Receivers and partitions referees are cut from the same cloth. In actions involving property, they step in at the request of the parties or order of the court to properly dispose of or manage the property at issue. That said, there are enough differences between the two to warrant litigants being put on notice.
At the Underwood Law Firm, our attorneys encounter both partition referees and receivers on a regular basis. We are well-versed in their appointment, associated costs, timelines, and the procedure they become involved in. As such, potential litigants should not hesitate to contact our office so that our team can begin helping you achieve your litigation goals.
What is a Partition Referee?
Partition referees are neutral third parties appointed by and accountable to the court. Their sole function is to assist in matters related to partitions. (CCP § 873.510.)
The duties of the referee can be ranging and complex. Most often, they will be tasked with determining the priority of all liens on the property. (CCP § 872.630.) But they may also determine the method of partition (physical division or sale), the method of sale (public or private), prepare the property for sale, and sell the property itself.
Their responsibilities can extend even further by order of the court, for referees may perform any acts necessary to exercise the authority given to them by the partition statutes or by the court itself. (CCP § 873.060.)
The myriad of services a referee can provide does not make them mandatory, however. In fact, referees can be quite expensive, even when their cost is split between the parties. And for simpler partitions without liens and complicated ownership structures, some litigants may feel a referee is an unnecessary expense.
In these instances, the court may outright refuse to appoint a referee, even if a party requests one. “The only function of a referee is to assist the court in determining those matters which cannot be so determined upon the evidence before it.” (Richmond v. Dofflemyer (1980) 105 Cal.App.3d 745, 755.)
What is a Receiver?
A receiver is also associated with property-based lawsuits, and the law concerning their appointment and duties can be found squarely under Code of Civil Procedure section 564.
Receivers are special in that they are actually officers of the court. They are not agents for any party involved in the lawsuit but are instead fiduciaries who, as officers and representatives of the court, act for the benefit of all persons interested in the property. (Security Pacific National Bank v. Geernaert (1988) 199 Cal.App.3d 1425, 1431.) This is to say that they are held to an exceptionally high standard.
But what do they do? In simple terms, they essentially operate in a similar vein to executors in probate court or trustees in bankruptcy court. (Shannon v. Superior Court (1990) 217 Cal.App.3d 986, 992.) In this regard, they are charged with the duty of managing, marshalling, and protecting the estate property during the pendency of the legal action, subject to the court’s continued control.
What Distinguishes a Receiver from a Partition Referee?
Ultimately, the main difference between a receiver and a partition referee is the purpose for which they are appointed. When referees are appointed, they have a number of tasks to complete, depending on the facts of the instant lawsuit.
For example, if a partition involves a property without any liens and owned only by two individuals (this is quite common), then the referee will usually be tasked with: (1) determining the manner of partition, (2) determining, if applicable, the method of sale (public or private auction), and (3) selling or dividing the property. In this manner, the referee somewhat controls the pace of the action. As soon as their tasks are completed, and their report is submitted to the court, judgment is entered, and the lawsuit ends.
With receivers, it’s the opposite. Once they are appointed, they do not have set “tasks.” Instead, they begin their appointment by possessing the property at issue in order to maintain a “status quo.” (Schreiber v. Ditch Road Investors (1980) 105 Cal.App.3d 675, 680.) In fact, one of their only obligations, outside of maintaining the property as it exists, is to pay the property taxes. (Prudential Ins. Co. v. Liberdar Holding Corp. (2d Cir. 1934) 74 F.2d 50, 52.)
Outside of this possession, however, the receiver has no control over the pace of the litigation. Instead, as they occupy the property, the parties battle in court over what, precisely, the receiver is to do. Only once the issue is litigated does the receiver act on the express order of the court itself.
This makes sense when considering the circumstances under which receivers are requested. Partition referees are exclusively sought in partition actions, where the ultimate goal is to sell or divide a property. Receivers, on the other hand, are primarily appointed in foreclosure and corporate dissolution actions. In those instances, it isn’t entirely clear whether the property needs to be sold, and in addition, there are usually many creditors whose debts all need to be satisfied.
Can a Receiver be Appointed in a Partition Action?
Yes. Though it may not be the norm, receivers can still be appointed in partition actions. (Melikian v. Aquila (1998) 63 Cal.App.4th 1364, 1367.) Of course, this is dependent on the facts, as the appointment of a receiver is actually an equitable remedy in it of itself. This means there have to be circumstances that warrant the appointment (although parties can always stipulate otherwise).
As receivers come in and actually possess the property at issue, one can imagine that their use is limited to those cases where one party isn’t being allowed on the property or where the property is in such disrepair that there’s a fear the property value is going down with each passing day. That said, it’s ultimately dependent on the facts of the particular case.
How the Attorneys at the Underwood Law Firm Can Assist You
Getting a judgment of partition is often only the first step in partition litigation. Perhaps unsurprisingly, getting the property sold or physically divided can take even longer than litigating the right to partition itself. The nature of the lawsuit becomes that of an accounting, as parties attempt to find common ground on the methods and costs of the partition itself.
As each case is unique, property owners would be well-served to seek experienced counsel familiar with the intricacies of partition actions and the most efficient partition referees in the business. At the Underwood Law Firm, our knowledgeable attorneys are here to help. If you are attempting to get a partition referee appointed, wondering if you fight off the appointment of a receiver, or if you just have questions, please do not hesitate to contact our office.
Learn more here.