Real estate contracts are an expansive field of both law and life. Sales, leases, options, and certainly wills can all fall under this broad category. Normally, once a contract is signed, parties can go to court to enforce them by filing a lawsuit. But if one of the parties has passed away, the transaction becomes more complicated.
Thankfully, the California legislature created Probate Code section 850 to remedy some of the problems inherent to these situations. No longer do separate lawsuits need to be filed. Instead, interested parties can file a special petition to get the probate court to enforce a contract concerning the subject property. For instance, a son could petition to enforce a contract with his decedent’s mother where she had promised to transfer him the house upon death.
That said, the law surrounding these petitions is still dense and unwieldy for inexperienced litigants. As such, securing the right attorney in these situations can make all the difference. At the Underwood Law Firm, our attorneys are well-versed in these matters and are ready to assist. Potential litigants should not hesitate to contact our office so that we can begin making your goals a reality.
What types of real estate contracts can be enforced in Probate Court?
Probate Code section 850 is the primary enforcement mechanism for real estate contracts while the parties are in probate court. It actually operates as an alternative to filing a lawsuit, as the provision was designed for pursuing “claims, causes of action, or matters that are normally raised in civil actions.” (Estate of Myers (2006) 139 Cal.App.4th 434, 440.)
Its action is actually quite straightforward. Under the statute, an “interested” person may file a petition that requests the court to make an order. (Prob. Code § 850 (a).) An “interested” person is “[a]n heir, devisee, child, spouse, creditor, beneficiary, and any other person having a property right in or claim against a trust estate or the estate of a decedent which may be affected by the proceeding.” (Prob. Code § 48 (emphasis added).)
But just because someone is an interested party does not mean they can, for instance, ask the court for 100% ownership of the subject property. Instead, there are generally two main situations in which this statute is invoked.
In the first instance, the decedent (the person who died) must have become bound to a written contract while they were alive to convey or transfer property. But, before the actual transfer took place, they died. (Prob. Code § 850 (a)(2)(A).) In the second, the decedent, while living, entered a written contract to convey or transfer property upon their death. (Id. (a)(2)(B).)
Both instances demonstrate the key elements of this statute. (1) There needs to have been a contract the decedent entered, (2) the contract needed to be in writing, and (3) the contract was capable of being specifically enforced.
When is a contract able to be specifically enforced?
A key aspect of Probate Code section 850 is that it does not create some new standard or method of enforcing a contract. Instead, a party bringing a petition under this statute must still demonstrate that the contract is capable of being “specifically enforced.” (Id.) Specific enforcement is a type of equitable legal remedy with a mountain of case law behind it. In essence, it is essentially a request that a party can make to enforce a contract instead of claiming damages for its breach.
As such, a litigant will need to show: “(1) the contract’s terms are sufficiently definite; (2) consideration is adequate; (3) there is a substantial similarity of the requested performance to the contractual terms; (4) there is a mutuality of remedies; and (5) plaintiff’s legal remedy is inadequate.” (Blackburn v. Charnley (2004) 117 Cal.App.4th 758, 766.)
The most troublesome of these elements is the first. This is because any court must refuse to enforce a contract whose terms are not sufficiently certain. (Store Properties v. Neal (1945) 72 Cal.App.2d 112, 116.)
For example, suppose Jack signs a contract with his co-owner to transfer his interest in a property to one of his children when he dies, but he fails to specify which child will receive the interest. It is unlikely that the court will enforce this contract because there was no meeting of the minds; it’s “too loose and inexact.” (Id.)
What is the procedure for filing a probate petition?
If the contract at issue is indeed capable of being specifically enforced, however, then a party bringing a petition under section 850 has to follow strict statutory guidelines.
First, at least 30 days before the petition hearing, the petitioner (the person trying to enforce the contract) has to serve notice of the petition on all personal representatives, conservators, guardians, trustees, and each other person claiming an interest in the property. (Prob. Code § 851.) Service of process is crucially important, whether one is in probate court or not. Failure to adhere to the applicable rules can get this petition, or an entire lawsuit, dismissed.
Second, any of those parties served with the petition can file a response, where they may controvert the allegations of the petition or request a continuance so they can conduct discovery. (Prob. Code § 852.) Finally, the parties then proceed to the hearing. If the court is satisfied that a conveyance or transfer order should be made, then it will direct the executor of the estate to make the transfer or grant whatever relief is appropriate. (Prob. Code § 856.)
How the Attorneys at the Underwood Law Firm Can Help
Real property contracts are complicated enough on their own. To be effective, they often have to go through many rewrites and overviews by skilled attorneys to be sure that they are actually effective and binding. Adding the element of probate makes things even more difficult, as emotions run high and tempers can flare between family members. For potential litigants, this specter can be quite the barrier to entry to asserting their rights.
As each case is unique, potential probate petitioners would be well-served to seek experienced counsel familiar with the intricacies of both contract and probate law, especially as they relate to real estate transactions. At the Underwood Law Firm, our knowledgeable attorneys are here to help. If you are attempting to disclaim an interest, wondering whether you have already accepted one, or if you just have questions, please do not hesitate to contact our office.
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