Selling a Montebello Unit in Probate

When does a Texas court have to approve the sale of a home at Montebello?

When the estate is in a dependent administration. Section 356.001 of the Texas Estates Code provides that, except as provided by that chapter, estate property may not be sold without a court order authorizing the sale. Subject to the chapter's own special provisions, the same section lets the court order estate property sold for cash or on credit, at public auction or privately, as the court considers most advantageous to the estate.

Section 356.002 covers a sale the will already authorizes, subject to that section's own Subsection (b). Where a will authorizes the executor to sell the testator's property, the executor may sell it at public auction or privately as the executor considers to be in the best interest of the estate, and for cash or on credit terms the executor determines, without a court order.

How an estate ends up on the court's route is set earlier than the listing. Section 401.001 of the Texas Estates Code lets any person capable of making a will provide that no independent administration of the estate may be allowed, and in that case the estate, if administered, is administered and settled under the direction of the probate court as other estates are required to be settled. Section 401.002 runs the other way: except as provided by Section 401.001(b), where a will names an executor without providing for independent administration, all of the distributees may agree on the advisability of an independent administration and collectively designate the executor named in the will to serve as independent executor.

Section 402.052 of the Texas Estates Code is the contrast that explains why two Texas estate sales on one street can run months apart. Unless limited by the terms of a will, an independent executor and an independent administrator have the same power of sale for the same purposes as a personal representative has in a supervised administration, but without the requirement of court approval, and the procedural requirements applicable to a supervised administration do not apply.

What goes into the application, and who is told about it?

The application starts the court's sequence, and Section 356.251 of the Texas Estates Code sets the grounds for making one. An application may be made where the sale appears necessary or advisable to pay expenses of administration, the decedent's funeral expenses, expenses of the decedent's last illness, allowances and claims against the estate, or to dispose of an interest in estate real property where selling the interest is considered in the estate's best interest.

Section 356.252 sets the contents. The application must be in writing, must describe the real estate, or the interest in or part of the real estate, sought to be sold, and must be accompanied by an exhibit, verified by an affidavit showing the estate's condition fully and in detail, the charges and claims that have been approved or established by suit or that have been rejected and may yet be established, the amount of each of those claims, the estate property remaining on hand that is liable for their payment, and any other facts showing the necessity for or advisability of the sale.

Notice follows the filing. Under Section 356.253, on the filing of an application and exhibit the clerk shall issue a citation to all persons interested in the estate. The citation describes the real estate or the interest in or part of the real estate sought to be sold, informs the interested persons of the right under Section 356.254 to file an opposition to the sale during the period prescribed by the court in the citation, and is served by posting.

Section 356.254 gives an interested person two filings during that period: a written opposition to the sale, or an application for the sale of other estate property. Section 356.255 ties the hearing to that window. The court shall hold a hearing on the application if an opposition is filed during the period prescribed in the citation. A hearing is not required under that section where no opposition is filed during the period, and the court may determine that a hearing on the application is necessary even then.

What must the order of sale actually say?

Section 356.256 of the Texas Estates Code requires an order for the sale of real estate to specify seven things: the property to be sold, including a description that identifies that property; whether the property is to be sold at public auction or private sale and, if at public auction, the time and place of the sale; the necessity or advisability of, and the purpose of, the sale; except in a case in which a personal representative was not required to give a general bond, the court's finding after examining the general bond that the bond is sufficient as required by law or that it is insufficient; where the finding is insufficiency, the amount of the necessary or increased bond; that the sale is to be made and the report returned in accordance with law; and the terms of the sale.

The same section gives the court its two outcomes. The court shall order the sale of the estate property described in the application where it is satisfied that the sale is necessary or advisable. Otherwise the court may deny the application and, if it considers it best, may order the sale of other estate property the sale of which would be more advantageous to the estate. Section 356.257 adds that estate real property selected to be sold for the payment of expenses or claims must be that property the sale of which the court considers most advantageous to the estate.

What the order permits, the method sections then govern. Under Section 356.401 a public sale of estate real estate is made at public auction, on a notice that includes a reference to the order of sale, the time, place and required terms of sale, and a brief description of the real estate. Under Section 356.451 the personal representative may enter into a contract for the private sale of estate real estate made in the manner the court directs in the order of sale, and unless the court directs otherwise, additional advertising, notice, or citation concerning the sale is not required. Where any part of the price is on credit, Section 356.302 provides that the cash payment may not be less than one-fifth of the purchase price.

What happens once the home is under contract?

The contract goes back to the court. Section 356.551 of the Texas Estates Code requires a successful bid or contract for the sale of estate real property to be reported to the court ordering the sale not later than the 30th day after the date the bid is made or the property is placed under contract. The report must be sworn to, in writing, filed with the clerk, and noted on the probate docket.

The section also fixes what the report contains: the date of the order of sale, a description of the property being sold, the time and place of the auction or the date the property is placed under contract, the purchaser's name, the amount of the successful bid or the purchase price for each parcel of property or interest in property auctioned or placed under contract, the terms of the sale, whether the proposed sale was made at public auction or by contract, and whether the purchaser is ready to comply with the order of sale.

Then the calendar imposes a wait. Under Section 356.552, after the expiration of five days from the date a report is filed under Section 356.551, the court shall inquire into the manner in which the auction or contract described in the report was made, hear evidence in support of or against the report, and determine the sufficiency or insufficiency of the personal representative's general bond, if any has been required and given.

The bond test sits between the report and the approval. Section 356.554 provides that where the representative is required by the title to give a general bond, the court shall determine before approving any sale of real estate whether the bond is sufficient to protect the estate after the sale proceeds are received, and where the court finds the bond insufficient it may not approve the sale until the bond is increased to the amount required by the court, or an additional bond is given and approved. That increase, or the additional bond, must equal the sum of the amount for which the real estate is sold and any additional amount the court finds necessary and sets for the estate's protection. Where the representative is not required by the title to give a general bond, Section 356.553 lets the court approve the sale in the manner provided by Section 356.556(a) on finding that the sale is satisfactory and made in accordance with law.

What does the court's approval do, and what must the deed say?

Approval authorizes the conveyance. Under Section 356.556(a) of the Texas Estates Code, where the court is satisfied that the proposed sale reported under Section 356.551 is for a fair price, properly made, and in conformity with law, and the court has approved any increased or additional bond it found necessary to protect the estate, the court shall enter an order approving the sale, showing conformity with the chapter, detailing the terms of the sale, and authorizing the personal representative to convey the property on the purchaser's compliance with the terms of the sale.

Section 356.556(b) covers the other finding: where the court is not satisfied on those three tests, it shall enter an order setting aside the bid or contract and ordering a new sale to be made, if necessary. Under Section 356.556(c) the court's action in approving or disapproving a report has the effect of a final judgment, and any person interested in the estate or in the sale is entitled to have the order reviewed as in other final judgments in probate proceedings.

The deed then points back to that order. Section 356.557 requires real estate of an estate that is sold to be conveyed by a proper deed that refers to and identifies the court order approving the sale, and the deed vests in the purchaser all right and title of the estate to, and all interest of the estate in, the property, and is prima facie evidence that the sale has met all applicable requirements of the law. Section 356.558 adds the timing: after the court has approved a sale and the purchaser has complied with the terms of the sale, the personal representative shall promptly execute and deliver to the purchaser a proper deed conveying the property.

What does the condominium add to that calendar?

A second clock, with its own deadline and its own shelf life. Section 82.157 of the Texas Property Code requires an association, not later than the 10th day after the date of receiving a written request by a unit owner, to furnish the selling unit owner or the owner's agent a resale certificate signed and dated by an officer or authorized agent of the association. The section permits a reasonable and necessary fee, not to exceed $375, to furnish that certificate.

The shelf life is where a court sequence and a condominium sale can pull against each other. Under the same section, a unit owner other than a declarant who intends to sell a unit must, before executing a contract or conveying the unit, furnish the purchaser a current copy of the declaration, the bylaws, any association rules and a resale certificate prepared not earlier than three months before the date it is delivered to the purchaser. A dependent administration that runs past that window means the certificate is requested against the court's calendar rather than after it.

What the certificate carries is also what a report to the court can rest on. Section 82.157 requires it to state any right of first refusal or other restraint contained in the declaration that restricts the right to transfer a unit, the amount of the periodic common expense assessment and the unpaid common expenses or special assessments currently due and payable from the selling unit owner, other unpaid fees or amounts payable to the association by the selling owner, and all fees payable to the association or an agent of the association associated with the transfer of ownership, including a description of each fee, to whom the fee is paid, and the amount of the fee. It arrives with the association's current operating budget.

Assessments keep running through all of it. Section 82.112 of the Texas Property Code provides that, after an initial assessment, assessments must be made at least annually and must be based on a budget adopted at least annually, so the monthly figure can change while the court's steps run, and a past due assessment or installment of an assessment may bear interest at a lawful rate established by the association. Section 82.113 provides that an assessment levied by the association against a unit or unit owner is a personal obligation of the unit owner and is secured by a continuing lien on the unit, a lien created by recordation of the declaration, which constitutes record notice and perfection.

The word assessments there takes in regular and special assessments, dues, fees, charges, interest, late fees, fines, collection costs and attorney's fees, all of which are enforceable as assessments unless the declaration provides otherwise, and at any time before a nonjudicial foreclosure sale a unit owner may avoid foreclosure by paying all amounts due the association.

What can this page not tell you?

Which route a particular estate is on lives in the will and in the court's own orders. How long a Harris County probate court takes is a docket question, since the Estates Code sets the steps and two of the waits rather than a schedule. What an association charges for a resale certificate, and what a transfer of ownership will cost, comes from that association in writing, since the public figures are the ceiling of $375 and the ten-day deadline in Section 82.157.

What a declaration says about a right of first refusal is answered by the declaration for the condominium in question, which is one of the items the resale certificate must state. What a court would treat as a fair price is left to the court, since Section 356.556 uses the phrase and sets no measure for it. Every step above is a quoted section rather than advice, so an estate should put the sequence, and its own facts, to its own lawyer.