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New Florida Law Came into effect July 1, 2020 called the “Uniform Commercial Real Estate Receivership Act” – Serves to Streamline Receivership Process to Protect and Preserve Value - Reyes Law Group

New Florida Law Came into effect July 1, 2020 called the “Uniform Commercial Real Estate Receivership Act” – Serves to Streamline Receivership Process to Protect and Preserve Value

A new Florida law came into effect July 1, 2020 called the Uniform Commercial Real Estate Receivership Act (“Act”).  (It’s part of the new Chapter 714 of the Florida Statutes.)  The Act codifies case law relating to the right to have a receiver appointed by the court in commercial foreclosure actions.  The intent is to provide clarity, predictability, and uniformity on the standard for the appointment of a receiver and the powers of receivers.  While new and likely to generate much discussion about its application, it will become increasingly important to commercial asset managers, loan portfolio managers, investors and lenders as they face the anticipated volume of commercial foreclosures on the horizon due to the impact of the COVID-19 pandemic. 

I will lay out aspects of the new law in follow-up posts; however, to help get you started understanding its appeal, see the introductory section on the Court’s power to “appoint a receiver” before and after judgment.  (In the meantime, naturally, if you are grappling with commercial loan defaults and have a pressing need to pursue commercial foreclosures – we handle them in Florida – statewide.  Call or email us – we can help!)  

Fla. Stat. 714.06. Appointment of receiver

(1) The court may appoint a receiver:

(a) Before judgment, to protect a party that demonstrates an apparent right, title, or interest in real property that is the subject of the action, if the property or its revenue-producing potential:

  1. Is being subjected to or is in danger of waste, loss, substantial diminution in value, dissipation, or impairment; or
  2. Has been or is about to be the subject of a voidable transaction;

(b) After judgment:

  1. To carry the judgment into effect; or
  2. To preserve nonexempt real property pending appeal or when an execution has been returned unsatisfied and the owner refuses to apply the property in satisfaction of the judgment;

(c) In an action in which a receiver for real property may be appointed on equitable grounds, subject to the requirements of paragraphs (a) and (b); or

(d) During the time allowed for redemption, to preserve real property sold in an execution or foreclosure sale and secure its rents to the person entitled to the rents.

(2) In connection with the foreclosure or other enforcement of a mortgage, the court shall consider the following facts and circumstances, together with any other relevant facts, in deciding whether to appoint a receiver for the mortgaged property:

(a) Appointment is necessary to protect the property from waste, loss, substantial diminution in value, transfer, dissipation, or impairment;

(b) The mortgagor agreed in a signed record to the appointment of a receiver on default;

(c) The owner agreed, after default and in a signed record, to appointment of a receiver;

(d) The property and any other collateral held by the mortgagee are not sufficient to satisfy the secured obligation;

(e) The owner fails to turn over to the mortgagee proceeds or rents the mortgagee was entitled to collect; or

(f) The holder of a subordinate lien obtains appointment of a receiver for the property.

(3) The court may condition the appointment of a receiver without prior notice or hearing under s. 714.03 on the giving of security by the person seeking the appointment for the payment of damages, reasonable attorney fees, and costs incurred or suffered by any person if the court later concludes that the appointment was not justified. If the court later concludes that the appointment was justified and the order of appointment of the receiver becomes final and no longer subject to appeal, the court shall release the bond or other security. When any order appointing a receiver or providing for injunctive relief is issued on the pleading of a municipality or the state, or any officer, agency, or political subdivision thereof, the court may require or dispense with a bond, with or without surety, and conditioned in the same manner, having due regard for public interest.

(4) A party adversely affected by an order appointing a receiver may move to dissolve or modify the order at any time. If a party moves to dissolve or modify the order, the motion must be heard within 5 days after the movant applies for a hearing on the motion or at such time as the court determines is reasonable and appropriate under the circumstances after the movant applies for a hearing on the motion. After notice and a hearing, the court may grant relief for cause shown.