What is receivership?

There can be many steps when it comes to property litigation, and it can be a lengthy process. While the conflict is pending, someone needs to continue to manage the property.

When there is a disagreement about a piece of property, the court appoints a receiver to take specific actions until the court decides on what will happen next. The receiver is supposed to remain neutral and act for the benefit of the property.

Here’s what you need to know about receivership and how it could apply to your property.

When is a receiver appointed?

Not every conflict requires a receiver, but the court or a party to the case may request a receiver in situations, including:

  • Dissolution of a company
  • Suspicion of embezzlement
  • Property needs a neutral party to collect rent or pay debts during litigation

The Code of Civil Procedure provides guidance for when the court can or should appoint a receiver and what that receiver should do.

What actions can a receiver take?

Most importantly, the receiver acts on behalf of the court. The litigants cannot request the receiver to take any specific action. The receiver also cannot take any independent action. The duties of a receiver often include tasks, such as:

  • Collecting rents
  • Paying taxes
  • Divide property income
  • Make transfers
  • Pay debts

A receiver may only be able to take limited action, but those actions are essential. If any party wants the receiver to take a specific action, they must go through the court. Both parties count on the receiver to carry out the orders of the court to maintain the property.