Court-Appointed Receiverships: Efficiency in the Court System

First, this is not a football term.  In the legal universe, a receiver can be appointed by a government regulator pursuant to a statute, appointed by a court or appointed privately.  Under a receivership, the receiver undertakes custodial responsibility over another’s property, assets and rights.  The extent of the receiver’s duties and powers are stated in the appointment documents, be it a court order, a statute or private agreement.  Receiverships are most commonly utilized for: interim corporate management, marital dissolutions, fraudulent transfers, criminal profiteering, white collar crime and real property disputes.

The receiver is a neutral third party many times playing an interim role while a separate (likely underlying) dispute is resolved.  In the case of real property, receiverships are common and necessary.  Typically, when dealing with real property, the receiver is appointed by a court based on a property dispute that has reached the court system (i.e. health and safety code violations, foreclosure proceedings).

For instance, if an apartment owner is found to be in violation of health and safety codes and a court is convinced the apartment owner is not capable of solving the underlying problem on his/her own, a receiver may be appointed to take over the property.  While the property is under receivership, the receiver will oversee and coordinate rent collection, carry out maintenance and repairs to bring the property up to code with respect to the applicable health and safety laws and in doing so potentially secure an additional loan on the subject property to finance the required maintenance and repairs.

The receiver, in the above example, does not work for the owner of the property nor does it work for the tenants or the tenants’ advocates.  The receiver is a neutral third party carrying out duties bestowed upon him/her by the court pursuant to a court order.  The receiver is a fiduciary and officer of the court and must oversee the property and assets according to the court’s directives.  The receiver will be obligated to report back to the court through comprehensive reports detailing the budget, progress, projections and goals.  Once the receiver completes the objectives of the court’s order and files a final report reflecting such, the receivership will be dismissed and the receiver shall be discharged from his/her duties.

For more information regarding court-appointed receiverships related to real property, please contact Griswold Law at (858) 481-1300 or email at rgriswold@griswoldlawsandiego.com.