While most major lenders understand the benefits of having a court appointed receiver when foreclosing on a piece of real property, there are some private lenders and smaller finance companies who seek foreclosure through the courts without ever asking to have a receiver appointed. If you are a lender considering foreclosing on a piece of real property within the State of California, it would be in your best interest to understand the benefits of a court appointed receiver.
Are Official Court Appointed Receivers Always Necessary?
Oftentimes lenders seeking to recover their investment are under the misconception that they need to have the court appoint an official receiver. While there are benefits of having a receiver appointed, there is nothing in the law that says you must. However, after understanding exactly just what a receiver is and can do for you, it is conceivable that you will ask to have one appointed.
Resolving Complex Issues
One thing to keep in mind is that the property is going into foreclosure most likely because the current owner/borrower wasn’t able to meet financial obligations such as making loan payments in full or on time. Perhaps the property was mismanaged, in the case of commercial properties, and perhaps the income property didn’t make enough to cover the costs involved of operating the property in question. Some issues may have short term solutions while other times the solution may be highly complex and require a greater length of time to investigate and resolve. The more complex the problem, the longer it will take to get to the bottom of it and reach a solution. An official receiver is equipped to deal with these types of issues much quicker than the lender but bear in mind the solution may be somewhere off in the future, even so.
Actions Resulting from Defects in Residential Construction
Slightly over a decade ago the California legislature ruled on defects in residential properties and as a result of these laws, the construction company has the result to go over each of the alleged faults and is given the ability to fix any problems, if possible. This legislation is extremely complex and it actually takes a knowledgeable receiver to weed through all the details in order to reach an equitable solution to both the construction company and the current owner. Without a thorough understanding of what this law entails, the lender could be leaving himself open to costly litigation. This has been seen time and again in Los Angeles Receivership cases and is why experts such as FedReceiver are often appointed by the court at the request of lenders looking to avoid such costly and stressful litigation.
If you are a lender in the State of California looking to recover money lent on a piece of real property, instead of jumping into foreclosure, it would be in your best interest to contact a knowledgeable consultant to walk you through the steps you need to take to recover as much of your investment as possible. While foreclosure is probably unavoidable, an official receiver has the fiduciary duty to act impartially but always as an agent of the court. This enables him or her to recoup as much of your investment as possible. And this, after all, is why you are taking the borrower to court.