How to Sell Inherited Property in California

Step 1 — Determine Which Process Governs the Sale: Probate, Trust, or Direct Transfer

How title was held on the date of death decides which track the sale follows, and every later step depends on it.

Probate track. This track generally applies when the decedent owned California real property in their own name, or as a tenant in common (a co-owner whose share does not pass automatically to the other owners), with no trust holding it, and no simplified procedure fits. A probate is filed in the county where the decedent lived. If the decedent lived outside California, it is filed in the California county where the decedent owned property, according to the California Courts' overview of formal probate.

Trust track. When a revocable living trust held title, the successor trustee acts under the trust's terms without opening a probate.

Direct-transfer track. Joint tenancy and community property with right of survivorship pass to the surviving owner. A transfer on death deed passes the property to the named beneficiary, who must survive the transferor. Under Probate Code section 5652, two or more beneficiaries take as tenants in common in equal shares. The property passes subject to recorded liens and similar limitations, including those recorded no later than 120 days after the required affidavit is recorded. It also passes without covenant or warranty of title, which means the deed makes no promise about the title's condition.

Simplified procedures. California has four, each for a different situation, in the Judicial Council's terms:

• Affidavit for collection or transfer of personal property. Covers personal property only, not the house.
• Petition to determine succession to the decedent's primary residence. Under Probate Code section 13151, a successor may file it once 40 days have passed since the death, if the home's gross value is within the limit.
• Affidavit for real property of small value. Under Probate Code section 13200, it can be filed no sooner than six months after the death. A probate referee's inventory and appraisal is attached.
• Spousal or domestic partner property petition. Used for property passing to a surviving spouse or domestic partner.

Real property and personal property have separate limits. The California Courts' page on simple transfer processes publishes the current amounts. That page says they are updated every 3 years, most recently on April 1, 2022 and April 1, 2025, with the next update on April 1, 2028.

Step 2 — Open or Confirm the Estate's Legal Authority to Sell

This is the step that produces the paper a title company will ask for, so it often feels like the moment the sale becomes real.

In probate. The executor, or a person seeking appointment as administrator, petitions the Superior Court in the proper county. The California Courts' guide to property after someone dies explains that the person named in the will is often appointed. If there is no will, the guide gives an order of priority that begins with a surviving spouse or domestic partner, then a child, and continues from there. The court's letters are the document a title company and a buyer rely on.

The court may also grant authority under the Independent Administration of Estates Act, which lets a personal representative act with less court supervision. Under Probate Code section 10500, a personal representative granted that authority may generally administer the estate without court supervision, subject to the Act's limitations and conditions. Probate Code section 10511 gives a personal representative with full authority the power to sell or exchange estate real property. Under Probate Code section 10501, a personal representative with only limited authority must obtain court supervision to sell, exchange or grant an option on real property, or to borrow against it.

Under Probate Code section 10503, the court-confirmation requirements, such as published notice of sale, court approval of agents' and brokers' commissions, sale at not less than 90 percent of appraised value and the court's examination of the sale, do not apply to a sale made with that authority.

A personal representative with full authority uses a notice of proposed action, which tells interested persons about a planned sale, including its price and any commission. The Judicial Council's Notice of Proposed Action form explains that a written objection must be received before the date stated in the notice or before the action is taken, whichever is later. If someone objects, the sale may go forward only under court supervision.

Valuation. Under Probate Code section 8800, the inventory and appraisal is due within four months after letters are first issued, unless the court allows more time. A change in ownership statement certification is filed with it. A probate referee, an appraiser the State Controller's Office appoints, values non-cash assets for that inventory. This valuation is distinct from a market appraisal used to set a sale price.

In a trust. No court filing is needed to begin. Probate Code section 16226 gives a trustee the power to dispose of property at public or private sale, for cash or on credit, within the trust's terms and the trustee's duties.

Step 3 — Understand the Tax Landscape Before You Price or Accept an Offer

Basis is the starting figure for measuring taxable gain when property is sold. Under 26 U.S.C. § 1014(a), the basis of property acquired from a decedent is generally one of the following:

• the fair market value on the date of death
• the value on an alternate valuation date, if one is elected under federal estate tax law
• a special-use value, where that election applies
• the decedent's own basis, to the extent a particular estate-tax exclusion for land under a conservation easement applies

Gain is measured from that basis, not from what the decedent originally paid. This is why a sale near the date-of-death value often shows little gain on paper. Whether a particular sale owes federal or California income tax depends on the facts, including how the property is valued and what it sells for.

Property tax. California generally reassesses real property when ownership changes. For transfers on or after February 16, 2021, Rev. & Tax. Code section 63.2 excludes certain parent-to-child and grandparent-to-grandchild transfers of a principal residence from reassessment, but only when a claim is filed with the assessor. The grandparent-to-grandchild transfer qualifies only if the grandchild's parents who are children of the grandparents have died. The home must become the transferee's principal residence within one year, and the transferee must file for the homeowners' or disabled veterans' exemption within a year. The statute also caps how much value the exclusion protects.

A claim is due within three years after the transfer, or before the property is transferred to a third party, or before an eligible transferee stops living there, whichever is earlier. A claim is also timely if it is filed within six months after the mailing of a supplemental or escape assessment notice. Because a sale to an outside buyer is a transfer to a third party, families planning to sell often look at this point early.

Transfer tax and withholding. Counties, and some cities, charge a documentary transfer tax on recorded conveyances. The county recorder publishes the current rate. Withholding rules may apply at closing when a seller is a nonresident of California or a foreign person.

A CPA, an enrolled agent or a tax attorney reviews income tax, basis and withholding questions. The county assessor's office handles reassessment and exclusion claims. The estate's or the trust's attorney answers questions about authority to sell.

Step 4 — Assess the Property's Condition and Required Disclosures

An inherited house often has a history no one living fully knows: a roof replaced decades ago, a room added without a permit, a repair a parent never mentioned. California sellers generally must disclose known material facts that affect a property's value or desirability, and that duty applies to estates and trusts as well.

The transfer disclosure statement is a separate matter. Civil Code section 1102.2 says the article that requires it does not apply to several kinds of sales, including:

• Court-ordered sales. These include sales ordered by a probate court in the administration of an estate.
• Fiduciary sales. These are sales by a fiduciary in the course of administering a trust, guardianship, conservatorship or decedent's estate. The exemption does not apply if the trustee is a natural person who is a trustee of a revocable trust and is a former owner of the property, or occupied it within the preceding year.
• Sales between co-owners. These are transfers from one co-owner to one or more other co-owners.
• Sales to a spouse or relative. These are sales to a spouse or to a person in the transferor's line of blood relationship.

A natural hazard disclosure statement is a separate document that describes whether the property lies in mapped hazard zones. It is commonly provided in residential sales, but the law that requires it has its own list of exempt sales, which includes sales ordered by a probate court in the administration of an estate and sales by a fiduciary in the course of administering a trust or a decedent's estate, unless the trustee is a natural person who is a trustee of a revocable trust and the seller is a former owner of the property or an occupant in possession of it within the preceding year. A sale outside that law may still be subject to other disclosure requirements.

A house can be sold in its present condition. Whether any repair is required before a particular sale depends on the property, its location and the buyer's lender, and a real estate licensee or the estate's attorney can say what applies. For more on these choices, see the guide to selling a house that needs repairs. A pre-listing inspection is not something this guide treats as required, but it is one way a seller gains documented knowledge of the home's condition. Clearing and valuing the furniture and belongings is a separate kind of work, often done by estate-sale companies.

Step 5 — Choose How to Sell: Listing, For Sale by Owner, or Direct Sale

There are three broad ways to sell, and none of them changes who holds authority or which court steps apply.

Listing with a licensed agent. The home goes on the open market, which reaches the widest pool of buyers. The seller pays a commission. The process usually includes showings, negotiation, a buyer's financing contingency and a standard escrow. The Department of Real Estate's tips on choosing an agent say to verify a license before hiring an agent, and to confirm that a salesperson works for a broker.

For sale by owner. The seller handles the marketing, the negotiation and the paperwork. There is no listing commission, but the seller takes on the work and the responsibility for disclosures.

Direct sale. A buyer makes an offer without the home being listed and takes it in its present condition. A direct offer is often lower than an open-market price, because that buyer carries the cost of repairs, the risk of what turns up and the expense of reselling. In return, the seller does less preparation, has fewer showings and depends less on a buyer qualifying for a loan. The comparison between a cash offer and a listing goes into these tradeoffs in more detail.

Families usually tell which method fits by comparing written offers side by side on estimated net proceeds: the price, less commissions, repairs, carrying costs, loan payoffs and closing costs.

When court confirmation applies. A probate sale made with limited authority, without independent-administration authority, or after an objection to a notice of proposed action goes to a confirmation hearing. The Notice of Proposed Action form explains that at such a hearing, higher bids for the property may be presented and the property sold to the highest bidder. The court sets the hearing. Its rules apply the same way whatever kind of buyer made the first offer. The steps of a probate sale in California are laid out in more depth separately.

Step 6 — Open Escrow, Clear Title, and Close

Escrow is a neutral third party, usually an escrow or title company, that holds the buyer's money and the seller's documents, arranges payoffs and records the deed. For a family coordinating from several cities, escrow is often where the paperwork finally comes together.

Title clearance. The title company issues a preliminary report listing liens, encumbrances and any clouds on title. A mortgage, unpaid property taxes, mechanics' liens or judgment liens are paid off or resolved before or at closing.

Who signs the deed. This depends on the track:

• Probate with court confirmation. Under Probate Code section 10308, a sale of estate real property is generally reported to and confirmed by the court before title passes, except a sale made under the authority Probate Code section 10503 describes. If the personal representative does not file the report and petition within 30 days after the sale, the buyer may file them. The Judicial Council's Report of Sale and Petition for Order Confirming Sale of Real Property asks how the property was exposed to the market. After confirmation, the personal representative signs a personal representative's deed, and the court's order is recorded with it.
• Trust. The successor trustee signs a trustee's deed as trustee, with the trust as grantor.
• Direct transfer. A surviving owner or transfer on death deed beneficiary who already holds title signs as an individual.

Where the money goes. Escrow pays liens and closing costs first. In probate or a trust, the net proceeds go to the estate or trust account, not directly to heirs, until they are distributed under the will, the trust or intestacy law. The Judicial Council's statement of a personal representative's duties says estate money must be kept in an account titled as an estate account.

An existing mortgage. Under 12 U.S.C. § 1701j-3(d), for a loan on residential property with fewer than five dwelling units, a lender may not use a due-on-sale clause because of certain transfers. These include a transfer to a relative resulting from the borrower's death, a transfer on the death of a joint tenant, and a transfer in which the borrower's spouse or children become owners. A sale to an outside buyer is a different event, and the loan is ordinarily paid off from the sale proceeds in escrow.

Typical Timeline and When the Process Gets More Complicated

No one can say in advance how long a particular sale will take, and waiting while the house sits empty is often the hardest part for a family. What can be said is how the tracks generally compare.

Typical timeline by track

• Trust. Often the shortest track. The successor trustee can list the home or accept an offer once their authority under the trust is confirmed, with no court filing needed to begin.
• Probate with full authority. The sale can go forward after the notice of proposed action period passes without an objection. A court hearing is required only if someone objects.
• Probate with limited or no independent authority. Add the time needed to give notice, schedule the confirmation hearing and hold it.

Title or lien problems

Defects or liens found in the preliminary report can extend any track until they are resolved or paid.

Co-owners who disagree

Heirs who own the property as tenants in common and cannot agree on a sale can turn to California's partition statutes, which provide a court process for dividing or selling co-owned property. A contested partition is handled by an attorney who litigates these cases.

Condition and financing

Problems with the property's condition can affect a buyer's lender, and a loan contingency adds its own wait.

Taxes and carrying costs

Unresolved income tax or estate tax questions can delay distribution of the proceeds. Throughout the sale, property taxes, insurance, utilities and any mortgage payments keep accruing, and all of them reduce net proceeds. In San Diego and other counties, the local practice notes for inherited property in San Diego County add county detail.