Disputes among co-owners of real property can sometimes be difficult and costly to resolve. They may arise from differences about the use of the property, or simply that one owner wants to liquidate his or her interest. Sometimes the dispute can be resolved through negotiation or mediation. If those options fail, then the only recourse will be the filing of a partition action.
I won’t delve into partition actions too much, as I have covered this topic before. Partition actions are governed by a very detailed statutory scheme that is found in Code of Civil Procedure 872.110. The statutes require the court to appoint one ore more referees. The partition referee will be in charge of a number of tasks, which will vary according to the nature of the partition, and will be given broad authority to deal with the property in order to effectively divide the interests accordingly among the owners.
I will discuss being a referee in partition actions where a court has ordered the sale of the real property at issue. If there is a private sale the referee can use a real estate broker and do all other acts that are necessary to complete the sale and then distribute the net proceeds to the owners. In this scenario, the referee’s main focus is to get the highest and best price for the sale of the real property. The referee is a judicial officer whose job is to be fair, diligent, and essentially act as an auctioneer in the process of selling the real estate. All of the referee’s powers will be exercised under the supervision of the court and with full opportunity for the owners to be heard during the process. The referee acts as an advisor to the court and sells the property on behalf of the owners in a private or public sale.
Who can be a referee? The Code does not require any particular qualifications for a partition referee. Lawyers, accountants, real estate appraisers, brokers, or developers may all be suitable. In my experience as a real estate attorney, real estate broker, and owner of an escrow company, my qualifications are uniquely suited to understand the nuances of the partition and referee processes inside and out. I have thoroughly enjoyed my experiences as a court appointed referee, as well as pursuing partition actions on behalf of my clients.
What are the general powers of a referee? The referee may enter into contracts for services, but will not be personally liable under such contracts, nor for expenses incurred, except as such liability if expressly assumed by the referee in writing. With the approval of the court the referee may employ an attorney in rare cases.
The referee must submit a report of sale to the court for confirmation, including a description of the property sold to each purchaser, the name of the purchaser, the sale price, the terms and conditions of sale and any security, any amounts payable to lien holders, a statement as to contractual or other arrangements or conditions as to agent’s commissions, and the material facts relevant to the sale and the confirmation proceeding.
In order to make effective use of a referee’s services in a partition action, the parties need to identify all of the matters to be disposed of and the skills that will be required of the referee. The parties also have to decide what the extent of the referee’s authority should be with respect to the issues other than sale and division of the property. There are opportunities for creativity on the part of the parties and their counsel in working with a court appointed referee. By working together in a cooperative fashion, the parties can take advantage of the expertise of individuals with various backgrounds to address whatever the situation may require. Since the partition itself requires the use of a referee it makes sense to give him or her all of the powers that are necessary in order to resolve any related disputes. Doing so will save time and expenses for the parties and avoid unnecessary litigation before the court.
If you need legal assistance with a partition action or a court appointed referee, please contact our law firm.