RECEIVERSHIP & ASSIGNMENT OF RENTS LITIGATION
Receiverships are often times a product of commercial foreclosures in Florida, although they also have applicability in partnership disputes and other forms of litigation. Though expensive, the appointment of a receiver can be a valuable tool for a mortgage holder in Florida to prevent waste of its secured collateral. Governed largely by common law, the ability to obtain a receiver is determined primarily by the specific facts of the case. For example, if a commercial mortgagor is committing waste, or otherwise jeopardizing the collateralized property, a lender may have sufficient grounds to petition the court for a receiver. Doing so may seem cost prohibitive in the short term, but can save significant money and trouble in the long-term.
Most commercial mortgages in Florida contain an “assignment of rents” provision. Although the standard commercial mortgage language is not surprisingly heavily in favor of the drafter (the bank), Florida Statute 679.07 sets forth some restrictions for a lender’s enforcement of an assignment of rents provision in a mortgage. Primarily, the statute distinguishes between the sequestration of rents (679.07(3)) and the turnover of rents (679.07(4)). Sequestration of rents involves the mortgagor (borrower) turning the rents enjoyed from a commercial property over to the registry of the court or other custodial account the Court sees fit. The statute provides great leeway to a trial court in whether to compel sequestration of the rents. With very little case law governing the interpretation of (679.07(3)) a trial judge would ostensibly be given deference by an appellate court in determining whether sequestration of rents is appropriate.
At Law Offices of Paul A. Humbert, P.L. we’ve litigated complicated receivership and assignment of rents issues, and can provide guidance on how to effectively use these tools to maximize recovery and mitigate risk to your collateral as a secured lender.
For more information about how we can help you with receivership & assignment of rents, contact the Law Offices of Paul A. Humbert, P.L. today. Our attorneys want to work for you and ensure an optimal negotiating process.
Paul is licensed to practice law in the following courts:
- Florida State Court
- Florida Southern District of Florida Federal Court
- Southern District of Florida Bankruptcy Court
- Florida Middle District of Florida Federal Court
- Middle District of Florida Bankruptcy Court
- United States Eleventh Circuit Court of Appeals