Alabama Senate Bill SB78 Introduced / Bill

                    SB78INTRODUCED
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SB78
FVFZD55-1
By Senator Smitherman
RFD: Judiciary
First Read: 07-Feb-24
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5 FVFZD55-1 02/07/2024 KMS (L)cr 2024-572
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First Read: 07-Feb-24
SYNOPSIS:
This act would create the Alabama Uniform
Commercial Real Estate Receivership Act.
This bill would create a uniform process for
state courts to appoint a receiver in disputes that
arise over commercial real estate, typically a default,
and would establish provisions governing the
appointment and powers of a receiver for real property
that is used for certain commercial purposes and any
personal property related to or used in operating that
real property.
A BILL
TO BE ENTITLED
AN ACT
To create the Alabama Uniform Commercial Real Estate
Receivership Act; to establish uniform requirements and the
authority of a receiver appointed by a court for the
management of commercial real estate during certain matters
pending before the court; to provide definitions; to provide
for notice and an opportunity for a hearing; to provide for
scope and exclusions; to provide for the power of the courts;
to provide for the appointment of a receiver, for
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to provide for the appointment of a receiver, for
disqualification from appointment as a receiver, and the
disclosure of any interest; to provide for bond and
alternative security; to provide for the status of receiver as
a lien creditor; to provide for the creating of a security
agreement covering after-acquired property; to provide for the
collection and turnover of receivership property; to provide
for the powers and duties of the receiver; to provide for the
duties of the owner and mortgagor; to provide for the use or a
stay of other actions and an injunction; to provide for the
engagement and compensation of other professionals; to provide
for the use or transfer of receivership property not in the
ordinary course of business; to provide for the creation of an
executory contract; to provide for defenses and immunities of
the receiver and for an interim report of the receiver; to
provide for notice of appointment, claims against the
receivership, and the distribution to creditors; to provide
for fees and expenses; to provide for the removal of the
receiver and the replacement and termination of the
receivership; to provide for the final report of the receiver
and for the discharge of the receiver; to provide for a
receivership in another state and ancillary reporting; to
provide an effect of enforcement by a mortgagee; to provide
for uniformity of application and construction; and to provide
for transition.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. Short title.
This act shall be known and may be cited as the Alabama
Uniform Commercial Real Estate Receivership Act.
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Uniform Commercial Real Estate Receivership Act.
Section 2. Definitions.
For the purposes of this act, the following terms have
the following meanings:
(1) AFFILIATE. a. With respect to an individual:
1. A companion of the individual;
2. A lineal ancestor or descendant, whether by blood or
adoption, of either of the following:
(i) The individual.
(ii) A companion of the individual;
3. A companion of an ancestor or descendant described
in subparagraph 2.;
4. A sibling, aunt, uncle, great aunt, great uncle,
first cousin, niece, nephew, grandniece, or grandnephew of the
individual, whether related by the whole or the half blood or
adoption, or a companion of any of them; or
5. Any other individual occupying the residence of the
individual.
b. With respect to a person other than an individual:
1. Another person that directly or indirectly controls,
is controlled by, or is under common control with the person;
2. An officer, director, manager, member, partner,
employee, or trustee or other fiduciary of the person; or
3. A companion of, or an individual occupying the
residence of, an individual described in subparagraph 1. or 2.
(2) COMPANION. Includes, but is not limited to, the
spouse or romantic partner of an individual.
(3) COURT. A circuit court of this state as well as a
federal court exercising jurisdiction over claims arising
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federal court exercising jurisdiction over claims arising
under this act.
(4) DISCHARGE. The removal or termination of the
receiver's obligations to possess, manage, preserve, or
administer the receivership property, or any combination of
the foregoing.
(5) EXECUTORY CONTRACT. A contract, including a lease,
under which each party has an unperformed obligation and the
failure of a party to complete performance would constitute a
material breach.
(6) GOVERNMENTAL UNIT. An office, department, division,
bureau, board, commission, or other agency of this state or a
subdivision of this state.
(7) INTERESTED PARTY. Any mortgagee, mortgagor, owner,
professional engaged pursuant to Section 15, claimant pursuant
to Section 20, or any person having an enforceable right or
claim which may be affected by the proceeding. The term as it
relates to particular persons may vary from time to time and
must be determined according to the particular purposes of,
and matter involved in, any proceeding.
(8) LIEN. An interest in property which secures payment
or performance of an obligation.
(9) MORTGAGE. A record, however denominated, that
creates or provides for a consensual lien on real property or
rents, even if the record also creates or provides for a lien
on personal property.
(10) MORTGAGEE. A person entitled to enforce an
obligation secured by a mortgage.
(11) MORTGAGOR. A person that grants a mortgage or a
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(11) MORTGAGOR. A person that grants a mortgage or a
successor in ownership of the real property described in the
mortgage.
(12) OWNER. The person for whose property a receiver is
appointed.
(13) PERSON. An individual, estate, business or
nonprofit entity, public corporation, government or
governmental subdivision, agency, or instrumentality, or other
legal entity.
(14) PROCEEDS. Any of the following property:
a. Whatever is acquired on the sale, lease, license,
exchange, or other disposition of receivership property.
b. Whatever is collected on, or distributed on account
of, receivership property.
c. Rights arising out of receivership property.
d. To the extent of the value of receivership property,
claims arising out of the loss, nonconformity, or interference
with the use of, defects or infringement of rights in, or
damage to the property.
e. To the extent of the value of receivership property
and to the extent payable to the owner or mortgagee, insurance
payable by reason of the loss or nonconformity of, defects or
infringement of rights in, or damage to the property.
(15) PROPERTY. All of a person's right, title, and
interest, both legal and equitable, in real and personal
property, tangible and intangible, wherever located and
however acquired. The term includes proceeds, products,
offspring, rents, or profits of or from the property.
(16) RECEIVER. A person appointed by the court as the
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(16) RECEIVER. A person appointed by the court as the
court's agent, and subject to the court's direction, to take
possession of, manage, and if authorized by this act or court
order, to transfer, sell, lease, license, exchange, collect,
or otherwise dispose of receivership property.
(17) RECEIVERSHIP. A proceeding in which a receiver is
appointed.
(18) RECEIVERSHIP PROPERTY. The property of an owner
which is described in the order appointing a receiver or a
subsequent order. The term includes any proceeds, products,
offspring, rents, or profits of or from the property.
(19) RECORD. When used as a noun, information that is
inscribed on a tangible medium or that is stored on an
electronic or other medium and is retrievable in perceivable
form.
(20) RENTS. Any of the following:
a. Sums payable for the right to possess or occupy, or
for the actual possession or occupation of, real property of
another person.
b. Sums payable to a mortgagor under a policy of
rental-interruption insurance covering real property.
c. Claims arising out of a default in the payment of
sums payable for the right to possess or occupy real property
of another person.
d. Sums payable to terminate an agreement to possess or
occupy real property of another person.
e. Sums payable to a mortgagor for payment or
reimbursement of expenses incurred in owning, operating, and
maintaining real property or incurred in constructing or
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maintaining real property or incurred in constructing or
installing improvements on real property.
f. Other sums payable under an agreement relating to
the real property of another person which constitute rents
under the law of this state other than this act.
(21) SECURED OBLIGATION. An obligation the payment or
performance of which is secured by a security agreement.
(22) SECURITY AGREEMENT. An agreement that creates or
provides for a lien.
(23) SIGN. Either of the following, with present intent
to authenticate or adopt a record:
a. To execute or adopt a tangible symbol.
b. To attach to or logically associate with the record
an electronic sound, symbol, or process.
(24) STATE. A state of the United States, the District
of Columbia, Puerto Rico, the United States Virgin Islands, or
any territory or insular possession subject to the
jurisdiction of the United States.
Section 3. Notice and opportunity for hearing.
(a) Except as otherwise provided in subsection (b), the
court may issue an order under this act only after notice and
opportunity for a hearing appropriate in the circumstances.
(b) The court may issue a preliminary order under this
act in any of the following circumstances:
(1) Without prior notice if the circumstances require
issuance of an order before notice is given.
(2) After notice and without a prior hearing if the
circumstances require issuance of an order before a hearing is
held.
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held.
(3) After notice and without a hearing, provided the
court finds that the administration of justice will be
preserved without a hearing.
(c) Upon request by an interested party for rehearing
of a preliminary order entered under subdivision (b)(1) or
(b)(2), the court shall schedule a hearing to make the order
final and in compliance with subsection (a).
Section 4. Scope; exclusions.
(a) Except as otherwise provided in subsection (b) or
(c), this act applies to a receivership for an interest in
real property and any personal property related to or used in
operating the real property.
(b) This act does not apply to a receivership for an
interest in real property improved by one to four dwelling
units unless:
(1) The interest is used for agricultural, commercial,
industrial, or mineral extraction purposes, other than
incidental uses by an owner occupying the property as the
owner's primary residence;
(2) The interest secures an obligation incurred at a
time when the property was used or planned for use for
agricultural, commercial, industrial, or mineral extraction
purposes;
(3) The owner planned or is planning to develop the
property into one or more dwelling units to be sold or leased
in the ordinary course of the owner's business; or
(4) The owner is collecting or has the right to collect
rents or other income from the property from a person other
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rents or other income from the property from a person other
than an affiliate of the owner.
(c) This act does not apply to a receivership
authorized by the law of this state other than this act in
which the receiver is a governmental unit or an individual
acting in an official capacity on behalf of the unit, except
to the extent provided by other law.
(d) This act does not limit the authority of a court to
appoint a receiver under the law of this state other than this
act.
(e) Unless displaced by a particular provision of this
act, the principles of law and equity supplement this act.
Section 5. Jurisdiction and venue.
(a) The court that appoints a receiver under this act
has statewide exclusive original jurisdiction, pursuant to
Section 12-11-30, Code of Alabama 1975, to direct the receiver
and determine any controversy related to the receivership or
receivership property.
(b) Venue for any actions filed pursuant to this act
shall be proper in any county where a substantial portion of
the receivership property is located.
Section 6. Appointment of receiver.
(a) The court may appoint a receiver:
(1) Before judgment, to protect a party that
demonstrates an apparent right, title, or interest in real
property that is the subject of the action, if any or all of
the property, its revenues, its rents, or its proceeds:
a. Is being subjected to or is in danger of waste,
loss, dissipation, or impairment; or
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loss, dissipation, or impairment; or
b. Has been or is about to be the subject of a voidable
transaction;
(2) After judgment:
a. To carry the judgment into effect; or
b. To preserve nonexempt real property pending appeal
or when an execution has been returned unsatisfied and the
owner refuses to apply the property in satisfaction of the
judgment; or
(3) In an action in which a receiver for real property
may be appointed on equitable grounds.
(b) In connection with the foreclosure or other
enforcement of a mortgage, the court may appoint a receiver
for the mortgaged property. The court shall consider all of
the following facts and circumstances, together with any other
relevant facts in deciding whether to appoint a receiver for
the mortgaged property:
(1) Appointment is necessary to protect the property
from waste, loss, transfer, dissipation, or impairment.
(2) The mortgagor agreed in a signed record to
appointment of a receiver on default.
(3) The owner agreed, after default and in a signed
record, to appointment of a receiver.
(4) The property and any other collateral held by the
mortgagee are not sufficient to satisfy the secured
obligation.
(5) The owner fails to turn over to the mortgagee
proceeds or rents the mortgagee was entitled to collect.
(6) The holder of a subordinate lien obtains
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(6) The holder of a subordinate lien obtains
appointment of a receiver for the property.
(c) The court may condition appointment of a receiver
without prior notice or hearing under Section 3(b)(1) or
3(b)(2) on the giving of security by the person seeking the
appointment for the payment of damages, reasonable attorney
fees, and costs incurred or suffered by any person if the
court later concludes that the appointment was not justified.
If the court later concludes that the appointment was
justified, the court shall release the security. Provided,
however, no security shall be required of this state or of an
officer or agency of this state.
Section 7. Disqualification from appointment as
receiver; disclosure of interest.
(a) The court may not appoint a person as receiver
unless the person submits to the court a statement under
penalty of perjury that the person is not disqualified.
(b) Except as otherwise provided in subsection (c), a
person is disqualified from appointment as receiver if the
person satisfies any of the following:
(1) Is an affiliate of a party.
(2) Has an interest materially adverse to an interest
of a party.
(3) Has a material financial interest in the outcome of
the action, other than compensation the court may allow the
receiver.
(4) Has a debtor-creditor relationship with a party.
(5) Holds an equity interest in a party, other than a
noncontrolling interest in a publicly traded company.
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noncontrolling interest in a publicly traded company.
(c) A person is not disqualified from appointment as
receiver solely because the person satisfies any of the
following:
(1) Was appointed receiver or is owed compensation in
an unrelated matter involving a party or was engaged by a
party in a matter unrelated to the receivership.
(2) Is an individual obligated to a party on a debt
that is not in default and was incurred primarily for
personal, family, or household purposes.
(3) Maintains with a party a deposit account as defined
in Section 7-9A-102(a), Code of Alabama 1975.
(d) A person seeking appointment of a receiver may
nominate a person to serve as receiver, but the court is not
bound by the nomination.
Section 8. Receiver's bond; alternative security.
(a) Except as otherwise provided in subsection (b), a
receiver shall post with the court a bond that satisfies all
of the following:
(1) Is conditioned on the faithful undertaking of the
receiver's duties.
(2) Has one or more sureties approved by the court.
(3) Is in an amount the court specifies.
(4) Is effective as of the date of the receiver's
appointment.
(b) The court may approve the posting by a receiver
with the court of alternative security, such as a letter of
credit or deposit of funds. The receiver may not use
receivership property as alternative security. Interest that
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receivership property as alternative security. Interest that
accrues on deposited funds must be paid to the receiver on the
receiver's discharge.
(c) The court may authorize a receiver to act before
the receiver posts the bond or alternative security required
by this section.
(d) A claim against a receiver's bond or alternative
security must be made not later than the date the receiver is
discharged.
Section 9. Status of receiver.
(a) On appointment of a receiver, the receiver has the
status of a lien creditor under Article 9A of Title 7, Code of
Alabama 1975, as to receivership property that is personal
property or fixtures.
(b) On appointment of a receiver, the receiver has the
status of a purchaser for value and without notice under
Section 35-4-90(a), Code of Alabama 1975, as to receivership
property that is real property.
Section 10. Security agreement covering after-acquired
property. 
Except as otherwise provided by the law of this state
other than this act, property that a receiver or owner
acquires after appointment of the receiver is subject to a
security agreement entered into before the appointment to the
same extent as if the court had not appointed the receiver.
Section 11. Collection and turnover of receivership
property.
(a) Unless the court orders otherwise, on demand by a
receiver:
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receiver:
(1) A person that owes a debt that is receivership
property and is matured or payable on demand or on order shall
pay the debt to or on the order of the receiver, except to the
extent the debt is subject to setoff or recoupment.
(2) Subject to subsection (c), a person that has
possession, custody, or control of receivership property shall
turn the property over to the receiver.
(b) A person that has actual notice of the appointment
of a receiver and owes a debt that is receivership property
may not satisfy the debt by payment to the owner.
(c) If a creditor has possession, custody, or control
of receivership property and the validity, perfection, or
priority of the creditor's lien on the property depends on the
creditor's possession, custody, or control, the creditor may
retain possession, custody, or control until the court orders
adequate protection of the creditor's lien.
(d) Unless a bona fide dispute exists about a
receiver's right to possession, custody, or control of
receivership property, the court may sanction as civil
contempt a person's failure to turn the property over when
required by this section.
Section 12. Powers and duties of receiver.
(a) Except as limited by court order or the law of this
state other than this act, a receiver may do any of the
following:
(1) Collect, control, manage, conserve, and protect
receivership property.
(2) Operate a business constituting receivership
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(2) Operate a business constituting receivership
property, including preservation, use, sale, lease, license,
exchange, collection, or disposition of the property in the
ordinary course of business.
(3) In the ordinary course of business, incur unsecured
debt and pay expenses incidental to the receiver's
preservation, use, sale, lease, license, exchange, collection,
or disposition of receivership property.
(4) Assert a right, claim, cause of action, or defense
of the owner which relates to receivership property.
(5) Seek and obtain instruction from the court
concerning receivership property, exercise of the receiver's
powers, and performance of the receiver's duties.
(6) Upon subpoena, compel a person to submit to
examination under oath, or to produce and permit inspection
and copying of designated records or tangible things, with
respect to receivership property or any other matter that may
affect administration of the receivership.
(7) Engage a professional as provided in Section 15.
(8) Apply to a court of another state for appointment
as ancillary receiver with respect to receivership property
located in that state.
(9) Exercise any power conferred by court order, this
act, or the laws of this state other than this act.
(b) With court approval, a receiver may do any of the
following:
(1) Incur debt for the use or benefit of receivership
property other than in the ordinary course of business.
(2) Make improvements to receivership property.
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(2) Make improvements to receivership property.
(3) Use or transfer receivership property other than in
the ordinary course of business as provided in Section 16.
(4) Adopt or reject an executory contract of the owner
as provided in Section 17.
(5) Pay compensation to the receiver as provided in
Section 21, and to each professional engaged by the receiver
as provided in Section 15.
(6) Recommend allowance or disallowance of a claim of a
creditor as provided in Section 20.
(7) Make a distribution of receivership property as
provided in Section 20.
(c) A receiver shall do all of the following:
(1) Prepare and retain appropriate business records,
including a record of each receipt, disbursement, and
disposition of receivership property.
(2) Account for receivership property, including the
proceeds of a sale, lease, license, exchange, collection, or
other disposition of the property.
(3) File with the appropriate probate court for
recording a copy of the order appointing the receiver and, if
a legal description of the real property is not included in
the order, the legal description.
(4) Disclose to the court any fact arising during the
receivership which would disqualify the receiver under Section
7.
(5) Perform any duty imposed by court order, this act,
or law of this state other than this act.
(d) The powers and duties of a receiver may be
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(d) The powers and duties of a receiver may be
expanded, modified, or limited by court order.
Section 13. Duties of owner and mortgagor.
(a) An owner and a mortgagor shall do all of the
following:
(1) Preserve and turn over to the receiver all
receivership property in the owner's possession, custody, or
control.
(2) Identify all records and other information relating
to the receivership property, including a password,
authorization, or other information needed to obtain or
maintain access to or control of the receivership property,
and make available to the receiver the records and information
in the owner's possession, custody, or control.
(3) On subpoena, submit to examination under oath by
the receiver concerning the acts, conduct, property,
liabilities, and financial condition of the owner or any
matter relating to the receivership property or the
receivership.
(4) Perform any duty imposed by court order, this act,
or law of this state other than this act.
(5) Assist and cooperate with the receiver in the
administration of the receivership and the undertaking of the
receiver's duties in accordance with the intent of this
subsection.
(b) If an owner is a person other than an individual,
this section applies to each officer, director, manager,
member, partner, trustee, or other person exercising or having
the power to exercise control over the affairs of the owner.
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the power to exercise control over the affairs of the owner.
(c) If a person knowingly fails to perform a duty
imposed by this section, the court may do any of the
following:
(1) Award the receiver actual damages caused by the
person's failure, reasonable attorney fees, and costs.
(2) Sanction the failure as civil contempt.
Section 14. Stay; injunction.
(a) Except as otherwise provided in subsection (d) or
ordered by the court, upon the earlier of: (1) recording of
the receivership order pursuant to Section 12(c)(3); or (2)
receipt of actual knowledge of the appointment of a receiver,
an order appointing a receiver operates as a stay, applicable
to all persons, of an act, action, or proceeding:
a. To obtain possession of, exercise control over, or
enforce a judgment against receivership property; and
b. To enforce a lien against receivership property to
the extent the lien secures a claim against the owner which
arose before entry of the order.
(b) Except as otherwise provided in subsection (d), the
court may enjoin an act, action, or proceeding against or
relating to receivership property if the injunction is
necessary to protect the property or facilitate administration
of the receivership.
(c) A person whose act, action, or proceeding is stayed
or enjoined under this section may apply to the court for
relief from the stay or injunction for cause.
(d) An order under subsection (a) or (b) does not
operate as a stay or injunction of any of the following:
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operate as a stay or injunction of any of the following:
(1) An act, action, or proceeding to foreclose or
otherwise enforce a mortgage by a party holding a senior lien
to the person seeking appointment of the receiver.
(2) An act, action, or proceeding to foreclose or
otherwise enforce a mortgage by the person seeking appointment
of the receiver.
(3) An act, action, or proceeding to perfect, or
maintain or continue the perfection of, an interest in
receivership property.
(4) Commencement or continuation of a criminal
proceeding.
(5) Commencement or continuation of an action or
proceeding, or enforcement of a judgment other than a money
judgment in an action or proceeding, by a governmental unit to
enforce its police or regulatory power.
(6) Establishment by a governmental unit of a tax
liability against the owner or receivership property or an
appeal of the liability.
(e) The court may void any act that violates a stay or
injunction under this section.
(f) If a person knowingly violates a stay or injunction
under this section, the court may do any of the following:
(1) Award actual damages caused by the violation,
reasonable attorney fees, and costs.
(2) Sanction the violation as civil contempt.
Section 15. Engagement and compensation of
professional.
(a) With court approval, a receiver may engage an
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(a) With court approval, a receiver may engage an
attorney, accountant, appraiser, auctioneer, broker, or other
professional to assist the receiver in performing a duty or
exercising a power of the receiver. The receiver shall
disclose to the court all of the following:
(1) The identity and qualifications of the
professional.
(2) The scope and nature of the proposed engagement.
(3) Any potential conflict of interest.
(4) The proposed compensation.
(b) A person is not disqualified from engagement under
this section solely because of the person's engagement by,
representation of, or other relationship with the receiver, a
creditor, or a party. This act does not prevent the receiver
from serving in the receivership as an attorney, accountant,
auctioneer, or broker when authorized by law.
(c) A receiver or professional engaged under subsection
(a) shall file with the court an itemized statement of the
time spent, work performed, and billing rate of each person
that performed the work and an itemized list of expenses. The
receiver shall pay the amount approved by the court or pay
amounts otherwise allowed by the court.
Section 16. Use or transfer of receivership property
not in ordinary course of business. 
(a) In this section, "good faith" means honesty in fact
in the conduct or transaction concerned.
(b) With court approval, a receiver may use
receivership property other than in the ordinary course of
business.
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business.
(c) With court approval, a receiver may transfer
receivership property other than in the ordinary course of
business by sale, lease, license, exchange, or other
disposition. Unless the agreement of sale provides otherwise,
a sale under this section is free and clear of a lien of the
person that obtained appointment of the receiver, any
subordinate lien, and any right of redemption but is subject
to a senior lien.
(d) A lien on receivership property which is
extinguished by a transfer under subsection (c) attaches to
the proceeds of the transfer with the same validity,
perfection, and priority the lien had on the property
immediately before the transfer, even if the proceeds are not
sufficient to satisfy all obligations secured by the lien. 
(e) A transfer under subsection (c) may occur by means
other than a public auction sale. A creditor holding a valid
lien on the property to be transferred may purchase the
property and offset against the purchase price part or all of
the allowed amount secured by the lien, if the creditor
tenders funds sufficient to satisfy in full the reasonable
expenses of transfer and the obligation secured by any senior
lien extinguished by the transfer. 
(f) A reversal or modification of an order approving a
transfer under subsection (c) does not affect the validity of
the transfer to a person that acquired the property in good
faith nor revive against the person any lien extinguished by
the transfer, whether the person knew before the transfer of
the request for reversal or modification, unless the court
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the request for reversal or modification, unless the court
stayed the order before the transfer.
Section 17. Executory contract.
(a) In this section, "timeshare interest" means an
interest having a duration of more than three years which
grants its holder the right to use and occupy an
accommodation, facility, or recreational site, whether
improved or not, for a specific period less than a full year
during any given year.
(b) Except as otherwise provided in subsection (h),
with court approval, a receiver may adopt or reject an
executory contract of the owner relating to receivership
property. The court may condition the receiver's adoption and
continued performance of the contract on terms appropriate
under the circumstances. If the receiver does not request
court approval to adopt or reject the contract within a
reasonable time after the receiver's appointment or discovery
of the executory contract, the receiver is deemed to have not
rejected the contract. 
(c) A receiver's performance of an executory contract
before court rejection under subsection (b) of its adoption or
rejection is not an adoption of the contract and does not
preclude the receiver from seeking approval to reject the
contract.
(d) A provision in an executory contract which requires
or permits a forfeiture, modification, or termination of the
contract because of the appointment of a receiver or the
financial condition of the owner does not affect a receiver' s
power under subsection (b) to adopt the contract.
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power under subsection (b) to adopt the contract.
(e) A receiver's right to possess or use receivership
property pursuant to an executory contract terminates on
rejection of the contract under subsection (b). Rejection is a
breach of the contract effective immediately before
appointment of the receiver. A claim for damages for rejection
of the contract must be submitted by the later of: 
(1) The time set for submitting a claim in the
receivership; or
(2) Thirty days after the court approves the rejection.
(f) If at the time a receiver is appointed, the owner
has the right to assign an executory contract relating to
receivership property under the law of this state other than
this act, the receiver may assign the contract with court
approval.
(g) If a receiver rejects under subsection (b) an
executory contract for the sale of receivership property that
is real property in possession of the purchaser or a real
property timeshare interest, the purchaser may do either of
the following:
(1) Treat the rejection as a termination of the
contract, and in that case the purchaser has a lien on the
property for the recovery of any part of the purchase price
the purchaser paid.
(2) Retain the purchaser's right to possession under
the contract, and in that case the purchaser shall continue to
perform all obligations arising under the contract and may
offset any damages caused by nonperformance of an obligation
of the owner after the date of the rejection, but the
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of the owner after the date of the rejection, but the
purchaser has no right or claim against other receivership
property or the receiver on account of the damages.
(h) A receiver may not reject an unexpired lease of
real property under which the owner is the landlord if:
(1) The tenant occupies the leased premises as the
tenant's primary residence;
(2) The receiver was appointed at the request of a
person other than a mortgagee; or
(3) The receiver was appointed at the request of a
mortgagee and any of the following are true or occur:
a. The lease is superior to the lien of the mortgage.
b. The tenant has an enforceable agreement with the
mortgagee or the holder of a senior lien under which the
tenant's occupancy will not be disturbed as long as the tenant
performs its obligations under the lease.
c. The mortgagee has consented to the lease, either in
a signed record or by its failure to timely object that the
lease violated the mortgage.
d. The terms of the lease were commercially reasonable
at the time the lease was agreed to and the tenant did not
know or have reason to know that the lease violated the
mortgage.
Section 18. Defenses and immunities of the receiver.
(a) A receiver is entitled to all defenses and
immunities provided by the law of this state other than this
act for an act or omission within the scope of the receiver's
appointment.
(b) A receiver may be sued personally for an act or
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(b) A receiver may be sued personally for an act or
omission in administering receivership property only with the
approval of the court that appointed the receiver.
Section 19. Interim report of receiver.
A receiver may file or, if ordered by the court, shall
file an interim report that includes all of the following:
(1) The activities of the receiver since appointment or
a previous report.
(2) Receipts and disbursements, including a payment
made or proposed to be made to a professional engaged by the
receiver.
(3) Receipts and dispositions of receivership property.
(4) A request for, or demand for, payment of fees and
expenses of the receiver and, if not filed separately, a
request for approval of payment of the fees and expenses.
(5) Any other information required by the court.
Section 20. Notice of appointment; claim against
receivership; distribution to creditors.
(a) Except as otherwise provided in subsection (f), a
receiver shall give notice of appointment of the receiver to
creditors of the owner by both of the following:
(1) First-class mail addressed to the last known
address of the creditor, or by other mechanism reasonably
calculated to provide actual notice, to all creditors with
claims against the receivership property who are known or
reasonably ascertainable by the receiver within 30 days after
appointment.
(2) Publishing a notice once a week for three
successive weeks in a newspaper of general circulation
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successive weeks in a newspaper of general circulation
published in the county in which the receiver was appointed,
or if none is published in the county, in the one published
nearest to the courthouse thereof or in an adjoining county.
(b) Except as otherwise provided in subsection (f), the
notice required by subsection (a) must specify the date by
which each creditor holding a claim against the owner which
arose before appointment of the receiver must submit the claim
to the receiver. The date specified must be at least 90 days
after the later of notice under subdivision (a)(1) or last
publication under subdivision (a)(2). The court may extend the
period for submitting the claim. Unless the court orders
otherwise, a claim that is not submitted timely is not
entitled to a distribution from the receivership. 
(c) A claim submitted by a creditor under this section
must satisfy all of the following:
(1) State the name and address of the creditor.
(2) State the amount and basis of the claim.
(3) Identify any property securing the claim.
(4) Be signed by the creditor under penalty of perjury.
(5) Include a copy of any record on which the claim is
based.
(d) An assignment by a creditor of a claim against the
owner is effective against the receiver only if the assignee
gives timely notice of the assignment to the receiver in a
signed record.
(e) At any time before entry of an order approving a
receiver's final report, the receiver or any interested party
may file with the court an objection to a claim of a creditor
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may file with the court an objection to a claim of a creditor
stating the basis for the objection. The court shall allow or
disallow the claim according to the law of this state other
than this act.
(f) If the court concludes that receivership property
is likely to be insufficient to satisfy claims of each
creditor holding a perfected lien on the property, the court
may order both of the following:
(1) That the receiver need not give notice under
subsection (a) of the appointment to all creditors of the
owner, but only to such creditors as the court directs.
(2) That unsecured creditors need not submit claims
under this section.
(g) Subject to Section 21:
(1) A distribution of receivership property to a
creditor holding a perfected lien on the property must be made
in accordance with the creditor's priority under the law of
this state other than this act; and
(2) A distribution of receivership property to a
creditor with an allowed unsecured claim must be made as the
court directs according to the law of this state other than
this act, pro rata as to the allowed amount.
Section 21. Fees and expenses.
(a) The court may award a receiver from receivership
property the reasonable and necessary fees and expenses of
performing the duties of the receiver and exercising the
powers of the receiver.
(b) The court may order one or more of the following to
pay the reasonable and necessary fees and expenses of the
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pay the reasonable and necessary fees and expenses of the
receivership, including reasonable attorney fees and costs:
(1) A person that requested the appointment of the
receiver, if the receivership does not produce sufficient
funds to pay the fees and expenses.
(2) A person whose conduct justified or would have
justified the appointment of the receiver under Section
6(a)(1).
Section 22. Removal of receiver; replacement;
termination of receivership.
(a) The court may remove a receiver for cause.
(b) The court shall replace a receiver that dies,
resigns, or is removed.
(c) If the court finds that a receiver that resigns or
is removed or the representative of a receiver that is
deceased has accounted fully for and turned over to the
successor receiver all receivership property and has filed a
report of all receipts and disbursements during the service of
the replaced receiver, the replaced receiver is discharged.
(d) The court may discharge a receiver and terminate
the court's administration of the receivership property if the
court finds that appointment of the receiver was improvident
or that the circumstances no longer warrant continuation of
the receivership. If the court finds that the appointment was
sought in bad faith, the court may assess both of the
following against the person that sought the appointment:
(1) The fees and expenses of the receivership,
including reasonable attorney fees and costs.
(2) Actual damages caused by the appointment, including
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(2) Actual damages caused by the appointment, including
reasonable attorney fees and costs.
Section 23. Final report of receiver; discharge.
(a) If required by the court, on completion of a
receiver's duties the receiver shall file a final report
including all of the following:
(1) A description of the activities of the receiver in
the conduct of the receivership.
(2) A list of receivership property at the commencement
of the receivership and any receivership property received
during the receivership.
(3) A list of disbursements, including payments to
professionals engaged by the receiver.
(4) A list of dispositions of receivership property.
(5) A list of distributions made or proposed to be made
from the receivership for creditor claims.
(6) If not filed separately, a request for approval of
the payment of fees and expenses of the receiver.
(7) Any other information required by the court.
(b) If the court requires a final report, the receiver
is discharged when the court approves the final report filed
under subsection (a) and the receiver distributes all
receivership property.
(c) If the court does not require a final report, the
receiver is discharged upon distribution of all receivership
property.
Section 24. Receivership in another state; ancillary
proceeding.
(a) The court may appoint a receiver appointed in
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(a) The court may appoint a receiver appointed in
another state, or that person's nominee, as an ancillary
receiver with respect to property located in this state or
subject to the jurisdiction of the court for which a receiver
could be appointed under this act, if:
(1) The person or nominee would be eligible to serve as
receiver under Section 7; and
(2) The appointment furthers the person's possession,
custody, control, or disposition of property subject to the
receivership in the other state.
(b) The court may issue an order that gives effect to
an order entered in another state appointing or directing a
receiver.
(c) Unless the court orders otherwise, an ancillary
receiver appointed under subsection (a) has the rights,
powers, and duties of a receiver appointed under this act.
Section 25. Effect of enforcement by mortgagee.
A request by a mortgagee for appointment of a receiver,
the appointment of a receiver, or application by a mortgagee
of receivership property or proceeds to the secured obligation
does not do any of the following:
(1) Make the mortgagee a mortgagee in possession of the
real property.
(2) Make:
a. The mortgagee an agent of the owner, receiver, or
mortgagor;
b. The owner an agent of the mortgagee, receiver, or
mortgagor;
c. The receiver an agent of the mortgagee, owner, or
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c. The receiver an agent of the mortgagee, owner, or
mortgagor; or
d. The mortgagor an agent of the owner, mortgagee, or
receiver.
(3) Constitute an election of remedies that precludes a
later action to enforce the secured obligation.
(4) Make the secured obligation unenforceable.
(5) Limit any right available to the mortgagee with
respect to the secured obligation.
Section 26. Uniformity of application and construction.
In applying and construing this uniform act,
consideration must be given to the need to promote uniformity
of the law with respect to its subject matter among states
that enact it.
Section 27. Relation to Electronic Signatures in Global
and National Commerce Act.
This act modifies, limits, or supersedes the Electronic
Signatures in Global and National Commerce Act, 15 U.S.C.
§7001 et seq., but does not modify, limit, or supersede
Section 101(c) of that act, 15 U.S.C. §7001(c), or authorize
electronic delivery of any of the notices described in Section
103(b) of that act, 15 U.S.C. Section 7003(b).
Section 28. Transition.
This act does not apply to a receivership for which the
receiver was appointed before January 1, 2025.
Section 29. This act shall become effective on January
1, 2025.
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