Real Estate Receiverships

A rents, issues and profits (real estate) receivership arises out of the enforcement of a deed of trust/mortgage. A receiver may be appointed to protect, preserve and secure rents during a foreclosure action. Typically, receiver appointments are completed under the specific performance provision of the deed of trust or assignment of rents clause in the loan documents; however, such a clause is not necessary for the appointment of a receiver.

A receiver may also be appointed to take possession of a property in judicial foreclosure where the property is in danger of being lost, removed or materially injured or where conditions in the deed of trust or mortgage have not been performed. In addition, a receiver may be appointed in a judicial foreclosure in the event that the property is worth less than the debt it secures.

The most common type of real estate/income property that are subject to the appointment of receiver include but are not limited to:

  • Multifamily
  • Office
  • Retail
  • Industrial
  • Medical
  • Hotel/Motel
  • Mobile Home/Manufactured Housing
  • Equestrian
  • Self Storage Facility
  • Other (gas station/car wash, etc.)

Typically, a receiver who is appointed in a rents, issues and profits case is one that has a professional background in the operation of a business/real estate and may include attorneys, CPA’s, property managers and/or other similarly qualified professionals.

The typical life cycle of a real estate receivership varies. A case can last for less than a day and up to a year or longer, depending on many factors. Ordinarily, a real estate case lasts only a few months, pending the completion of a foreclosure action by the lender. If the underlying default is cured or a bankruptcy is filed, these would be qualifying events to terminate the receivership.3

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