment: February 1 (due April 10)

Property Tax Reassessment

Death can trigger reassessment:

General rule: Death triggers reassessment to current market value.

Exceptions (Proposition 19, effective 2021):

Parent-child transfer exemption:

• Principal residence: Up to $1 million in value excluded
• Other property: No exemption (will be reassessed)
• Child must file claim
• Child must use as principal residence (for residence exemption)

Grandparent-grandchild: Same rules if parents deceased.

Impact: Property taxes may increase significantly after transfer.

Change of Ownership Form

Required: Within 150 days of death or 90 days of recording deed.

File with: County assessor.

Preliminary Change of Ownership Report (PCOR).

Distributing Real Estate to Beneficiaries

Step 1: Obtain Court Order

After creditor period and all debts paid:

Executor files:

• Petition for final distribution
• Proposed order

Order specifies:

• Which beneficiaries receive property
• Any conditions
• How title will be held

Step 2: Prepare Deed

Executor prepares deed:

Type: Usually grant deed

From: Estate of [Decedent] By: [Executor Name], Executor To: [Beneficiary Names]

Recites: Authority under probate court order

Step 3: Record Deed

File with county recorder where property located.

Include:

• Executed deed
• Certified copy of court order (or letters and order)
• Preliminary Change of Ownership Report
• Documentary transfer tax declaration

Recording transfers title to beneficiaries.

Step 4: Transfer Insurance and Utilities

Beneficiary should:

• Obtain new homeowner's insurance
• Transfer utilities to their name
• Take possession of property

Multiple Beneficiaries

If property distributed to multiple beneficiaries:

Title options:

• Joint tenancy with right of survivorship
• Tenancy in common (default)
• Community property (if married to each other)

Usually: Tenants in common with each owning specified percentage.

Special Real Estate Situations

Rental Property

If property is rented:

Executor duties:

• Collect rent
• Maintain property
• Handle tenant issues
• Enforce lease terms
• Comply with landlord-tenant law

At sale:

• Property sold subject to existing leases
• Buyer becomes new landlord
• Or negotiate tenant move-out

Out-of-State Property

Property in other states:

Requires ancillary probate in that state.

Solutions:

• Full ancillary probate proceeding
• Simplified procedures (if available)
• Living trust avoids this (plan ahead)

Property in Disrepair

Severely damaged or dilapidated property:

Options:

1. Repair and sell retail
2. Sell "as-is" at discount
3. Sell to investor
4. Demolish and sell land

Analysis: Cost of repairs vs. increase in sale price.

Underwater Property

Property worth less than mortgage:

Options:

1. Short sale (if lender agrees)
2. Deed in lieu of foreclosure
3. Let property foreclose
4. Beneficiary assumes mortgage and takes property

Not executor's personal liability.

Life Estate Properties

If decedent held life estate:

Life estate ends at death.

Property passes to remainder beneficiaries automatically (no probate).

Properties with Environmental Issues

Contamination, hazardous materials, etc.:

Executor duties:

• Disclose to buyers
• May need environmental assessment
• May need remediation
• Affects marketability and price

Get professional advice before listing.

Executor Liability for Real Estate

When Executor Can Be Personally Liable

Personal liability possible if:

1. Allows property to deteriorate through neglect
2. Fails to maintain insurance
3. Someone injured on property due to known hazard
4. Property taxes go delinquent (creates lien)
5. Sells below fair value without proper procedure
6. Favors one beneficiary in property distribution

Protecting Yourself

Best practices:

1. Maintain adequate insurance at all times
2. Document property condition at start
3. Make necessary repairs promptly
4. Keep detailed records of all expenses
5. Get professional appraisals
6. Follow court procedures for sales
7. Get beneficiary consent when possible
8. Consult probate attorney on major decisions
9. Regular property inspections
10. Address hazards immediately

Frequently Asked Questions

Can executor live in probate property?

Generally no, unless will specifically permits or beneficiaries consent and executor pays fair rental value. Living rent-free is self-dealing.

How long does it take to sell probate real estate?

With IAEA authority: 30-60 days typical. Without IAEA (court confirmation): 3-6 months.

Can beneficiaries force sale of property?

Depends on will terms and circumstances. If multiple beneficiaries can't agree, partition sale may be required.

What if property needs major repairs?

Executor should make necessary repairs to protect value and marketability, but get court approval for very expensive repairs.

Can executor sell property to themselves?

Generally no. This is self-dealing and voidable unless full disclosure and court approval obtained.

What if beneficiaries disagree about selling?

Executor follows will terms. If ambiguous, executor has discretion but should seek court guidance if dispute is serious.

Are property sale proceeds taxable?

Generally no income tax on inherited property basis step-up. Capital gains only if property appreciates after death.

Related Articles

Learn more about probate real estate:

• How to Sell a House in Probate California - Detailed guide to the probate property sales process.

• California Executor Duties & Responsibilities - Complete checklist including property management duties.

• What Assets Go Through Probate California - Understanding which real estate requires probate.

• Letters Testamentary California - Authority needed to manage and sell probate property.

• How Long Does Probate Take in California? - Timeline including property sales and distribution.

Get Professional Help with Probate Real Estate

Managing real estate during probate involves significant responsibility and potential liability. Professional guidance ensures property is properly maintained, sold at fair value, and transferred correctly.

Call (818) 291-6217 to schedule a consultation at my Glendale office, or complete our probate questionnaire to discuss your probate real estate situation.

As a California probate attorney serving Los Angeles County, I guide executors through all aspects of probate real estate: securing and maintaining property, navigating sales procedures, addressing property issues, and protecting executors from liability while maximizing value for beneficiaries.

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About the Author

Rozsa Gyene (State Bar No. 208356) is a California estate planning and probate attorney serving Glendale, Burbank, Pasadena, and throughout Los Angeles County. With extensive experience advising executors on probate real estate management and sales, Rozsa provides practical guidance on handling property worth millions of dollars while protecting executors from personal liability.

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Disclaimer: This article provides general information about California probate real estate and should not be construed as legal advice. Every property and situation is unique. Real estate laws and procedures change, and this article reflects California law as of January 2025. Consult with a qualified California probate attorney about your specific circumstances.