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Appointing a Receiver to Sell Jointly Owned Property

When co-owners of property are at odds over the property, it may be necessary to have a court appoint a receiver to manage and/or sell the property. This remedy isn’t always available, as evidenced by the In re Estate of Martinez, No. 01-18-00217-CV (Tex. Ct. App.–Houston 2019) case.

Facts & Procedural History

The case involves a probate in Fort Bend County, Texas. Prior to her death, the decedent had purchased real property and held title jointly with her daughter and son-in-law. The decedent owned half of the property and the daughter and son-in-law owned half. This was spelled out in a Joint Ownership Agreement and Non-Testamentary Transfer Agreement.

The decedent died without a will. The probate was handled as a dependent administration. A probate attorney was appointed as the administrator for the estate.

The daughter who was not a joint owner contended that the written agreement was invalid. The decedent’s two daughters, one of whom owned a joint interest in the property and the other who didn’t, asked the probate court to decide who owned the property.

The attorney serving as the administrator asked the probate court to appoint a receiver to sell the property. The probate court did this and one of the daughters appealed the decision to appoint the receiver.

Joint Ownership of Property

It is common for family members to own property jointly. This is most common with bank accounts and parents and their children. The thought is that the funds should be made available to the children if the parent dies, so that the children will have funds to carryout the last affairs.

With jointly owned real estate, the hope is that the property will transfer without the need for a probate administration. In other cases real estate is held jointly in an attempt to avoid paying a creditor or disqualifying the parent from receiving certain government benefits.

But jointly held property often results in disputes, much like the dispute in the current case. This is where a receiver comes in. A receiver can be appointed to take control of and to sell real estate or other assets.

When a Receiver Can be Appointed

The issue for the appeals court was whether it was proper for the trial court to appoint a receiver.

Texas law provides that a receiver can be appointed in the following circumstances:

  1. in an action by a vendor to vacate a fraudulent purchase of property;
  2. in an action by a creditor to subject any property or fund to his claim;
  3. in an action between partners or others jointly owning or interested in any property or fund;
  4. in an action by a mortgagee for the foreclosure of the mortgage and sale of the mortgaged property if it appears that the mortgaged property is in danger of being lost, removed, or materially injured;
  5. for a corporation that is insolvent, is in imminent danger of insolvency, has been dissolved, or has forfeited its corporate rights;  or
  6. in any other case in which a receiver may be appointed under the rules of equity.

With the first three items, a receiver can be appointed only if the property or fund is in danger of being lost, removed, or materially injured. With the last item, which only applies if the five prior items do not apply, there is no such requirement.

This was the dispute in the case. One daughter argued that the receiver was appointed under # 3, above. The other daughter argued for # 6, above. With # 3, the court would have to have evidence of the potential loss, removal, or injury to the property.

The court appeals concluded that this was a dispute under # 3, which requires the additional evidence. Since none was provided to the court, the appeals court concluded that a receiver should not have been appointed. The appeals court vacated the order appointing the receiver.

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