5 Duties a Court Appointed Receiver Performs
September 14th, 2020
Owning commercial real estate is a lucrative endeavor. It creates a passive income stream that benefits the owner/borrower and the lender. When times are good, landlords reap the rewards of steady tenants and well-kept properties. Lenders receive their payments plus interest. It is a win-win for both parties. When things go wrong, as they sometimes do, and a borrower falls behind on their mortgage, lenders may take the necessary action to mitigate loss and start foreclosure proceedings. They want to protect their interest in the property and may request another company to come in and take over control.
Preserve the integrity of your commercial real estate and ask for The Estes Group to be your court appointed receiver. Our team is one of the few management companies in the southeast able to provide this service to lenders and courts. We believe in an open and transparent relationship with all the parties involved.
What Court Appointed Receiverships Do
Once a court-appointed receiver is tasked with handling a distressed property, there are many different responsibilities involved. While this list is not extensive, it gives you an idea of the importance a receivership has over a piece of real estate:
- Secure the Property under Receivership: Before anything else can be done, the receiver must step in and take custody and control of a property. First, they must secure the physical property by changing locks. Next, they need to gather all pertinent information such as copies of leases, any contracts, bills, and any information management software.
- Notify Parties of New Management: Before the receivership, tenants, contractors, and other interested parties dealt with the borrower or its management company. Now, the receiver company must notify all parties of the change and that it is the new point of contact. As needed, they must also place their company name on all accounts related to the property, such as utilities.
- Manage Existing Leases: Any existing leases must be reviewed to ensure all obligations are being met. This may include analyzing rent rates and tenant performance. This extra information gives the receivership the information to assess if a tenant’s lease should be renewed or terminated upon its expiration or default.
- Enter into New Leases: Sometimes, a distressed property has vacancies because a tenant moves or the receiver deems a lease is underperforming. They can then enter into new contracts with new tenants. In the event of foreclosure, the court may require new leases.
- Collect Monthly Rents: Part of commercial property leasing is cash flow in the form of rent payments. The receiver company is tasked with collecting monthly rent monies and using those funds to preserve the value and making loan payments. By protecting the property’s value, the lender and borrower may both benefit.
Maximize the Value of a Distressed Commercial Property
Let the team at The Estes Group take over the day-to-day operations of your distressed investment properties through a court-appointed receivership. We strive to add value where possible, with an extensive assessment of the property in question and detailed monthly reports. You will know exactly what is going on when you work with us. Our team primarily works in Mississippi; Tennessee, Louisiana and Alabama.
Find out more about how court-appointed receiverships work. Call us at 601-362-9633 or contact us online to discuss your real estate goals.