How do you become a court receiver in California?

Learn how to become a court-appointed receiver in the state of California. This article explains who qualifies and what qualifications are necessary for this job.

The appointment of a receiver is an equitable remedy, including in the context of a distressed property dispute or in the appointment of a receiver over the company. A receiver’s authority is likewise equitable, deriving from the appointing court. As a court-appointed, third-party neutral, the receiver’s authority is limited and identified by the contents of the court’s order, unless amended. But how, exactly, does an individual qualify to be a receiver in California?

First, in California and for a Los Angeles receiver, there are no licenses, permits, designations, or degrees that someone seeking to be appointed as receiver must hold. However, experience is key. For example, are you seeking to be appointed as a receiver in connection with real estate? If so, are you a licensed California real estate broker, do you have experience in property management, brokerage, development, acquisitions, sales, or related experience involving either commercial or residential real estate?

These are questions a lawyer or a judge will be seeking to answer. In order to be appointed as receiver, you must demonstrate that you have the requisite skills and experience to be able to administer the receivership estate, and depending upon the type of asset over which you are appointed as receiver, you must possess expertise in that particular field. It is imperative that you have knowledge of all types of either real estate or businesses over which you may be appointed as receiver. However, it is possible after the appointment to employ a consultant to assist as may be needed.

In addition to the requisite prior experience, a properly formatted CV identifying experience, education, training, prior cases, professional designations, and licenses is important. This will allow a lawyer seeking to nominate you and a judge seeking to appoint you, to understand in a clear and concise manner, your background and experience. These qualifications will be scrutinized.

A proposed receiver needs to have relationships with lawyers who appoint receivers and the proposed receiver needs to have a good reputation in the particular field which is the subject of the receivership itself. This includes published articles, being retained in prior cases, relevant work experience, licenses, and professional designations as well as excellent references.

But everybody needs to get their first case. This is usually the result of a relationship with a lawyer who has expertise in appointing receivers and obtaining the confidence of the judge who may ultimately appoint the receiver.

The lifecycle of being appointed as a receiver includes but is not limited to the following:

(1) circulating a CV;

(2) the nominating attorney filing a motion to have a receiver appointed, including having the nominated receiver execute a declaration in support of the appointment of the receiver;

(3) the nominating attorney filing the motion seeking appointment of a receiver;

(4) either an ex parte or noticed motion hearing occurring at which time the court will review the qualifications of the receiver;

(5) sometimes the receiver attends that hearing and answers questions of the court;

(6) opposing counsel may also nominate a competing receiver and the judge ultimately determines which receiver shall be appointed;

(7) the Court Signs the order appointing the receiver and the receiver thereafter needs to qualify to become receiver;

(8) the receiver may need to file an oath of a receiver as well as post a bond. The process of qualifying for a bond may require the submission of a financial statement and evidence of a sufficient net worth for the bonding company to be willing to issue a bond. This may also include a credit check.

The foregoing is a summary of the steps involving the appointment of a receiver as well as considerations regarding receiver qualifications. It is imperative that the nominated receiver has the requisite experience to efficiently and properly administer the receivership estate in order to faithfully perform his/her duties as a receiver. A nominated receiver should seriously consider whether or not he/she has the requisite experience to perform the duties as mandated pursuant to the order appointing a receiver. In certain instances, a receiver may have personal liability in instances where the receiver acts outside the scope of the order appointing the receiver and/or under other circumstances.

The bottom line is that only well-qualified receivers should seek an appointment as receivers in either state or federal court.