Also known as:appointing a receiver · appointed a receiver · appointments of receivers · receiver appointment · receivership appointment
Written by attorneys · grounded in primary & secondary sources — see below
A court-ordered mechanism by which a neutral third party assumes control over mortgaged real property to collect rents and prevent waste. The appointment occurs at the request of a mortgagee upon mortgagor default and operates to preserve the value of the collateral for the benefit of lienholders.
Sources & Authorities
How it applies
Common Examples
2
Senior Mortgagee Seeks Priority Appointment
Sky Housing holds the senior mortgage on a mixed-use building owned by National Properties. The mortgage describes the collateral as the real property and improvements but contains no rents clause or receivership authorization. Liberty Estates holds the junior mortgage, which expressly mortgages all rents and authorizes appointment of a receiver upon default. After National Properties defaults on both loans, Liberty Estates moves for appointment of a receiver. Sky Housing cross-moves. The court grants Liberty Estates the receivership because its mortgage supplies the required rents or receivership language while the senior mortgage supplies neither.
Junior Receiver Applies Collected Rents
Creek Power holds the senior mortgage on Alpha Oil's wind-farm operations center. The mortgage lacks any rents assignment or receivership authorization. National Oil holds the junior mortgage, which assigns all lease income and authorizes a receiver upon default. National Oil obtains appointment of a receiver that collects rents, pays taxes, and makes structural repairs. Before Creek Power secures its own receiver, the junior receiver may retain the net rents after those expenditures and apply them to the junior obligation.
Put it into practice
Test Yourself
10
Practice Questions5
· 12 primary sources
Select any source to read its text and confirm it supports the definition.
Statutes
Federal Rules
Uniform Acts
Model Codes
Restatements
Casebooks
Study Supplements
Common questions
Frequently Asked
4
Which mortgagee receives priority when both seek appointment of a receiver?+
A senior mortgagee's request has priority unless the senior mortgage contains neither a mortgage on the rents nor a receivership authorization and the junior mortgage contains at least one of those provisions. The priority rule applies even if a junior receiver has already been appointed.
Supporting sources
What may a junior receiver do with rents collected before a senior receiver is appointed?+
The junior receiver may collect rents and apply them first to real estate taxes and reasonable maintenance and repair expenses. Any excess may be applied to the junior obligation. The junior receiver has no duty to apply excess to the senior obligation.
Supporting sources
Does a junior mortgagee need a rents clause to obtain a receiver?+
No. The junior mortgagee may still obtain appointment of a receiver under general state law even without a rents clause or receivership authorization in its own documents. The junior mortgagee then enjoys the right to rents until a senior receiver is appointed.
Supporting sources
What limits apply to a junior receiver once a senior receiver is appointed?+
The junior receiver must account to the senior receiver for any rents that accrued but remained uncollected. The junior receiver must also surrender unauthorized prepayments and may have improvident leases disaffirmed by the successor receiver.
Supporting sources
Business Associations Agency and PartnershipDissolution · Distinguished from winding up and terminationUBEFoundational