Court Appointed Real Estate Receiverships
A variety of circumstances may lead to the appointment of a Court Appointed Receiver to administer the affairs of a property. It is not unusual that the real estate is “distressed” in regards to one or more issues: vacancies, deferred maintenance, code violations, rent delinquencies, etc. These issues demand responsive, experienced and competent management so that the Receiver, as a fiduciary officer of the Court, meets his or her responsibilities as outlined in the Order of Appointment and as required under related governing regulations. Simply stated, the Receiver is charged with preservation of the property’s market value and, if directed, administering the liquidation of the asset.
Most often, a Receiver will engage a highly respected and qualified property management firm which has the resources and the intimate knowledge of the unique requirements of managing receiver controlled real estate to act as a secondary appointment of the court. The property management firm must be able, on immediate notice, to:
• provide the tenants, if any, with court approved notice of their engagement and instructions of where to make future rent payments
• secure the access to the property, its equipment and supplies
• inspect the property so as to identify any hazards, health or safety issues
• obtain possession of all available books and records
• perform a property tax search to identify any delinquent taxes
• open a banking account for the deposit of operating funds
• coordinate the transfer of all security deposits and open a properly administered account for the same
• review all service contracts, accounts payable, delinquencies and related issues
• verify physical occupancies
• verify rent rolls and related lease documents
• develop deferred maintenance remediation schedules and budgets
• insure that all necessary liability and property insurances are adequate and in effect
• evaluate existing staff and hire or employ new staff as employees of agent, so as to avoid necessity of Receiver becoming an employer
• meet with a representative of each tenant to address any issues or concerns etc.
While performing all of these duties and, eventually, developing a strategic plan for the property for review and approval by the Receiver, the management firm must remain constantly aware of the limitations and risks that the Receiver assumes by his or her appointment. As an Accredited Management Organization (AMO),THE CABOT GROUP has received appointments by the Courts in New York State to serve as Managing Agent for almost every type of real estate property imaginable, including: apartment communities, office buildings, golf courses, restaurants, retail outlets and warehouses. We have found that with the right combination of experience, legal knowledge, and motivation, assuming management of a Receivership property is a most rewarding challenge.