Sell Inherited Property in California

Probate Sales: Court Supervision, IAEA Authority, and What Each Requires

For an executor or administrator, the first practical fact is that nothing can be signed until the court has issued letters, the document confirming the appointment. Probate Code section 8400 says a person has no power to administer the estate until appointed, and that the appointment becomes effective when letters are issued, whether or not the person is named executor in the will; a named executor may, before then, pay funeral expenses and take necessary measures to maintain and preserve the estate.

Early in the case the personal representative prepares an Inventory and Appraisal, the document listing the estate's assets and their values. The California Courts' overview of formal probate says the personal representative usually contacts a probate referee, an appraiser appointed to value non-cash assets such as a house. The same page says the personal representative must give formal notice to creditors and pay the estate's debts if there is money to do so, before distribution.

Whether the sale needs a court's confirmation depends on the authority the court granted under the Independent Administration of Estates Act and on whether anyone objects to a notice of proposed action. Probate Code section 10308 says that, except as provided in Probate Code section 10503, all sales of estate real property must be reported to and confirmed by the court before title passes; if the personal representative does not file the report and petition within 30 days after the sale, the buyer may file them. Under Probate Code section 10511, a personal representative with full authority has the power to sell estate real property. 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.

The Judicial Council's DE-165 Notice of Proposed Action form says limited authority carries no power to sell real property without court supervision, and that if someone objects, the personal representative may take the action only under court supervision. A deeper look at selling during probate in California follows these steps one by one. None of them change with the buyer: the estate's authority, the court's steps and the law's duties are the same for a cash buyer as for any other.

Trust Sales: What a Successor Trustee Can and Cannot Do

A house titled in a revocable living trust does not go through probate. When the person who created the trust dies, the successor trustee named in the trust instrument takes over managing the property, and the authority to sell comes from that instrument rather than from a court order. Probate Code section 16226 gives a trustee the power to acquire or dispose of property, for cash or on credit, at public or private sale, or by exchange, and the trust's own terms can shape or limit how that power is used.

A successor trustee is not an executor. The trustee holds trust property and acts as a fiduciary for the trust's beneficiaries, meaning the trustee must put their interests ahead of the trustee's own. In practice that means following the trust's terms, giving beneficiaries the notices the law requires, and accounting for what the sale brought in and where it went. A title company handling a trust sale typically asks to see proof that the person signing is the current trustee with power to sell, and the trust's attorney is the usual person to confirm that authority.

For a successor trustee who is also a grieving son or daughter, this can feel like doing two jobs at once: settling a parent's house and answering to brothers and sisters as a fiduciary. When beneficiaries dispute a sale or question the trustee's conduct, that is a contested matter for a trust litigation attorney.

Simplified Procedures: When Probate May Not Be Required

The California Courts page on checking for a simple transfer process says that, depending on how property is owned and its type and amount, a simpler court process may be available, and that the value limits are updated every three years. The Judicial Council's terms for these procedures are:

• The affidavit for collection or transfer of personal property. This covers personal property, not a house.
• The petition to determine succession to the decedent's primary residence. Under Probate Code section 13151, a successor may file it in superior court once 40 days have passed since the death, if the home was the decedent's primary residence in California and its gross value does not exceed the limit, which that section states as $750,000, as adjusted periodically.
• The affidavit for real property of small value. Under Probate Code section 13200, it may be filed no sooner than six months after the death, with an inventory and appraisal by a probate referee attached.
• The spousal or domestic partner property petition. This is for property passing to a surviving spouse or domestic partner.

The California Courts' maximum property values for summary succession cases list, for a death on or after April 1, 2025, a $69,625 limit for the real property procedure and a $208,850 limit for the personal property procedure, and say a 2025 law raised the limit to $750,000 for the person's main home in California; earlier dates of death use other figures.

A transfer on death deed works differently. Under Probate Code section 5652, it passes the owner's interest to the beneficiary, and several beneficiaries take as tenants in common in equal shares, subject to recorded liens and leases, and without a warranty of title. Which path applies depends on how title was held, the estate's value, the date of death and the heir's relationship to the decedent.

Step-Up in Basis and Capital Gains: What Heirs Need to Know

The tax question most families ask first is whether a sale means a large capital gains bill. The answer starts with basis, the figure a gain is measured from. Under 26 U.S.C. § 1014(a), the basis of property acquired from a decedent is generally its fair market value at the date of death, or one of the alternatives that section gives: the value at an alternate valuation date the estate elects, a special-use value under another election, or, to the extent a particular exclusion applies, the decedent's own basis.

In plain words, the starting point is usually what the house was worth when the owner died, not what the owner paid decades ago. That is why this is called a stepped-up basis. The IRS answer on whether money from selling inherited property is taxable says that selling for more than your basis produces a taxable gain, and that the estate's executor is the person to contact about the date-of-death value. A sale close to that value may produce little or no gain; a sale for more is measured from the stepped-up basis. The IRS page also notes that, in certain circumstances, basis must be consistent with the value finally determined for federal estate tax purposes.

The IRS and the California Franchise Tax Board publish guidance on reporting a sale. A CPA, an enrolled agent or a tax attorney reviews the income-tax and basis question for a particular estate or heir.

Property Tax Reassessment and Proposition 19

When California real property changes ownership, it is generally reassessed to current market value for property tax purposes. For a transfer on or after February 16, 2021, the parent-child and grandparent-grandchild exclusion is Rev. & Tax. Code section 63.2. A grandchild qualifies only if all of the grandchild's parents who are children of the grandparents, other than stepparents, have died as of the transfer.

For a family home, the conditions are specific. The house must have been the parent's principal residence and must become the child's principal residence within one year of the transfer, and the child must file for the homeowners' or disabled veterans' exemption within a year of the transfer. The exclusion also has a value limit measured against the home's existing taxable value; the State Board of Equalization and the county assessor's office publish the current figure.

The exclusion is not automatic. A claim must be filed with the county assessor within three years after the transfer, or before the property is transferred to a third party, or before an eligible transferee stops occupying it, whichever is earlier; a claim filed within six months after a notice of supplemental or escape assessment counts as timely. If the property has not been transferred to a third party, a later claim can still be considered, but an exclusion granted on it applies only going forward from the lien date of the year it is filed.

Because the exclusion depends on an heir living in the home, a house that is sold rather than used as the heir's principal residence generally does not keep it. The assessor's office in the county where the property sits handles reassessment questions and exclusion claims.

Your Sale Options: Listing, Owner Sale, and Direct Sale — and How to Compare Them

Once authority is in place, there are three broad ways to sell, and each trades something.

A listing with a licensed real estate agent puts the house on the open market, where competing buyers can set the price. It usually means preparing the house, showings, a buyer who may depend on a loan, and a commission. The California Department of Real Estate's tips on choosing an agent say to verify an agent's license before hiring and, if the agent is a salesperson, to make sure the agent works for a broker.

A sale by the owner without an agent avoids a listing commission, but the seller, personal representative or trustee takes on pricing, marketing, paperwork and negotiation, often from a distance.

A direct sale to a buyer who pays cash and takes the house as it is lets a family sell in its present condition. That buyer is taking on the repairs, the risk and the cost of reselling, so a direct offer is often lower than what the house might bring on the open market. In return, the seller usually does less preparation, has fewer showings and depends less on a buyer's financing. Readers weighing that choice can get an offer on an inherited property from Silver Lining Inherited Property for a direct as-is sale, and asking carries no obligation to sell. The tradeoffs are compared side by side in a cash offer versus a listing, and a house in rough shape raises its own questions about selling a house that needs repairs.

Comparing written offers and estimated net proceeds is how a family tells which way fits: the price less commissions, repairs, carrying costs, loan payoffs and closing costs.

Disclosure duties do not depend on which way the house is sold. Under Civ. Code section 1102.2, the disclosure article that section belongs to does not apply to certain sales, including sales under court order such as sales ordered by a probate court, and sales by a fiduciary in administering a trust or a decedent's estate. That fiduciary exemption does not apply if the trustee is a natural person trustee of a revocable trust who is a former owner of the property or occupied it within the preceding year. The estate's attorney or a licensed real estate agent can identify which disclosures apply to a particular sale. Whoever buys, the estate's authority, the court's steps and the law's duties stay the same.

Co-Ownership: When Multiple Heirs Inherit the Same Property

A house left to two or more people belongs to all of them together. Each heir or beneficiary holds an undivided fractional share of the whole property, not a separate room or corner of it. That makes them co-owners, and a sale of the whole needs every co-owner's signature or a court's order. Under Probate Code section 5652, for example, several beneficiaries of a transfer on death deed take as tenants in common in equal shares.

Families in this position usually come to one of three outcomes. All the co-owners agree to sell, which means agreeing on price, terms and how proceeds are divided. One co-owner buys out the others. Or, if they cannot agree, a co-owner may ask a California superior court for partition. Under California's partition statutes, the court can divide the property or order it sold and the proceeds divided, and California has specific rules for partition of some inherited property held by family members. A contested partition case is handled by an attorney who litigates trust and probate cases.

Out-of-state heirs add another layer: where an heir lives or other property sits in another state, that state's law may apply. For families coordinating across counties, a local example is selling inherited property in San Diego County.

Due-on-Sale, Existing Loans, and the Garn–St Germain Act

A mortgage does not disappear when its borrower dies, and many families worry the lender will demand the full balance at once. Most mortgages contain a due-on-sale clause, a provision letting the lender declare the whole loan due if the property is transferred without its consent. 12 U.S.C. § 1701j-3(d) limits that clause for a loan secured by residential real property with fewer than five dwelling units, including a unit in a cooperative housing corporation or a residential manufactured home.

For those loans, the statute says a lender may not exercise a due-on-sale clause on transfers including a transfer by devise, descent or operation of law on the death of a joint tenant; a transfer to a relative resulting from the borrower's death; and a transfer in which the borrower's spouse or children become an owner of the property. The statute lists other protected transfers as well. Elsewhere, it encourages lenders to permit an assumption of a loan.

An heir who inherits and lives in the house may be able to keep making payments or assume the loan, but the loan's terms and the lender's requirements govern, and the loan servicer is the office that answers that question. When the estate, the trust or the heirs sell, the existing loan is typically paid off from the sale proceeds at closing, and that payoff is one of the deductions in any estimate of net proceeds.