While the simple answer is “yes,” the reality of a Realtor serving as a partition referee for a partition action is nuanced and warrants a deeper understanding of the pros and cons of using a Realtor for this function. In turn, this requires an understanding of the responsibilities that partition referees execute. A Realtor, with their expertise in the real estate market, might seem like a suitable candidate for this role, however, there are several factors to consider before proceeding down this path.
What is a partition referee?
Pursuant to Code of Civil Procedure § 873.010(a), the court appoints a referee to market and sell the property. Indeed, a co-owner of a property may propose that the court appoint a realtor as a referee. Code. Civ. Proc. § 873.050. Once appointed, the partition referee replaces the co-owners as the party who would sign the deed selling or dividing the property in a partition by sale or partition in-kind. Code Civ. Proc. § 873.790. However, conducting this task requires skills beyond simply signing the deed that may not match those commonly held by Realtors.
A Realtor may be a perfect fit to sell the property in a cooperative agreement. However, if a referee is necessary, then cooperation is apparently over. Indeed, if the matter is simple and the parties have agreed to sell, a Realtor can indeed be best suited to keep costs low and end the co-ownership. However, this role is probably best described as simply an agreement to sell using a Realtor, not the appointment of a Realtor as a partition referee.
Realtors are Well Suited for the Marketing of the Property
The fundamental task of most partition referees involves marketing a single-family home for sale. This is indeed a Realtor’s scope of expertise, meaning the Realtor is generally well-equipped to handle aspects of the sale such as marketing the property, negotiating with potential buyers, and ensuring the property is sold for a fair market value. While Code of Civil Procedure § 873.680 refers to the traditional marketing of the property on the MLS as a “private sale”, these sales are indeed conducted on the open market to yield fair market value in a partition. A better tactic would be for the co-owner to attempt to select an appropriate Realtor to be used by the professional partition referee.
The perception might be that adding another layer of administration by hiring a referee to hire the realtor adds costs without adding value. However, in most cases, an attorney-referee will indeed prove their value, as explained below.
Realtors May Struggle with Non-Marketing Issues when Acting as Partition Referee
However, as shown by examples of a partition action, partitions are often more complicated than merely facilitating the sale of a property.
Sale Confirmation Motions Favor Attorney-Referees
Most commonly, a partition action also involves obtaining court approval of the sale of the property. This requires some basic understanding of how courts work, and how to draft a motion to confirm a partition sale or stipulation and order approving the sale. Such a court order is generally needed for the title company to allow the referee to sign the deed so that escrow can close. Commonly, because the Realtor lacks the expertise, the attorney for one side (usually the plaintiff) drafts the sale motion or stipulation for an order approving the sale. This means that the referee fee charged by a Realtor acting as referee, which is often a percentage of the sale, does not include this legal work.
Handling Co-Owners in a Contentious Relationship favors Attorney-Referees
Another important role of a partition referee in the sale of a property involves resolving disputes between the co-owners. For example, the co-owner in possession might ask that the offer not be accepted, encouraging the referee to wait for a better offer. Of course, that co-owner in possession obtains the benefit of remaining in the property during the additional marketing period. By contrast, the co-owner out of possession may be less patient in waiting for their equity, simply encouraging the referee to accept the offer. The referee must communicate with the co-owners to reach a fair and reasonable conclusion that all sides accept as based on their valid professional judgment, not based on cozy relationship with one side or the other. This is a skillset where attorneys would normally excel, while Realtors may be unfamiliar with the concept of waring co-owners on the sell-side of the transaction.
Obtaining Cooperation from the Co-Owner in Possession Favors Attorney-Referees
One of the most common issues in a partition is obtaining the cooperation of the co-owner in possession, who is often the party that was reluctant to agree to a sale in the first place. Thus, as part of the appointment of the referee, the court’s interlocutory judgment of partition can grant the referee powers to control the property. One of those powers can be to take possession of the property from anyone who may be impeding the partition process. See Code Civ. Proc. § 872.130. If allowed by the judgment of partition, the referee can do so by obtaining a writ of possession, which is the same legal tool obtained in an unlawful detainer.
Generally, when a co-owner in possession realizes that the referee has this power, they will cooperate to avoid losing possession based on the request of the referee to the court for a writ of possession. However, if a Realtor is the referee, the co-owner in possession may be more likely to test the referee’s legal skills in obtaining possession, thereby delaying the partition action.
Issuing a Report on Offsets by a Realtor-Referee Would Increase the Chances of Further Litigation and Appeals
Yet another task of a partition referee is to provide the court with a report on partition offsets, which allocates the sale proceeds among parties. The referee’s role is crucial in ensuring that the partition process is conducted fairly, which may require the referee to provide recommendations to the court during the partition action’s various hearings.
As explained by the California Court of Appeals, the partition referee may “make a report on the facts and circumstances of the case, and make a recommendation to the court on precisely this primary determination. ([CCP] § 872.820, subd. (b).) Although his or her report and recommendation is advisory, the referee clearly serves as the initial examiner of the facts, and perhaps the law, in a partition action, under the aegis of the appointing court. The referee’s determinations are either accepted by the court, modified, or set aside. ([CCP] § 873.290, subd. (b).) Given the general role of referees as preliminary examiners of fact, we have no difficulty in concluding that trial in a partition action has commenced once evidentiary proceedings are begun before a referee. Despite the fact that the partition referee’s report was not in itself dispositive or tantamount to a final judgment, the trial proceedings began when the parties appeared before the referee to present their evidence.”[1]Gray v. Superior Court (1997) 52 Cal.App.4th 165, 171.
This report on partition offsets is not simply an accounting as would be completed by a bookkeeper. Rather, it is a mixture of legal and financial analysis. Perhaps one party submits invoices for painting the house pink. The referee does not simply tally up the invoices, but may conclude that painting the house pink did not add any value, and thus is excluded as an allowable offset. The referee’s report would cite the appropriate authority on that topic. Ensuring that the report is legally defensible will increase the likelihood that the report is adopted by the parties without further litigation.
Partition Referee’s Report After the Sale of a Property
Once the subject property of a partition action has been sold, California Code of Civil Procedure 873.710 is the California partition statute that lays out what information should be included in a referee’s report. As outlined in California Code of Civil Procedure 873.710(b), the partition referee’s report must provide the following pieces of information to the court:
(1) A description of the property sold to each purchaser.
(2) The name of the purchaser.
(3) The sale price.
(4) The terms and conditions of the sale and the security, if any, taken.
(5) Any amounts payable to lienholders.
(6) A statement as to contractual or other arrangements or conditions as to agents’ commissions.
(7) Any determination and recommendation as to opening and closing public and private ways, roads, streets, and easements.
(8) Other material facts relevant to the sale and the confirmation proceeding.
California Code of Civil Procedure 873.710(b)
Although a real estate agent may be familiar with the language in California Code of Civil Procedure 873.710(b), a Realtor may not be familiar with the process of filing the referee’s report which is an integral part of the partition action.
Costly Risk of Inefficiency During Partition Action
An inexperienced or inefficient referee can lead to increased costs of a partition action as well as delays. Some may unnecessarily extend their scope beyond facilitating the sale, while others may lack familiarity with partition procedures, leading to additional legal fees to enforce property access and possession. When suggesting a partition referee to the court, the goal should be finding someone who is an efficient and experienced referee because a seasoned partition referee can navigate issues effectively. An efficient referee who promptly and competently completes the court-ordered partition by sale means a quicker timeline for distributing the property’s sales proceeds and the faster you can wrap up this chapter of disputing with your co-owner. The co-owners will likely find that the cost of the referee is more than made up for by the benefit of that partition referee.
Talkov Law’s Partition Attorneys Can Help
The selection of a partition referee, whether it is a lawyer or a real estate agent, has significant implications in a partition action. A partition attorney who offers specialized guidance to navigate the uncertainties about the role of a partition referee can serve you in a partition action. If you are seeking tailored advice and representation, contact Talkov Law, California’s premier partition action law firm, for a free consultation, call (844) 4-TALKOV (825568) or reach out online today.
References
| ↑1 | Gray v. Superior Court (1997) 52 Cal.App.4th 165, 171. |
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