What Happens If Co-Owners Disagree and a Court-Appointed Commissioner Handles a Private Sale in Hawaii

Short answer: In Hawaii, when co-owners cannot agree about jointly owned real property, a co-owner may file a partition action asking the court to divide the property or order its sale. If the court orders sale but finds that a public sale (e.g., sheriff’s sale or auction) is impractical or inappropriate, the court can appoint a commissioner to sell the share privately. The commissioner must follow the court’s directions, give required notice to interested parties, seek a fair price, report back to the court, and turn over sale proceeds for distribution according to ownership interests after paying liens, costs, and commissions. Parties can object to the sale, ask the court to confirm or set aside the sale, and appeal final orders.

How the process commonly works (step by step)

1. Filing a partition action: One co-owner files a partition lawsuit in circuit court asking for partition in kind (physical division) or a sale. The complaint names all owners and lienholders.
2. Court determines whether partition in kind is feasible: The court first considers whether the property can be fairly divided. If not feasible (for example, a single-family home on one lot), the court typically orders sale instead of division.
3. Appointment of a commissioner: If sale is ordered, the court may appoint a commissioner (sometimes called a referee or special commissioner) to manage the sale. The appointment is a court order and sets the commissioner’s duties and limits.
4. Public sale vs. private sale: Courts often prefer an open, public sale, but the court can authorize a private sale if the commissioner and court find it appropriate (for example, to preserve value, when marketing shows better results, or where a public auction would be impractical). The court will set the parameters for a private sale — minimum price, advertising and notice requirements, marketing period, approval steps, and any confidentiality rules.
5. Notice to parties and creditors: The commissioner must notify all interested parties (co-owners, lienholders, lessees as applicable) of the sale process and any proposed sale terms. Notice requirements are set by the court and by applicable Hawaii law and rules.
6. Marketing and obtaining offers: The commissioner markets the property, solicits offers, and negotiates. A private sale usually requires the commissioner to seek the best reasonably obtainable price given market conditions and the court’s instructions.
7. Reporting to the court and seeking confirmation: After a proposed sale is reached, the commissioner files a written report and accounting with the court describing bids, marketing efforts, purchase agreement terms, offers received, and recommended distribution of proceeds. The court typically schedules a hearing to confirm the sale.
8. Opportunity to object: Co-owners or lienholders who disagree can file written objections and appear at the confirmation hearing. Common grounds to object include inadequate marketing, sale price being unreasonably low, failure to follow court directions, conflicts of interest by the commissioner, or inadequate notice.
9. Court confirmation or setting aside the sale: The court reviews the commissioner’s report and any objections. If the court finds the sale fair, supported by evidence of marketing and a good-faith effort to get a reasonable price, it confirms the sale. If the court finds problems, it can set aside the sale and either order a new sale or give new instructions to the commissioner.
10. Distribution of proceeds: Once the sale is confirmed and closes, the commissioner pays liens, taxes, court costs, and the commissioner’s fees, then deposits the remainder with the court or distributes it according to ownership shares (in accordance with the court’s order). Parties can ask the court for final accounting and detailed distribution statements.
11. Post-sale remedies: Unhappy parties can ask the court to reopen or set aside the sale for fraud, inadequate notice, or misconduct by the commissioner. After a final order, parties may have the right to appeal under Hawaii appellate rules.

Key legal principles and duties

• Fiduciary duty: A court-appointed commissioner acts under the court’s supervision and owes duties to act in good faith, to seek a fair sale price, and to follow the court’s instructions.
• Notice and opportunity to be heard: Due process requires reasonable notice to all interested parties and a chance to object before confirmation of a private sale.
• Court oversight: The sale is not final until the court confirms it. The court’s review focuses on whether the commissioner acted reasonably and whether the price and process were fair given market conditions.
• Costs and liens: Secured creditors are paid from sale proceeds according to their priority; outstanding property taxes and court-ordered costs are paid before distributing net proceeds to owners.

Relevant Hawaii law and resources

Hawaii sets out procedures for civil actions and property disputes in its statutes and court rules. For the statutory framework and civil procedure rules that affect partition and sale procedures, see the Hawaii Revised Statutes and the Hawaii State Judiciary resources:

• Hawaii Revised Statutes — current edition: https://www.capitol.hawaii.gov/hrscurrent/ (use this site to search terms like “partition,” “commissioner,” or “sale of property” for the most relevant sections).
• Hawaii State Judiciary (general court information and forms): https://www.courts.state.hi.us/.

Typical timeline and practical expectations

Timelines vary. Simple cases with cooperative parties can resolve in a few months. Contested partitions that require appointment of a commissioner, marketing, objections, and confirmation hearings commonly take several months to over a year. Expect further delay if parties object, seek new appraisals, or appeal.

When to consider getting an attorney

Consider consulting an attorney if any of the following apply:

• Co-owners strongly disagree about sale vs. division.
• There are multiple liens, complex encumbrances, or tax issues.
• The commissioner’s actions raise concerns about conflicts of interest, inadequate marketing, or improper accounting.
• You need help objecting to a proposed private sale or seeking confirmation for a sale you believe is fair.

Disclaimer: This article explains general principles about partition and court-appointed commissioners in Hawaii. It is educational only and not legal advice. For advice specific to your situation, consult a licensed Hawaii attorney.