Code of Civil Procedure (CCP) Section 874.315 – Referees

The purpose of Code of Civil Procedure section 874.315 is to allow referee appointments to manage sales in the partition process.

Code of Civil Procedure section 874.316 states:

If the court appoints referees pursuant to Section 873.010, each referee, in addition to any other requirements and disqualifications applicable to referees, shall be disinterested and impartial and not a party to or a participant in the action.

This statute had not been amended since its enactment. However, this section was created to replace section 5 of the Uniform Partition of Heirs Property Act. The section provides that the court may appoint referees as an alternative to parties choosing a realtor or broker as a referee. A referee must be impartial and not a party or participant in the ongoing partition action. A referee may be appointed to divide the property like in this section or to handle the sale of the property (CCP § 873.510)

The Partition of Real Property Act was an outgrowth of a law review article titled Historic Partition Law Reform (2019) Texas A&M Legal Research Paper Series No. 19-27 by Thomas W. Mitchell (“Law Reform”). (see also Thomas W. Mitchell, Reforming Property Law to Address Devastating Land Loss, 66 Ala.L.Rev. 1, 9, 29 (2014).

The inspiration for advocating for the open market sales procedure came from a 1972 partition law case in Scotland. (see Law Reform, p. 74.) In that partition law case in Scotland, the Scottish high court changed the rule governing the specific partition sales procedure that had to be used in partition actions in Scotland—a procedure roughly similar to the sales upon execution procedure used in most States in the United States—due to a concern that auction sales used exclusively for partition sales up to that point in Scotland often yielded very low sales prices. (see Law Reform, p. 75.)

Previously, advocates “overestimated the degree to which partition sales have been a source of black land loss.” (Thomas W. Mitchell, Destabilizing the Normalization of Rural Black Land Loss (“Destabilizing”), 2005 Wis. L. Rev. 557, 581 (2005); see Faith Rivers, Inequity in Equity (Temp.Po.&Civ.Rts.L.Rev. 2007) 1, 31 (“There is little empirical data documenting claims of African-American land loss” [due to partitions].) (“Inequity”).) Others have claimed that low will-making rates for African-Americans represent a present day manifestation of the ways in which African Americans after the conclusion of the Civil War were deprived of access to attorneys and even to basic information about estate planning, but this theory has not been verified in any meaningful way. (see Law Reform p. 68.)

The Act’s restructured sales procedure is designed to preserve as much real estate wealth as possible for heirs’ property owners by incorporating many of the features of sales that are conducted under conditions designed to yield fair market value prices. (see Law Reform, p. 74.) These features simply are not incorporated into the forced sale procedures used for partition sales under general State partition laws. In seeking to vindicate the wealth maximization goal many courts have relied upon in ordering partition sales in the first place, the drafting committee for the Act substantially changed partition law by making an “open market sale” the preferred sales procedure under the Act. (see Law Reform, p. 74.) The open market sales procedure is designed to mirror the traditional procedures real estate brokers use when they market properties in their normal inventories as opposed to any distressed properties in their inventories. (see Law Reform, p. 75.)

The Partition of Real Property Act seeks to address consequences of this type of property ownership, and which California adopted in 2022.

Other states take a similar position on courts having the ability to choose referees however the role these referees take can differ. Like California, Montana district courts may similarly order the sale of a property or appoint a referee or referees. Similarly, in Montana, these referees must make a report to the court as to how the property should be divided. (Britton v. Brown (2013) 368 Mont. 379, 386.) In California the referee will only make its determination following the court’s determining that partition is appropriate. (CCP § 873.210.) In California, a referee must similarly file a report with the court. (CCP 873.280.)

North Dakota’s approach to using referees is similar to that of California and Montana. The court may order sale or must appoint referees to partition the property, which suggests the court will not make a determination unless it is the one ordering the sale. (Beach Railport, LLC v. Michels (N.D. 2017) 903 N.W.2d 88, 91–92.)

In South Dakota for a partition by sale, the court is required to appoint referees to recommend an appropriate division of the property, and the referees will provide a report. (Englehart v. Larson (S.D. 1997) 566 N.W.2d 152, 155.) Unlike California, South Dakota trial courts have less discretion in using a referee in determining the division of the property at issue.

For example, “Shawn” and “Julie” want to partition their home. If they held the property as joint tenants, it would be easy to determine the division of the property. The meaning of joint tenants indicates Shawn and Julie own the property 50/50 each. Such a case is unlikely to require the court to appoint a partition referee to determine how it should be divided. However, if the property needed to be physically divided and had unclear boundaries or development potential, the court may be unequipped to determine how the property should be divided. In a more complex scenario, the court would appoint a referee to determine how it should be divided.

Here at Underwood Law Firm, our knowledgeable attorneys are here to help navigate the complex web of case law and statutes surrounding partitions. If you are thinking of filing a partition, are already in the midst of a partition suit, or just have any questions, please do not hesitate to reach out to our office.