What is a Receiver?
A Receiver is a person "placed in the custodial responsibility for the property of others, including tangible and intangible assets and rights." The Receiver controls all of the assets over which he is appointed, most often being all of the property of the business. The Receiver takes over the management of the property and all associated operational, insurance and tax aspects as a neutral third party.
What is Receivership?
A legal arrangement typically during a foreclosure proceeding or during litigation wherein a circuit court appoints, on behalf of a lender or the owner of a distressed asset, an individual or firm to take over all aspects of the operations of the distressed asset. Services may include asset stabilization, property management, outstanding construction issues, tenant retention, marketing and repositioning, leasing and sales. The Receiver's purpose is to reduce costs, add value and maximize the potential of the property to help elevate it out of its troubled situation.
When is Receivership recommended?
The appointment of a Receiver is justified when a property in dispute is allowed to deteriorate to the extent where emergency repairs are necessary, and where there is good reason to suspect that the property is going to be wasted, sold, misused or destroyed if the court does not take action to preserve it. A Receiver can also be appointed when it appears that no person with a legal right to manage a certain property is present.
Who does the Receiver represent?
The Receiver represents the court where a case is being heard and the plaintiff may be a lender and the defendant a borrower, for example. A Receiver assumes control of all the property subject to the Receivership but does not take title to the property and cannot exercise control over property outside the territorial authority of the court. A Receiver does not represent the individual whose property is being administered, since the Receiver is an officer of the court and is responsible to the court for protecting the interests of all opposing parties fairly. The Receiver is required to account to the court at regular intervals for all the property entrusted to him during, and at the termination of, the appointment.
Who can be a Receiver in Florida?
A Receiver should be someone who has an inherent understanding of the law, is a good business manager, and is often a skilled turnaround consultant. A Receiver is held to the highest ethical and commercial standards and must exhibit good judgment. An effective Receiver should be knowledgeable in the area of property management. The Receiver should be:
- A qualified, capable professional with a proven track record in the real estate industry
- Someone who understands the legal process
- Someone who understands all sides of the process and the asset challenges
Caution: Do not hire someone who has no Receivership background or who is learning to be a Receiver.
Where should a Receiver be?
A Receiver for any property in the USA can be located anywhere in the USA. A Receiver is not restricted by licensing. However, a Receiver specializing in the state of Florida would provide familiarity with local requirements.
Who needs a Receiver?
Banks and lenders who own foreclosed or troubled property often require Receivers to quickly gain control of troubled assets in an effort to stabilize them and avoid further loss of value.
Why do banks and lenders request a Receiver?
Banks and lenders ask for a Receiver to be appointed to analyze a troubled property and maintain and increase its value through the proper and continued management and assurance of all compliances required. Real estate receivership keeps the original borrower from further reducing the property value that could arise from things like deferred maintenance, and establishes a priority action for property stabilization.
How do Court Appointed Receiver fees work?
Court Appointed Receivers will set their own fee structure, most likely on an hourly fee schedule that includes the Receiver, with other personnel including Asset Manager, Property Management personnel, accounting, marketing, maintenance and administrative personnel receiving payment as verified by the Receiver. A Receiver may also be compensated for costs or traveling expenses, and counsel fees are allowed if the receiver must hire an attorney. The compensation amount is based on the value of the property, difficulties encountered, and time spent, as well as upon the Receiver's skill, experience and diligence and the success of his efforts. It is illegal for the Receiver to take payment money out of the property being managed.
What is a Court-Appointed Receiver?
A Court-Appointed Receiver, also sometimes referred to as Court Ordered Receiver, is a person appointed by the court as a neutral third party to take charge of assets usually where they are subject to legal dispute, most often with the purpose of saving the lender time and money in allowing them to focus on their area of expertise as opposed to them managing the property themselves.
How is a Receivership motion requested?
A Receivership motion is requested by filing a motion with a draft order appointing a Receiver that specifies all the duties and responsibilities of the Receiver. This document is typically prepared by the plaintiff's counsel, reviewed by the borrower counsel, and reviewed by the judge. The order appointing Receiver is a critical document. If drafted appropriately, it can simplify the work of all parties involved.
When is a Receiver appointed?
A Receiver is appointed simultaneously with the filing of a foreclosure action. When a party makes a motion to the court to have a Receiver appointed, most loan documents provide for a Receiver to be appointed "by right" if there is a default under the loan, however, judges tend to require a higher standard. This standard usually includes the threat of ongoing "waste" or diminution of value. "Waste" can include real estate taxes and insurance not being paid for, as well as lack of physical maintenance to the property... the best time to seek Receivership.
What are the advantages of gaining a Court-Appointed Receivership in Florida?
Through reducing expenses, examining vendor contracts, solving outstanding construction issues, stabilizing existing tenant relationships and marketing the troubled asset to fill vacancies or offer for sale, the Receiver enhances the value of the property and is a buffer for the bank or lender. Receivers can control the finances of the property, pay for maintenance and needed improvements through the Receivership estate, and prevent further decay to the property.