What Is A Court Appointed Receiver In Real Estate?
Where a loan is in default, or where there is a business, family divorce, or probate dispute involving the operations, management, ownership, or sale of real property or business assets, problems may arise that could threaten the financial viability or otherwise diminish the value of real estate assets. By appointing a court appointed receiver or Special Master with receivership authority, the parties may have the ability to preserve, protect, and enhance these assets.
But beyond simply protecting and preserving assets, a court-appointed receiver provides an array of benefits to parties on both sides of a legal dispute. Here is a breakdown of some of those benefits.
Breaking Down the Benefits of a Court-Appointed Receiver
Before a court-appointed receiver for real estate even enters the arena, the motion for their appointment sends out a signal to the other party that the petitioner “means business.” The motion to appoint, alone, may be enough to bring about a settlement through payment of a defaulted loan, providing information necessary for the other party to make decisions, or allocating property interests. When a real estate receiver is formally appointed, the goal is to preserve, protect, and ultimately enhance the business or property assets. Some of the top benefits of a receivership appointment include:
Protecting Assets
The primary role of a court-appointed receiver is to protect and preserve assets in dispute. Loan default, waste, loss, deterioration, or impairment of the disputed asset are reasonable justifications for petitioning the court for a receivership appointment. Judges can issue a receivership appointment order to secure, manage, and stabilize assets, requiring the receiver to post bond and protect the property from further damage, minimizing liability for the owners or interested parties.
Preserve, Add Value
The presiding court gives the appointed receiver for real estate the authority to implement procedures and enact restrictions to protect the value of a disputed property. Proper accounting procedures can be put in place to manage cash flow and, when needed, receivers with experience in local real estate markets can develop marketing strategies to increase the value of the property and velocity of sale. By streamlining this process, a court appointed receiver is able to preserve value and reduce legal fees to the benefit of all parties.
Maximize Efficiency
A primary objective of any real estate receiver should be to reduce the cost and time expenditures needed to reach a settlement. An experienced court receiver, having undergone extensive training, can complete court-ordered activities and timely procedures more efficiently than is usually possible during protracted litigation.
Lessen Liability
During the petitioning phase, the attorney drafting the petition may include in it exculpatory language that exempts their client from liability. Legal claims may intensify or become increasingly complex should a property or business have to undergo a sale. By neutralizing the disputed property and approaching a potential sale in a fully impartial manner, receivers can protect parties from assuming liability, while maximizing value.
Equal Rights
Court-appointed receivers provide a great deal of value to litigants who may feel overwhelmed by the legal process, or by one another, by leveling the playing field. When a presiding judge approves a petition and appoints a receiver to the case, that receiver is given the authority to take control of disputed assets and put parties on equal footing with regards to accessing information or administrating the property. Receivers, therefore, enable an objective balance and provide court oversight to a challenging process.
Increase the Possibility of Settlement
Finally, the simple act of petitioning the court for a receiver conveys the seriousness of a situation to the opposing party. Concerns about additional costs and loss of control can lead to the desire for a settlement.
Corporate Trusteeship
In cases involving real estate assets, bankruptcy, or divorce, court-appointed receivers can fulfill the functions of a corporate trustee. Expertise in the local real estate market is a must if receivers are going to resolve a dispute efficiently while still meeting the wealth-management and investment goals of stakeholders.
Choose wisely.
With all the benefits that a court-appointed receiver can provide, choosing an Arizona receiver to engage in your case may seem like an easy decision. But keep in mind that because of the financial implications, real property and other assets are likely the largest, and tend to be the most contentious, targets of receivership. Selling and administrating real estate subject to a court order can be challenging. But the right court-appointed receivers, with the ability to act as a neutral party, while proactively managing properties and businesses to address health and safety related and regulatory concerns can set nervous minds at ease, smoothing out the path to resolution for lenders or parties who are involved in contentious litigation matters.
R.O.I. Properties works closely with the parties to act on a neutral basis, while preserving, protecting, and enhancing the value of real estate assets.
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Are you looking to achieve the maximum benefits from the court appointment of a Special Master? Our expert team has helped to resolve more than 100 cases, representing more than $350 million in disputed assets.
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