What is the IAEA?
The Independent Administration of Estates Act (IAEA), enacted in 1987, has changed and streamlined the way in which probate sales may proceed. Any personal representative (unless otherwise prohibited in the will) may apply for court granted authority to sell the estate without the usual court supervision. Note that interested parties may legally object to this petition for granted authority. If the court awards authority through Letters of Testamentary, several steps to the probate process change and the court relinquishes supervision of the property sale and other actions regarding the estate.
Under the typical probate sale process, the property in question will be court-appraised. Potential-buyers then make an offer within 90% of the home’s appraisal-value. At this point the personal representative’s acceptance of an offer is "subject to court confirmation," but the buyer must make a down payment deposit of 10% by the time the court confirmation hearing begins (usually a cashier’s check is required). The court hearing typically occurs 30-60 days after a request is filed. A Notice of Confirmation of Sale will be released providing information to potential over-bidders, who may then bid on the property during the court confirmation hearing. The lowest starting bid must be equal to the conditionally accepted offer plus roughly 5%, and all overbids must be unconditional and accompanied by a 10% deposit (usually non-refundable). If the final highest bidder is not the original buyer, then the court will refund the original 10% down payment.
The IAEA makes the probate process much simpler. If limited powers are granted to the personal representative, he or she has the authority to take most actions without court supervision except sell real estate. For example, with limited powers through the IAEA, he or she may make renovations to real property without court supervision. If the personal representative is granted full powers, court approval of the property sale is not required; the process and sale price become much more similar to a conventional sale. Under the IAEA, the Notice of Confirmation of Sale is not made, buyers are not required to make a 10% deposit, and a contract price can be agreed upon without the court’s approval. Unless otherwise requested, the personal representative may bypass the traditional court confirmation hearing and over-bidding process. Interested parties must still be notified of the personal representative’s actions via a Notice of Proposed Action, at which time any interested party may be able to force the sale into a court supervised one. This provision is misunderstood even amongst some real estate professionals. If there is cooperation among all interested parties however, the IAEA’s simplification of this process cuts the timeline to completion significantly.
The information posted above is a general summary of the probate court process. It is not presented as legal advice, nor are its accuracy and completeness guaranteed. Consult your legal advisor for help with your specific probate situation.