It is common in a commercial foreclosure for the lender to request that the judge appoint a receiver to take control of the property. Receivers are generally individuals or companies. Some receivers are attorneys. Frequently, landlords in foreclosure do not maintain the property, avoid paying maintenance crews, keep rental payments, and do not make their mortgage payments. Although, commercial real estate owners do not vandalize their properties like individual homeowners, who strip their homes when they lose them to foreclosure, receivers help protect and maintain the property, restore order to the business and limit the lender’s liability to make sure everything runs smoothly during the foreclosure.
By hiring a receiver, the lender is showing you that they mean business. This puts pressure on you to work out some type of negotiations with the lender if you want to keep your property and continue running your business. It’s a good idea to consult with a commercial real estate foreclosure defense attorney if your lender has filed foreclosure and has been successful in getting the court to appoint a receiver. The attorney can assist you with negotiations with your lender, and defend you in court.
Authority of Receivers
Receivers have the authority to do the following:
- Hire tradesmen to maintain the building.
- Make decisions about the operation of the property and the business.
- Notify tenants of the receivership.
- Execute leases.
- Collect rents.
- Pay taxes.
- Pay utilities.
- Maintain insurance.
- Hire a real estate broker to list and sell the property.
As a result of the increase in foreclosure filings, more lenders are recognizing the value of using receivers in commercial foreclosure. Receivers receive hundreds of dollars an hour for their services, which include hiring a real estate broker to list and sell the property. Properties are priced below market to move them quickly because commercial properties take longer to sell. It is sometimes harder to find buyers. By helping the seller find a buyer, this also helps the lender because they don’t have to take over the title to the property and conduct due diligence. By using a receiver, the lender can get rid of the property quicker and recover some of their financial losses. The receiver is dismissed by the court after the sale of the property.
Speak to an Attorney
Foreclosure and receivership laws are very complicated. It is highly recommended that you speak to a commercial foreclosure defense attorney, who can explain the laws and discuss your options to save your property from foreclosure. The attorney can negotiate with the lender and the receiver, and represent you in court.
