Receivers & Referees in Partition of Real Estate Owned by Tenants in Common and Joint Tenants
When in a dispute with a co-owner of a piece of real estate, each co-owner has an absolute right to file an action to partition the property. We have posted a free form complaint to file in a partition action.
Using this form may help lower the costs associated with a partition action. As an aside, costs of a partition action may be subject to offsets arising from one co-owner’s undertaking of certain expenses. Costs recoverable potentially include attorney’s fees. However, when using this form, it is always prudent to consult with an experienced real estate attorney to ensure compliance with applicable laws.
Further, there is a requirement to promptly file a lis pendens (or notice of pendency of action). Among other potential issues, if improperly filed, the lis pendens may be subject to expungement. To ensure you have properly filed the lis pendens, consult this free checklist.
The court must then decide whether a partition action should proceed in-kind or by sale. There are three tricks to use to help win a partition action, as well.
Given all of the issues arising in a partition action, it is prudent for a co-owner to do all that she can to protect the property while the partition is pending or after the judgment ordering a partition is entered. The question becomes: what is the best way to protect my property?
In short, the most efficient way to protect a piece of property subject to partition is to have a referee appointed under Code of Civil Procedure section 873.010(a) providing that: “The court shall appoint a referee to divide or sell the property as ordered by the court.”
Alternatively, a receiver can be appointed, with Section 564(b)(9) of the California Code of Civil Procedure noting that a receiver may be appointed: “In all … cases where necessary to preserve the property or rights of any party.” A partition action is one of these actions where a receiver may be deemed “necessary to preserve the property.”
When is a Receiver or Referee Appointed to Partition of Real Estate?
Section 564(a) of the Code of Civil Procedure notes that a court may appoint a receiver during the pendency of the proceeding in which a receiver is required. California cases affirm the court’s ability to appoint a receiver during the pending litigation. See Chalta v. Biller (1931) 212 Cal. 745, 747. “The following applicable rules of law on the merits of the case are settled: A superior court has jurisdiction to appoint a receiver as an ancillary remedy in an action for partition of real property between tenants in common.” Lent v. H.C. Morris Co. (1938) 25 Cal.App.2d 305, 307. “The superior court has jurisdiction to appoint a receiver as an ancillary remedy in an action for partition of real property among tenants in common and should do so when the circumstances require it.” Blodgett v. Haddock (1949) 95 Cal.App.2d 17, 18. Generally, the court is required to appoint a referee to market and sell the property. Code Civ. Proc. § 873.010(a).
Referees & Receivers – What Do They Do?
Generally, a receiver or referee is a neutral third party who is appointed to preserve a piece of property and any person’s rights in the property pending a judgment in the outstanding litigation. See Cal. Rules of Court Rule 3.1179; Code Civ. Proc. § 564. Indeed, a partition referee is prohibited from having a relationship with the the judge or the court. Code Civ. Proc. § 873.050.
A receiver is an officer or representative of the court, appointed to take the charge and management of property which is the subject of litigation before it, for the purpose of its preservation and ultimate disposition according to the final judgment therein.” Kreling v. Kreling (1897) 118 Cal. 421, 422.
This makes clear that a receiver or referee is not an agent of either of the parties of the subject litigation, but acts as a fiduciary with the duty to protect the interests of both parties to the litigation if appointed during the proceeding. See Cal. Rules of Court Rule 3.1179; Shannon v. Sup. Ct. (1990) 217 Cal.App.3d 986, 992-93; Security Pacific Nat’l Bank v. Geernaert (1988) 199 Cal.App.3d 1425, 1431-32; Maggiora v. Palo Alto Inn, Inc. (1967) 249 Cal.App.2d 706, 712. Given that the receiver is appointed to uphold its fiduciary duty to protect the interests of the co-owners of the subject property, it necessarily follows that a receiver has a duty to act as a prudent owner would with respect to her own property. See Vitug v. Griffin (1989) 214 Cal.App.3d 488, 496.
The partition laws even provide that: “The referee may perform any acts necessary to exercise the authority conferred by this title or by order of the court.” Code Civ. Proc. § 873.060. Many times, a partition referee may be given authority to change the locks if a co-tenant or occupant is uncooperative, make repairs, or hire professionals to maintain the property.
Appointing a Referee to Carry Out Partition In Kind
If, pursuant to an interlocutory judgment, a court orders a partition to ensue “in-kind” (i.e., physical division of the property rather than a sale of the property and split of the proceeds from sale), a referee may be appointed to divide the property according to the court’s instruction. Code Civ. Proc. § 873.210. Subject to court approval, the referee is entitled to engage attorneys, brokers, and other agents to carry out the referee’s duties. Code Civ. Proc. § 873.110 et seq.
Appointing a Referee to Carry Out Partition by Sale
If a court orders a property partitioned by sale (i.e. sell the property and proceeds of sale are split between co-owners subject to partition action), a court may appoint a referee to carry out the sale pursuant to Code Civ. Proc. § 873.510. The court often refers to the referee to determine whether to sell the property by public auction or by private sale. Code Civ. Proc. § 873.610.
In order to follow through with the sale of the property subject to partition by sale, the referee must provide a report of the sale to the court including items required pursuant to Code Civ. Proc. § 873.710. Only upon court approval will the sale by a referee be deemed as final; a motion to confirm or set aside the sale may be made by the purchaser, a party to the partition, or the referee herself. Code Civ. Proc. § 873.720.
How Does a Partition Referee Get Paid?
Typically, referees are paid on an hourly basis. This will be paid by the parties to the parition action should the partition proceed as an “in-kind” division of the property.
If the partition is orderd by sale, the costs of sale including the referee’s fees will be paid out of the proceeds of the sale. Code Civ. Proc. § 873.820.
Contact an Experienced Real Estate Partition Attorney in Los Angeles, Orange County, San Diego, Riverside, Palm Springs, San Bernardino, & Silicon Valley Today
Given the complexities associated with filing a partition action generally, and the complexities of getting a receiver appointed to protect your interest in a given piece of property, it would serve a potential litigant well to contact an experience real estate attorney to discuss the particulars of their case.