Real property sales through conservatorship fall under the same rules as probate sales. They are regulated by Probate Code and are conducted in Probate Court.
One of the primary differences is that in a probate transaction the property owner is deceased; in conservatorship sales the property owner — the conservatee — is often very much alive and may even be living in the home that is for sale. A conservator acts as fiduciary, selling the property on the conservatee’s behalf, possibly to provide additional funds for the conservatee’s care.
After an initial offer on the real property has been accepted, potential buyers appear at the specified day, time and courtroom to overbid on the property in the hope that they may be the ultimate purchaser.
Unfortunately for these overbidders, many real estate agents and lenders are not familiar with probate proceedings, so they may attempt to work around the rules and treat the transaction as a “normal” real estate purchase. For buyers who are serious about purchasing real property through a court-approved transaction, some “home-work” is essential (and, of course, an experienced agent will make a huge difference).
For example: when someone comes in as an overbidder, there is no written contract to show to the lender; the buyer receives a court order, not a traditional purchase agreement. So, before the court date, the buyer should interview lenders to be certain that the chosen lender will be comfortable with the non-standard documentation. Ask the lender: Have you ever made a loan to someone buying a house subject to a court-confirmed sale?
The lender will need to jump through some hoops with the underwriter, so it’s critical to work with a lender who is familiar with this type of purchase and who can work with the documentation provided. Both the property and the borrower must be prequalified prior to the court date so the court transaction can be completed and the property put into escrow at the close of the court session.
Read this post about buying real property through conservatorship or this one about navigating the pitfalls of selling through conservatorship. If you have questions or if we can provide additional information on buying or selling through probate, trust or conservatorship, contact The Sanborn Team: 310-777-2858 or [email protected].