The California Code of Civil Procedure Section 564 lists many of the traditional types of cases in which receivers may be appointed. They include, but are not limited to, the following: Preservation of a common fund or property in dispute and in danger of injury or dissipation;Rents, Issues and Profits (Real Estate);Substandard Housing – The…
Can a court receiver sell property?
Los Angeles real estate receivership cases involving the sale of property are complex, especially when they involve assets worth millions of dollars. Here are some of the things that a California real estate receiver can and cannot do.
California law permits the sale of real estate out of receivership. California Code of Civil Procedure 568.5 authorizes the receiver to sell property upon the notice and in the manner prescribed by Article 6 of Chapter 3 of Division 2 of Title 9. The sale is not final until confirmed by the court.
One of the most important elements of a real estate receivership involving the sale of real estate is the issue of notice. Receivers must ensure proper notice of a proposed sale of real or personal property. The notice must go to all interested parties. This includes lenders, judgment creditors, and others with an interest, lien, or claim against the real estate to be sold.
A rents and profits receiver does not generally have the ability to sell real estate. The order appointing a rents and profits receiver is narrow and the scope and duty of the receiver is limited. A subsequent order authorizing the receiver to sell real estate or a more expanded initial order appointing the receiver authorizing the receiver to sell real estate is generally required.
The receivership is an equitable remedy. The receiver’s duties and powers consequently can be expanded, in accordance with the principles of equity, by the appointing court. As a receivership case develops, the initial facts and circumstances may change. As a result, the duties of a receiver can change too. This occurs through the order9s) of the court.
The receiver has a duty to all interested parties and creditors. When a receiver sells a property, the issue of liens is addressed. The liens are paid off in order of priority based on whether or not they are secured or unsecured. Pursuant to court order, a receiver may sell real property free and clear of liens with the liens attaching to the sales proceeds.
In California, an order confirming the sale of real estate may be appealed within 60 days of the notice of ruling confirming the sale. Therefore, a Los Angeles real estate receiver may not be able to obtain title insurance until the appeal period has run its course. the court-ordered receiver should utilize specialists in the field of receiverships including using title and escrow companies that understand the process of selling real estate through a receiver.
A California real estate receiver who has been provided with court authority may sign a receiver’s deed. The receiver’s deed conveys the title to the purchaser. The deed is recorded and the sale occurs on the date of recordation. Prior to the deed being recorded, lienholders are paid off or sales proceeds are held either in escrow or with the receiver in the receiver’s trust account. A claims procedure may have already been established and the seniority of competing lienholders will thereafter be adjudicated by the Court.
The receivership court approves the sale of real estate by a real estate receiver either through a public or private sale. Sometimes, an overbid procedure is required by the Court. Regardless of the sales method approved by the court, it is necessary for a receiver to widely market the property in order to reasonably ensure that the highest market price is realized. This is generally done through third-party brokers and sometimes that broker is approved by the court pursuant to an employment application. In other instances, the real estate receiver is given blanket authority to retain a broker.
A successful California real estate receiver sale requires the use of an experienced receiver, experienced professionals, and requisite court authority and due diligence by the receiver and the court receiver professionals.
A receivership can be structured in a variety of ways based on the nature of the dispute, the goals and objectives of the parties, the type of asset(s) that will be placed under the control of a receiver as well as the ruling of the court. There are two core types of receiverships – a…