Inherited an Apartment Building in LA: Trust vs. Probate

How an inherited Los Angeles apartment building gets sold through a trust or probate, the taxes to ask about early, and how to prepare for market.

The First Question: How Was Title Held?

When a parent or relative leaves an apartment building, the path to a sale depends on how they held title. Two routes cover most situations:

In a living trust: The successor trustee takes over and can usually sell without going to court
In their own name: The building generally goes through probate, where a court-appointed personal representative handles the sale

The estate's attorney will confirm which applies. This article explains what each route looks like for an apartment building, and what families can do early to keep the sale on track.

If the Building Is in a Trust

A trustee manages the property for the beneficiaries and must act prudently and impartially among them. In practice that means the decision to sell or hold, the choice of price, and the choice among offers should all be documented.

Most living trust sales do not require court confirmation
The trust document controls. If it directs the trustee to keep or sell the property, that matters
Beneficiaries should be kept informed before the property is listed and as offers arrive

For a detailed discussion, see selling income property from a trust.

If the Building Is in Probate

How a probate sale works depends on the authority the court gave the personal representative.

Full Independent Authority

With full authority under the Independent Administration of Estates Act, the representative can sell without a court hearing after giving heirs a Notice of Proposed Action. The notice period is at least 15 days. If someone objects in writing, the sale goes to the court for confirmation.

Court Confirmation

With limited authority, or after an objection, the court must confirm the sale:

The accepted price must be at least 90% of an appraisal dated within one year before the hearing
At the hearing, other buyers can overbid in open court
The first overbid must be at least the accepted price plus 10% of its first $10,000 and 5% of the rest. On a $1,000,000 offer, that is $1,050,500

Buyers who understand this process still make strong offers, but the timeline is longer and depends on the court's calendar. See court confirmation of real estate sales for the full sequence.

Taxes Heirs Should Ask About Early

Step-up in basis: Inherited property generally takes a tax basis equal to its value at the date of death, which can sharply reduce capital gains on a sale. See step-up in basis
Property tax reassessment: Under Proposition 19, an inherited rental building is reassessed to market value. The parent-child exclusion now covers only a family home the child moves into, or a family farm. See Prop 13 and Prop 19
Measure ULA: In the City of Los Angeles, sales above $5.4 million (the threshold adjusts each July 1) carry an additional transfer tax, and a sale is not exempt because the seller is a trust or an estate. See current ULA thresholds

These three items often decide whether a family sells or keeps the building, so raise them with the estate's CPA before choosing.

Four Steps Before the Building Goes to Market

1. Establish a Clear Valuation

A written valuation gives the trustee or representative something to share with beneficiaries and, where needed, the court. For an apartment building it should address rent-regulation status, current rents against market, deferred maintenance, and the likely buyer pool for that submarket.

2. Find Physical and Legal Issues Early

Identify code violations and open permits
Address obvious health and safety issues
Gather leases, security deposit records and rent history

Existing tenancies and rent stabilization obligations continue through the sale, so buyers will ask for these records. Having them ready prevents surprises in escrow.

3. Choose a Marketing Plan You Can Document

The plan should show that the property was properly exposed to the market, record how offers were received and compared, and let the fiduciary explain the decision later if a beneficiary questions it.

4. Keep Beneficiaries Informed

Regular updates on pricing, buyer feedback and the reasons one offer is stronger than another reduce tension among heirs.

When Heirs Disagree

If the building passes to several heirs as co-owners and they cannot agree, the usual options are a buyout, an agreed sale, or as a last resort a partition action. Since 2023, co-owners who do not want to sell have a court-supervised right to buy out the one who does. See resolving co-owner disputes and partition actions.

Working With a Multifamily Specialist

A broker who focuses on Los Angeles apartment buildings and understands trust and probate procedure can help turn legal requirements into a practical sale plan. Learn more about my fiduciary real estate services for trust attorneys, estate planners and fiduciaries, or contact me to discuss your situation confidentially.

Quick FAQs

Q: Do trust and probate sales sell for less?
A: Not necessarily. With proper preparation and marketing they can achieve full market value. The key is managing timelines and disclosures correctly.

Q: Should we fix up the building before selling?
A: It depends on the scope and budget. Sometimes modest cleanup is enough. In other cases, selling as-is with appropriate pricing is more efficient.

Q: Do we need court approval to sell?
A: Usually not for a living trust. In probate it depends on the representative's authority and on whether anyone objects.

Sources

This article is general information, not legal or tax advice. Statutes and figures were checked against the sources above on November 5, 2026 and can change. Consult the estate's attorney and CPA about your situation.

Written by

Jason Matatiaho

Los Angeles Multifamily Specialist

Contact Jason

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