When commercial real estate does not go as planned, the court system often steps in to finalize sales and debt recovery. A property management company loses control of its assets if the properties move into receivership. Receiverships are the result of business disputes and real estate closures. Additionally, a divorce can also lead to the implementation of receivership services.
Number One: Financial Hardships Lead to Receivership Services
Occasionally, receivership services are initiated by impatient creditors. For the most part, however, the receivership process occurs when an owner can no longer meet the financial obligations for owning a property. The property may be a single residential home that is part of a divorce or a multi-unit apartment building owned by a group of investors. Commercial real estate companies can be on either end of the receivership process. They may be the company that is attempting to get out from under a financial burden they can no longer meet or they can be attempting to purchase a property that has just entered the receivership process.
Financial hardships can be felt by businesses that are considered both large and small. For instance, nearly 70% of commercial buildings are smaller than 10,000 square feet in size and are generally valued much lower than $2.5 million. These small buildings are typically frequented by people on the main Streets across America and include everything from retail, small offices, strip shopping centers. Larger buildings that sell for more than $2.5 million are often multi story office buildings, office parks, and warehouses. No matter what the size or the purpose, falling behind on financial commitments and business loans can lead to bankruptcy and the need for receivership services.
Number Two: Courts Appoint Receivership Representatives
A receiver is a party appointed by the court. This position is commonly used in real estate foreclosures as well as business disputes. The receiver is responsible for managing property and all of its processes during the entire length of the pending action. Once the court appoints the receiver the business owner may either agree to use the receiver or contest. If contested, a hearing is scheduled to determine both the reason for the necessity of the receivership and the qualifications of the named receiver. Once appointed, the receiver is from then on thought of as a court officer. With this position, the court appointed receivership operates with a certain degree of some judicial immunity.
Number Three: Receivers Complete a Variety of Services
Working as an impartial mediator, a receiver works in the best interest of property owners and real estate managers, as well as tenant representation. Once appointed, the length of the process involves several tasks, including:continued and ongoing court appearances, detailed and updated reports to all involved parties, takeover services, and post takeover services. Dealing with tenants, creditors, and new owners is a task that is completed by court appointed recivership services.