Code of Civil Procedure (CCP) Section 873.160 - Liability of Referee

Code of Civil Procedure section 873.160 releases the partition referee from most personal liability in the partition. This statute is important because it allows the referee to perform his or her duties without fear of liability.

Code of Civil Procedure section 873.160 states:

The referee is not personally liable on contracts made, or for expenses incurred, except as such liability is expressly assumed by the referee in writing.

(Amended by Stats. 1976, c. 73, p. 110, § 6.)

“Shawn” and “Julie” are an unmarried couple. They decide to buy a home as joint tenants and move in together.

Unfortunately, Shawn and Julie’s relationship doesn’t work out, and they break up. They cannot agree on what to do with the property. Shawn wants to sell the home and move on, so he sues for partition by sale.

The court orders the property to be sold and the sale proceeds distributed. The court appoints a referee to oversee the sale.

After investigation, the referee realizes that lots of work must be done on the property for it to be in a marketable state. The referee hires several contractors, with court approval, to make certain improvements to the property, incurring multiple expenses.

Julie finds out and becomes angry that the referee has incurred these expenses. She wants to sue the referee. Under CCP § 873.160, however, the referee is not personally liable for the contracts with the contractors, or the expenses incurred. If this liability was in writing than the referee would be liable, but this is not the case here.

1976 Addition

Section 873.160 is new. The contract itself may provide a means of payment, e.g., the commission of an auctioneer or a real estate broker from the proceeds of sale. In other cases, particularly where the property is divided, the third person will have lien rights. See Section 874.120 (lien for costs).

As is the case for most of the partition statutes, section 873.160 does not include a an “official” Assembly Committee Comment from the California Legislature. But this is because the Legislature endorsed an overall adoption of the Law Revision Commission suggestions when it passed the new partition statutes in 1976.

In fact, the introduction to Assembly Bill 1671 (the bill that contained the new partition laws) states that the Revision Commission’s recommendations “reflect the intent of the Assembly Committee… in approving the various provisions of Assembly Bill 1671.” This demonstrates that the intent of the Legislature was substantially in line with that of the Revision Commission.

As to the statute itself, it simply provides that the referee is not liable on contracts unless they assume that liability expressly. Without this provision, acquiring referees for cases would be much more difficult, and the court system would be further bogged down by lawsuits from third party contractors or the parties themselves.

The comment though, concerns itself more with how the contracts with referees are set up. As is also provided in section 873.150 the contracts with referees and third parties can actually pay out from a portion of the sales proceeds. This ensures that the referee can seek the services of competent persons to assist with partitioning the property.

For instance, in a federal case, Kamb v. United States Coast Guard (N.D. Cal. 1994) 869 F.Supp.793, a referee was hired to market and sell the property. The property itself was a former gun-range, and so it was necessary for the referee to seek the services of a consulting firm that performed soil analysis. When the firm relayed that the soil was contaminated with lead from shell casings, the referee had to contract with another consulting firm to do scientific tests and further evaluation of the soil. Finally, the referee then needed to contract with yet another firm to conduct a site cleanup.

In total, the first consulting firm was owed $5,000, the second firm was owed $21,0000, the referee’s fees were $11,000, and the estimated costs of cleanup for the site was at least $122,000. Those amounts would seem staggering to parties months or years deep into a full-blown lawsuit. Allowing these services to defer payment with interest, however, ensures that they provide competent assistance knowing they will eventually be paid.