Beth Jo Zeitzer, Esq.
The best laid plans of jointly owning real property, whether through co-investment, marriage, cohabitation, beneficiary deeds, wills or trusts, can often lead to unexpected results. The unique and complex nature of real estate assets, including revenue production, leasing, reporting, valuation, management, repair, maintenance and disposition, frequently leads to litigation, many times in partition, divorce, probate and contested estate matters. Neither the legal expense nor the extended time frame of such actions are likely to serve the best interests of the estate or the parties to it.
Many property owners may desire to deploy more expedited, cost-effective, transparent and equitable solutions. One solution, where litigation is pending, is the appointment of a court-appointed Real Estate Special Commissioner. A Real Estate Special Commissioner can often be the most cost-effective route to achieving resolution as well the highest and best value for the estate. The use of court-ordered Real Estate Special Commissioners was initially adopted in family law, with a standard form court order, but it has been so successful that judges are utilizing these appointments in probate/contested estate and civil /partition matters. Anytime there is a joint property interest that needs to be divided /sold, with disbursement of proceeds to the parties, a Real Estate Special Commissioner can be a useful tool. The Real Estate Special Commissioner’s Order provides for a transparent and neutral valuation, marketing, sales and disbursement process, and also enables the Real Estate Special Commissioner to motion the court if one or more parties are not cooperating, or where some form of judicial intervention is needed.
Another alternative, where the parties are in dispute, whether litigation is pending or not, is a Neutral Broker. The Neutral Broker typically moves through the valuation, marketing, sales and disbursement process in the same way as a Real Estate Special Commissioner, but where there is a lack of party cooperation, the Neutral Broker does not have the ability to petition the court, and doesn’t have a formal court order to rely upon, outlining the valuation, marketing and sale process.
Joint ownership disputes can arise from a dizzying array of scenarios, but they can be loosely grouped into three categories:
- Family law. As noted above, this is the origin of court-ordered sales, with Rule 89A in the Family Law Rules. Most often these are divorce cases that require the sale of community property; in addition to residential, Real Estate Special Commissioners who are experts in Commercial Real Estate and Land Assets, can be named as Real Estate Special Commissioners (or Neutral Brokers).
- Civil/Partition Actions. These are typically civil matters that arise out of a joint investment/ “business divorce” or cohabitation.
- Contested Estates/Probate matters. One of the most common scenarios in this category is where a decedent’s death results in multiple beneficiaries holding joint interest in real property, either residential or commercial.
Step by Step: The Real Estate Special Commissioner’s Role
When parties can’t agree, a Real Estate Special Commissioner brings objectivity—whether in the disposition of a family home or an income-producing commercial property.
In addition to navigating the court system, as needed, and executing on court orders, the Real Estate Special Commissioner has a specific goal: obtaining the highest and best returns for the estate within the time period specified, and upon the terms set forth in the court order. With a court order in place, the Special Commissioner generally proceeds through the following steps:
- valuing the property and provide a report to the parties (e.g., broker price opinion/broker opinion of value, or comparative market analysis);
- developing a customized marketing strategy, aimed at achieving maximum value and reaching high-probability buyers;
- driving contract negotiations to achieve highest/best terms, and to ensure enforceability/closing;
- handle all aspects of closing, disbursement, and reporting to the parties, on an objective and transparent basis, while being accountable to the Court.
Shared Goals for Better Outcomes
Neutral third parties, such as Real Estate Special Commissioners and Neutral Brokers reduce legal fees, provide accountability, and move transactions forward by ensuring transparency and adherence to specific processes in the valuation, management, marketing, sale and distribution of proceeds, with transparent communications.
Attorneys (and their clients) often find Real Estate Special Commissioners or Neutral Brokers, to be appealing options, since they enable them to be more thoughtful with their spend of legal fees or clients, while ensuring an objective, transparent process to secure highest/best pricing within the clients’ timelines through a broker who guides them through an orderly process. The costs associated with utilizing a Special Commissioner or Neutral Broker typical pricing in the market for other brokers/agents, and paid on a success fee/commission basis.
If the shared goal of joint property owners is a fair process, which focuses on transparency, and meaningful valuation, management, marketing and sale, the appointment of a Real Estate Special Commissioner can be one of the most valuable tools in an attorney’s toolbox.
Beth Jo Zeitzer, Esq., is the owner and designated broker of R.O.I. Properties, a full-service real estate brokerage firm focused on the valuation, marketing and sale of commercial and residential properties, and land assets. She serves as Special Real Estate Commissioner, Court-Appointed Receiver, and Bankruptcy Trustee, in numerous real estate matters. Beth Jo is an attorney by training, and former Corporate Counsel and Director of Commercial Properties for Del Webb Corporation. She can be reached at 602-319-1326 or [email protected].
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