In Arizona, it is common for divorce, probate, or partition actions to involve jointly held real estate or community real property. These types of cases often involve the sale, distribution, partition, or division of community, estate, or jointly-owned real property. Appointed by the court, or stipulated by the parties, Special Real Estate Commissioners effectively facilitate these potentially complex transactions. As Special Real Estate Commissioner, one wears many hats by fulfilling the roles of a neutral broker, valuation consultant, market analyst, and closing agent. The Special Commissioner’s successful completion of the duties and tasks commanded by each role effectuates a timely sale of the contested property. If you are preparing to undergo litigation involving real estate or real property, here are a few key considerations to keep in mind when considering the appointment of a Special Real Estate Commissioner.
Type of Case
Real Estate Special Commissioners are typically involved in family law and probate cases, but also play an important of contested or disputed community real property, or jointly-owned real estate assets.
Family Law. Many times, divorce and legal separation cases include a court order for the partitioning or sale of community real property. In these cases, Rule 95G of the Arizona Rules of Family Law Procedure governs procedures for the appointment of a licensed real estate agent or Realtor® as a Special Real Estate Commissioner.
First put into effect in January 2006, Rule 95G states that the court “may appoint a Real Estate Special Commissioner, in accordance with local rule or policy and procedure, to assist the parties in the division and disposition of community real property when the parties are otherwise unable to agree on such issues.”
When Parties disagree on the selection of a real estate agent or Realtor®, and/or dispute the decision to sell or partition real property, the court appointment of a Special Real Estate Commissioner assists in moving the Parties forward toward the division or sale of real estate assets. Many times, the Party with possession of the community asset, typically the marital home, may make the property inaccessible to prospective buyers or agents; or, may not be incentivized to keep the property in market-ready condition. Additionally, pets, cleanliness, dangerous conditions, and/or health and safety hazards can pose challenges for marketing and sale. With an appropriately drafted and executed court order, the Special Real Estate Commissioner is empowered to make decisions, prepare the property for sale, and value the property, all of which help the Parties achieve the sale of a property on highest and best terms.
Probate, Estate Settlement. When a property is co-owned by multiple parties as a result of death and a settlement agreement cannot be reached amongst the parties, a Real Estate Special Commissioner can offer valuable assistance in the valuation, management, marketing, and sale of real estate assets. In Arizona, Arizona Revised Statute (A.R.S.) §14-3911 governs partition actions. This statute provides authority for the court with jurisdiction to appoint a Real Estate Special Commissioner to conduct the sale of a contested real property or real estate asset when multiple heirs are entitled to a distribution of “undivided interests in any real or personal property of the estate.”
Partitioning. As with estate settlement, partitioning is a common practice during a “business divorce” or the dissolution of other jointly-owned properties. Partition action is governed by A.R.S. §12-1218, which outlines the various options that are available should the voluntary and fair division of a co-owned property become impossible between contesting parties. A.R.S. §12-1218(A)(B) holds that when there is no foreseeable way to navigate an impasse between parties, the court will order the sale of the property in question. To effectuate the sale, section A.R.S. §12-1218(C) provides the court with authority to “appoint a commissioner to make the sale…and return the proceeds into court to be divided” between the co-owners according to their interests in the real property.
Receivership. When real property in question is income-producing, such as a rental property, the appointment of a receiver is likely a better choice than that of a Real Estate Special Commissioner, as a court-appointed receiver may be authorized to collect rents, seize control of bank accounts, and manage or operate properties. The decision to forego the appointment of a Real Estate Special Commissioner, and instead, appoint a receiver, is most appropriate for income producing properties such as apartment complexes, hotels, office buildings, industrial buildings, or retail centers. In these instances, a receiver has the authority to collect rents, build financial data, operate the properties, and package the properties for sale with better operating and financial data in place. We mention receivership here alongside the work of a Special Commissioner because receivers are often authorized to sell real estate assets within the terms of the court order, thereby allowing a receiver to seize control of bank accounts and operate businesses/real estate assets as a precursor to the sale of real property.
Type of Property
You should also take into consideration the type of property subject to a court action. For residential disputes commonly adjudicated in divorce or probate courts, you should ensure that the real estate agent or Realtor® under consideration for Special Commissioner has extensive experience in the local market. And likewise, for commercial properties, you should select or request the appointment of a Broker with relevant commercial experience, as well as close ties to the local business community and defined knowledge of the commercial real estate market.
Are you looking to resolve a dispute involving jointly held real property or real estate in Arizona?
Our above insight into the various measures taken for the appointment of Special Real Estate Commissioners and receivers should help you prepare for your journey through the division, sale or other disposition of contested real property or real estate.