- Florida has adopted the Uniform Commercial Real Estate Receivership Act as of July 1, 2020
- This act codifies the receivership appointment process and provides uniformity to the process of appointment and the powers of a receiver
- The appointment of the receiver is within the courts discretion and there are several governing factors for how the court goes about if and how they appoint the receiver
- The UCRERA establishes duties for owners of commercial property while it is being managed by a receiver
On July 1, 2020, the Uniform Commercial Real Estate Receivership Act (UCRERA) became effective after Governor DeSantis signed the law on June 27, 2020. This codifies existing common law regarding commercial receiverships during foreclosures. While Florida law has long recognized commercial receiverships as a remedy available to stakeholders in commercial property, the UCRERA has created uniformity for the process by codifying Florida common law. The UCRERA defines a receiver as a person appointed by a court to take possession of the property of another to receive, collect, care for, and dispose of the property or the profits of the property.
The UCRERA aims to protect creditors’ interests in commercial real property in Florida. The act applies to receiverships for interests in commercial real estate and associated personal property. This act does not create an independent cause of action and is only available when a party brings an underlying action relating to commercial real estate, such as a foreclosure proceeding.
The appointment of the receiver is firmly within the court’s discretion. The appointment may happen without any notice to the property owner and without an opportunity for a hearing, provided the lender can show that it will suffer immediate irreparable harm if such notice is given or that waste, dissipation, impairment, or substantial diminution in value of the property will occur if a receiver is not immediately appointed. If the lender cannot meet this standard of proof, a hearing will be held regarding the appointment. A receiver can also be appointed if the loan contract provides for one to be appointed.
In terms of the operation of the property, the receiver takes the place of the property owner and the creditors are not allowed to use receivership property to satisfy their outstanding obligations without court approval. The court may also pay the receiver reasonable fees and reimburse reasonable expenses paid in the course of the receiver’s duties. The court can also require the party who requested and justified the receiver’s appointment be the one to pay their fees.
Under UCRERA, the receiver is allowed to sell, use, license, or transfer ownership in receivership property if it is free of any liens or to adopt or reject executory contracts under specific circumstances before judgment is rendered in the case. The new law allows the receiver to notify creditors who may be unaware of the foreclosure or receivership proceeding. They can also dispose or satisfy claims of creditors provided they have court approval. The act also allows the court to appoint a receiver in post judgment proceedings to enforce the judgment, protect the property while an appeal is pending, or secure a property’s rents to the person entitled to the rents after a foreclosure sale.
The UCRERA establishes the following duties to the owners:
- a) Assist and cooperate in the administration of the receiver’s duties;
- b) Preserve and turn over all receivership property;
- c) Identify and make available all records;
- d) Submit to an examination under oath, if subpoenaed; and
- e) Perform any other duty imposed by the court.
If the owner knowingly fails to perform their duties, the UCRERA has provisions that allow for sanctions to be awarded.
Enacting this new law provides a uniform system for the appointment of a receiver and administration of commercial real property receiverships in Florida.