What Does a Partition Referee Do?

General Overview

A partition referee is a neutral third party appointed by a court to oversee the partition or division of real or personal property. Partition referees are appointed in partition actions where co-owners are segregating and terminating their common property interests.

In California, joint owners of real property may file a lawsuit seeking to have their joint interest in the property partitioned. The need for a partition arises in situations where there is a divorce or other break up or after a death where multiple parties have an inherited interest and are in disagreement as to their interests or how to divide them. It may also occur when multiple parties own a property that only one of them is living in.

One co-owner of the property in dispute will file a complaint with the court, which begins an action of partition. The court will initially determine each party’s interest and the method of partition in an interlocutory judgment. Usually, the court will order a division by sale unless the parties agree to partition by appraisal or the court determines a division in kind is possible. Once this is determined, the court appoints a partition referee to handle the actual partition of the property. The partition referee may be authorized to employ attorneys, surveyors, engineers, and others to carry out the division.

As part of the partition process, there will be an accounting of charges and credits to each co-owner’s share. Both plaintiff and defendant will want to seek reimbursement of money spent to maintain, improve or preserve property that benefits all co-owners. Credits can include expenditures in excess of the co-owners fractional share for necessary repairs, improvements that enhance the value of the property, taxes, payments of principal and interest on mortgages, and other liens, insurance for common benefit, and protection and preservation of title.

Partition by Sale

In the case of partition by sale, the partition referee will be appointed to carry out the sale. The sale of the property may be by public auction or by private sale. The referee will usually have discretion to decide which means is more beneficial to the parties. The most common method of sale is by private sale with fees going to the partition referee and real estate broker for advertising and listing the property.

Before a sale is complete the partition referee makes a report of the sale to the court which includes details of the sale such as the name of the purchaser, the sale price, and the terms of the sale. The court may confirm the sale, set aside the proposed sale, or allow higher bids for the property.

The partition referee is required to negotiate the highest possible price on the best terms when selling the property. Final contracts for sale must specify that court confirmation is required before any sale is final and that overbidding may occur in court.

When the court has confirmed the sale, they will give the partition referee the authority to execute documents as required to consummate the sale. Following the sale, the partition referee will file a final report and motion to disburse the remaining funds among the parties, for approval of the partition referee’s fees and costs, and to terminate the appointment.

Partition by Appraisal

For a partition by appraisal, all co-owning parties have to be in agreement, otherwise the property will be partitioned by sale. In this type of partition the parties agree that one will buy out the other(s) at an appraised price and a referee is appointed to obtain the appraisal and determine the price of the buyout for each party. The parties will form an agreement for this type of partition and the parties can complete the sale according to this agreement. The agreement must be in writing, name the parties, identify their interests, name the party or parties who be the buyer(s), name the referee, and the date when the appraisal is to be made. The agreement should also set out the terms of the sale including deposits, financing, and the status of title. The agreement must be filed with and approved by the court.

Once the referee is appointed they will obtain an appraisal of the property and the parties’ interests involved and report this information to the court. The court determines the adequacy of the report in a hearing. If the appraisal is deemed fair the court will confirm the report and order the property to be sold at the appraised price according to the terms of the parties’ agreement. Once the sale is completed the court will enter a judgment confirming the transfer of property.