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…
What is a Los Angeles court-appointed real estate receiver?
The California Rules of Court, Rule 3.1179 sets forth the basic parameters regarding court-appointed receivers. A Los Angeles court-appointed real estate receiver is an agent of the Court and not a party. As a result, the receiver is neutral, asks for the benefit of all who may have an interest in the receivership property, and holds assets for the Court and not for the plaintiff or the defendant.
However, receivership appointments have limitations. The party seeking the appointment of the receiver may not, directly or indirectly, require any contract, agreement, arrangement, or understanding with any receiver whom it intends to nominate or recommend to the court, and the receiver may not enter into any such contract, arrangement, agreement, or understanding regarding any elements of the potential receivership including but not limited to:
- The role of the receiver with respect to the property following a trustee’s sale or termination of a receivership, without specific court permission;
- How the receiver will administer the receivership estate or how much the receiver will charge for services or pay for services to appropriate or approved 3rd parties hired to provide services;
- Who the receiver will hire, or seek approval to hire, to perform necessary services; or
- What capital expenditures will be made on the property.
Typically, a receiver is appointed to preserve and maintain the real property. The receiver protects the property and manages it consistent with industry standards or pursuant to a court order. The appointment of the receiver does not impact how the title is held, nor does it impact the existence of a priority of liens against the property.
Pursuant to California Code of Civil Procedure Section 564, the appointment of a receiver is a provisional remedy and it is not a cause of action, other than in connection with seeking to dissolve a corporation, in which case a receiver’s appointment is a cause of action.
A court receiver is a useful tool to preserve, maintain and hopefully enhance the value of the real estate. This benefits the property owners as well as the creditors.
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…