I received the following via e-mail from Kristine Poe(CA). I post so others can read and perhaps contribute.
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Ronald Starr: do you know which section of the code I should be reading/researching? I am assuming this information regarding staying tax sale would be in the taxation codes? Thanks. Sincerely,
Kristine
Ok, I did a google search for “California state statutes” and then a search in the revenue and taxation code for ‘“tax collector” probate’. I came up with about 8 cites. Unfortunately the search produced selections that had any one of the words “tax,” “collector,” or “probate” rather than just the junction of those words. What I found is different than what I remembered and seems to sink you hopes of staying the tax sale because there is a probate involved. Sorry about that. Here is the seemingly most relevant part, although you might want to read some of the paragraphs prior to it for more context.
4986.6. When any real property escheats to the state after the lien date and is not distributed by description, either because it is unknown, or is included in a general distribution clause without description, or is property as to which no probate proceedings have been taken, all taxes levied upon the real property are valid and any tax sale for those taxes conveys the same title thereto as if no
escheat had occurred, notwithstanding any provision of law to the contrary. All those taxes levied upon the real property and tax sales duly taken pursuant to law occurring before the effective date of this section are hereby validated.
If any such real property is discovered prior to tax sale, the public administrator of the county in which the property is situated shall immediately commence probate proceedings with respect to the
property, and the tax sale shall not be made.
End quotation
This is obviously is talking about escheated properties and specificly those that have NO PROBATE and the public guardian should start such a probate while the tax sale is stayed.
Making low offers on probate properties in CA - Posted by Kristine-CA
Posted by Kristine-CA on July 03, 2003 at 09:42:21:
Greetings. Does anyone have any experience making lower offers than the court requires for properties being sold out of probate in CA?
An attorney contacted me for a client who is losing an estate property at tax sale. They had a buyer in escrow who did not get funding in time (next week). The tax bill is pretty big (17K). The attorney and client will accept any offer as long as we can save it from the tax sale, but the courts require an offer that is not less than 90% of the probate referee appraisal. It’s still a good deal at that price. However, has any one had experience making an lower offer and having the probate court accept it? In this case, I believe that the condition of the property and the tax sale situation warrant a better price. But I’m not the probate judge.
2 big issues in probate RE - Posted by John Merchant
Posted by John Merchant on July 03, 2003 at 22:13:23:
First, is the RE, at the price you might be able to buy, really a tremendous deal at that price? If not, move on.
Second, would the applicable state probate law let an outside purchaser like you, come in and buy it, where you could get good, complete title. From what Ron *** says, apparently CA probate law might be too restrictive to allow any real deals with the legal representative of the estate.
I’m currently working on a CA probate/estate deal, so shortly I’ll know a LOT more about what the CCCs* say & how to deal with them.
I have limited experience with probate court deals in CA.
However, the law specifies no sale at less than 90% of the appraised value. If there are no offers, then the representative of the estate or the attorney will have a new appraisal made, with the appraiser being apprised of the law of offers.
Sounds to me like this cannot happen here as they had one serious offer and you say it would be a good deal at the 90% figure. It may be that others will appear in court to bid up the property if it is too good of a deal, as mentioned by Alex F(CA). Boy, two hundred potential bidders! Wow.
You might try to structure a 90% sale with financing terms that make it still a better deal, sort of along the lines of Kevin(IL)'s suggestion. I’d think a steep discount in a few days might be a little suspicious, but some sort of discount if repaid within a month or two might make sense.
Because of the public nature of the probate sales confirmation hearings, it is harder to get a great deal when the market is hot.
You should check with the attorney however, if they could do a sale without a court confirmation, so you would not have to face competition.
Re: My experience with probate - Posted by Alex F. (CA)
Posted by Alex F. (CA) on July 03, 2003 at 11:47:26:
Kristine,
I live in Southern Cali and went to a probate auction a year ago. I’ve found out each state laws vary, but there are 3 stages of probate in which you can purchase:
Private auction with probate attorney
at court hearing at private aution
from successful bidder at above or heir who receives property instead of cash
The one I went to was at a court auction and here in San Diego, the market is hot so 200 potential bidders crammed into this little court room to bid on this property that went to probate (owner died). The price went above market value bought by some people that wanted to live in there.
This doesn’t really answer your question, but my experience here in southern cali didn’t work for me maybe because it was due to market conditions. I’m not exactly sure which stage the probate is at, but it may end up being sold to the highest bidder at court aution. Let us know what you find out.
Re: Making low offers on probate properties in CA - Posted by Kevin - IL
Posted by Kevin - IL on July 03, 2003 at 10:50:22:
Hi Kristine!
First my disclaimer: I have no clue about probate. That said I’ll try and offer a creative idea.
How about giving the seller the 90% of appraisal. Some money in cash and the remainder on a seller note. Now on the note, there can be a provision that you can purchase that note back within 3 days for $x (obviously discounted). Work these numbers so that you get into the property for exactly what you wanted.
This should satisfy the court that the property was sold for a fair price. It should not concern the court that the seller would sell their note at a steep discount.
I’d love to hear if others think this is plausible. Kevin
Re: 2 big issues in probate RE - Posted by Kristine-CA
Posted by Kristine-CA on July 04, 2003 at 02:33:37:
Dear John Merchant. Thank you for your message. The property is a good enough deal at 90% of probate referee appraisal. Court has no issue with outside buyers (as long as they offer 90%). The estate can convey marketable title.
However, the question of what circumstances the court will allow a better deal remains unanswered. For example, given that I am essentially lending the estate money in order to save the property from tax sale and am doing so in an emergency, I am wondering if that could be presented in such a way as to warrant a better deal. Or that the estate’s previous buyer in escrow could not complete funding prior to tax sale. Or something like that. When I learn more from my probate attorney and the seller’s attorney regarding their experience with this, I will be glad to share what I learn.
Re: Making low offers on probate properties in CA - Posted by Kristine-CA
Posted by Kristine-CA on July 04, 2003 at 02:16:21:
Ron Starr: thank you for your reply. The property is a good deal at 10% below the probate referee appraisal–$68.4K. The estate had a serious offer that ran out of funding time for 90K (and buyer was out of the country this week when the executor called his attorney about the tax sale situation. Still surprises me how someone could fail to mention this earlier. Buyer can’t come up with 17K out of pocket by Monday. And his lender won’t close without their own appraisal which is taking 4 weeks in the county now.) Comps are 100K+.
The reason I am asking about making a lower offer is that I am trying to assess the risk of how long the 17K deposit money (tax sale rescue money) will be tied up. If I make an offer any lower than 90% of the referee appraisal and the court refuses it, the estate will refund my money. But since it has no funds I’d be waiting until the property sold to someone else. So it doesn’t seem worth the risk to attempt to get a better deal. Interest free lending to strangers is not my idea of a good time.
Still, I’m curious to know what it takes to convince the court to allow a sale below 90%. It does happen. Both my attorney and the seller’s attorney have done it. I just don’t have access to them until Monday. And Monday’s the last day before the sale.
I’m not too worried about bidders appearing in court. I’ve spoken with several probate attorneys in the county and they say they have never seen it. But even so, at least I wouldn’t lose the money. And the buyer that shows up in court would most likely be a serious buyer that would have funds to close asap.
My understanding of the court confirmation is that is required in certain types of probates. This executor does not have the power to sell without court approval.
So, we’ll see. It’ not over until 5:00 on Monday. And then fun really begins.
Well, my understanding of the law is as I stated in the earlier post. The judge is supposed to NOT allow a sale for less than 90% of the appraised value. So I have no explanation for people saying they have done it.
As I said before, I think you should structure the loan so you get something out of the deal. I don’t see making interest-free loans when it pulls somebody’s bacon out of the fire. If there is a real estate broker involved in the property, the state law allows “broker arranged” loans to exceed the usury limits for private loans. You could get your “reduction” by an increase in the money coming back to you with a high rate of interest. Plus you wouldn’t want to outperform banks would you? Of course not, charge some loan fees–“points”–for the loan also.
Now, if you were to tell the tax collector’s office that this property is in an estate, they might be willing to pull it off the tax sale. Especially if you told them that it would be sold within a couple of months, at which time they would get all of their delinquent property taxes paid in full.
Re: Making low offers on probate properties in CA - Posted by Kristine-CA
Posted by Kristine-CA on July 04, 2003 at 17:33:48:
Ron Starr: I’m still thinking about how I can structure the tax payment as a loan. Points and interest seems like a good idea to me.
Tax collector will not pull property from sale. Attorney tried that one already. And the tax collector’s office informed me a couple of weeks ago (when inquiring about the general policy) that probate properties are not stayed. So maybe that is something only a few county tax collectors do?
I’m very confused on that issue of probate and tax sale. Have you read anywhere in the codes that probate will stay a tax sale? Or is it just some people’s experience that they’ve managed to do it? As always, thanks for your sharing your experience and ideas.
It is in the CA code on collection of property taxes. However, I don’t a reference to it handy.
I believe that it says they shall stay it. But maybe it says can. It’s worth doing a search of the black letter law, I think. It is in the code, not in court case decisions.