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Short Sales in California Probates

What a hot topic right now!  Sure short sales or “upside down houses” or houses without equity are hot topics for a large number of people. However, when dealing with short sales after death there are different rules, different procedures and different outcomes. In fact, the probate code has special rules that can make a short sale profitable to the Administrator of the Executor of the estate if done exactly right.  That is California Probate Code 10360 which I will paste in full down below.

If you know all the rules you can come out ahead! I have helped Administrators and Executor’s of California probate estates walk away with $15,000, and more, in their pocket! That is, their loved one died with an upside down house and nothing else but I have been able to put money into their pocket and it’s totally legal!

Contact me and let’s discuss your California probate and how we can “short sell” your loved one’s house. I can do this in any county in California. Contact me to see if your case has good facts to use this procedure.

-John

 

 

CALIFORNIA CODES PROBATE CODE SECTION 10360-10363
10360.  As used in this article:
(a) “Amount secured by the lien” includes interest and any costs
and charges secured by the lien.
(b) “Encumbered property” means real or personal property that is
subject to a lien for a secured debt which is a valid claim against
the estate and which has been allowed or approved.
(c) “Lien” means a mortgage, deed of trust, or other lien.

 

10361.  (a) If encumbered property is sold, the purchase money shall
be applied in the following order:
(1) Expenses of administration which are reasonably related to the
administration of the property sold as provided in paragraph (1) of
subdivision (a) of Section 11420.
(2) The payment of the expenses of the sale.
(3) The payment and satisfaction of the amount secured by the lien
on the property sold if payment and satisfaction of the lien is
required under the terms of the sale.
(4) Application in the course of administration.
(b) The application of the purchase money, after the payment of
those expenses set forth in paragraphs (1) and (2) of subdivision
(a), to the payment and satisfaction of the amount secured by the
lien on the property sold shall be made without delay; and, subject
to Section 10362, the property sold remains subject to the lien until
the purchase money has been actually so applied.

 

10361.5.  The personal representative or any interested party may,
at any time before payment is made to satisfy all liens on the
encumbered property sold, petition for an order determining the
amount of expenses of administration that are reasonably related to
the administration of that encumbered property as provided in
paragraph (1) of subdivision (a) of Section 11420. The petition may
be heard as part of a petition for confirmation of sale of personal
or real property as provided in Section 10260 or 10308, respectively
or may be heard separately. If the petition is presented as part of a
petition for confirmation of sale of real or personal property, the
notice of hearing otherwise required by this code for a petition for
confirmation of sale shall be given in addition to the notice
requirements under Section 10361.6.

 

10361.6.  (a) At least 30 days prior to the day of the hearing, the
petitioner shall cause notice of the hearing and a copy of the
petition to be served in the manner provided in Chapter 4 (commencing
with Section 413.10) of Title 5 of Part 3 of the Code of Civil
Procedure on all of the following persons:
(1) The personal representative, if the personal representative is
not the petitioner.
(2) The holder of any mortgage or other lien secured by the
property that is sold.
(3) All agents or brokers entitled to compensation from the
proceeds of the property that is sold.
(b) Except for those persons given notice pursuant to subdivision
(a), notice of the hearing, together with a copy of the petition,
shall be given as provided in Section 1220 to all of the following
persons:
(1) Each person listed in Section 1220.
(2) Each known heir whose interest in the estate would be affected
by the petition.
(3) Each known devisee whose interest in the estate would be
affected by the petition.
(4) The Attorney General, at the office of the Attorney General in
Sacramento, if any portion of the estate is to escheat to the state
and its interest in the estate would be affected by the petition.
(c) The court may not shorten the time for giving the notice of
hearing under this section.

 

10362.  (a) If encumbered property is sold, the purchase money, or
so much of the purchase money as is sufficient to pay the amount
secured by the lien on the property sold and the expenses of the
sale, may be paid to the clerk of the court. Upon the payment being
so made, the lien on the property sold ceases.
(b) The clerk of court without delay shall use the money paid to
the clerk under this section to pay the expenses of the sale and to
pay and satisfy the amount secured by the lien on the property sold.
The clerk shall at once return the surplus, if any, to the personal
representative unless the court, for good cause shown and after
notice to the personal representative, otherwise orders.

 

10363.  (a) At a sale of real or personal property subject to a
lien, the lienholder may become the purchaser of the property, even
though no claim for the amount secured by the lien on the property
sold has been, or could have been, filed, allowed, or approved.
(b) Unless the property is sold subject to the lien:
(1) If the lienholder becomes the purchaser of the property and
the amount secured by the lien on the property is a valid claim
against the estate and has been allowed or approved, the receipt of
the lienholder for the amount due the lienholder from the proceeds of
the sale is a payment pro tanto.
(2) If the lienholder becomes the purchaser of the property and no
claim for the amount secured by the lien on the property has been
filed, allowed, or approved, the court may at the hearing on the
petition for confirmation of the sale examine into the validity and
enforceability of the lien and the amount secured by the lien, and
the court may authorize the personal representative to accept the
receipt of the lienholder for the amount secured by the lien as
payment pro tanto.
(3) If the lienholder becomes the purchaser of the property and
the amount for which the property is purchased is insufficient to pay
the expenses of the sale and to discharge the lienholder’s lien,
whether or not a claim has been filed, allowed, or approved, the
lienholder shall pay to the clerk of the court an amount sufficient
to cover the expenses of the sale.
(c) Nothing permitted under this section shall be deemed to be an
allowance or approval of a claim based upon the lien or the amount
secured by the lien.