LCO \\PRDFS1\HCOUSERS\BARRYJN\WS\2019HB-07271-R01-
HB.docx
1 of 26
General Assembly Substitute Bill No. 7271
January Session, 2019
AN ACT CONCERNING TH E UNIFORM COMMERCIAL REAL ESTATE
RECEIVERSHIP ACT.
Be it enacted by the Senate and House of Representatives in General
Assembly convened:
Section 1. (NEW) (Effective October 1, 2019) Sections 1 to 28, 1
inclusive, of this act, may be cited as the Uniform Commercial Real 2
Estate Receivership Act. 3
Sec. 2. (NEW) (Effective October 1, 2019) As used in sections 1 to 28, 4
inclusive, of this act: 5
(1) "Affiliate" means: 6
(A) With respect to an individual: 7
(i) A companion of the individual; 8
(ii) A lineal ancestor or descendant, whether by blood or adoption, 9
of (I) the individual; or (II) a companion of the individual; 10
(iii) A companion of an ancestor or descendant described in 11
subparagraph (A)(ii) of this subdivision; 12
(iv) A sibling, aunt, uncle, great aunt, great uncle, first cousin, niece, 13
nephew, grandniece or grandnephew of the individual, whether 14
related by the whole or the half blood or adoption, or a companion of 15
any of them; or 16 Substitute Bill No. 7271
LCO {\\PRDFS1\HCOUSERS\BARRYJN\WS\2019HB-07271-
R01-HB.docx }
2 of 26
(v) Any other individual occupying the residence of the individual; 17
and 18
(B) With respect to a person other than an individual: 19
(i) Another person that directly or indirectly controls, is controlled 20
by, or is under common control with the person; 21
(ii) An officer, director, manager, member, partner, employee or 22
trustee or other fiduciary of the person; or 23
(iii) A companion of, or an individual occupying the residence of, an 24
individual described in subparagraph (B)(i) or (B)(ii) of this 25
subdivision. 26
(2) "Companion" means the spouse of an individual. 27
(3) "Court" means the Superior Court. 28
(4) "Executory contract" means a contract, including a lease, under 29
which each party has an unperformed obligation and the failure of a 30
party to complete performance would constitute a material breach. 31
(5) "Governmental unit" means an office, department, division, 32
bureau, board, commission or other agency of this state or a 33
subdivision of this state. 34
(6) "Lien" means an interest in property which secures payment or 35
performance of an obligation. 36
(7) "Mortgage" means a record, however denominated, that creates 37
or provides for a consensual lien on real property or rents, even if the 38
record also creates or provides for a lien on personal property. 39
(8) "Mortgagee" means a person entitled to enforce an obligation 40
secured by a mortgage. 41
(9) "Mortgagor" means a person that grants a mortgage or a 42 Substitute Bill No. 7271
LCO {\\PRDFS1\HCOUSERS\BARRYJN\WS\2019HB-07271-
R01-HB.docx }
3 of 26
successor in ownership of the real property described in the mortgage. 43
(10) "Owner" means the person for whose property a receiver is 44
appointed. 45
(11) "Person" means an individual, estate, business or nonprofit 46
entity, public corporation, government or governmental subdivision, 47
agency, instrumentality or other legal entity. 48
(12) "Proceeds" means the following property: 49
(A) Whatever is acquired on the sale, lease, license, exchange or 50
other disposition of receivership property; 51
(B) Whatever is collected on, or distributed on account of, 52
receivership property; 53
(C) Rights arising out of receivership property; 54
(D) To the extent of the value of receivership property, claims 55
arising out of the loss, nonconformity or interference with the use of, 56
defects or infringement of rights in, or damage to, the property; or 57
(E) To the extent of the value of receivership property and to the 58
extent payable to the owner or mortgagee, insurance payable by 59
reason of the loss or nonconformity of, defects or infringement of 60
rights in, or damage to, the property. 61
(13) "Property" means all of a person's right, title and interest, both 62
legal and equitable, in real and personal property, tangible and 63
intangible, wherever located and however acquired. "Property" 64
includes proceeds, products, offspring, rents or profits of or from the 65
property. 66
(14) "Receiver" means a person appointed by the court as the court's 67
agent, and subject to the court's direction, to take possession of, 68
manage and, if authorized by sections 1 to 28, inclusive, of this act or 69
court order, transfer, sell, lease, license, exchange, collect or otherwise 70 Substitute Bill No. 7271
LCO {\\PRDFS1\HCOUSERS\BARRYJN\WS\2019HB-07271-
R01-HB.docx }
4 of 26
dispose of receivership property. 71
(15) "Receivership" means a proceeding in which a receiver is 72
appointed. 73
(16) "Receivership property" means the property of an owner which 74
is described in the order appointing a receiver or a subsequent order. 75
"Receivership property" includes any proceeds, products, offspring, 76
rents or profits of or from the property. 77
(17) "Record", used as a noun, means information that is inscribed 78
on a tangible medium or that is stored on an electronic or other 79
medium and is retrievable in perceivable form. 80
(18) "Rents" means: 81
(A) Sums payable for the right to possess or occupy, or for the actual 82
possession or occupation of, real property of another person; 83
(B) Sums payable to a mortgagor under a policy of rental-84
interruption insurance covering real property; 85
(C) Claims arising out of a default in the payment of sums payable 86
for the right to possess or occupy real property of another person; 87
(D) Sums payable to terminate an agreement to possess or occupy 88
real property of another person; 89
(E) Sums payable to a mortgagor for payment or reimbursement of 90
expenses incurred in owning, operating and maintaining real property 91
or constructing or installing improvements on real property; or 92
(F) Other sums payable under an agreement relating to the real 93
property of another person which constitute rents under the law of this 94
state other than sections 1 to 28, inclusive, of this act. 95
(19) "Secured obligation" means an obligation the payment or 96
performance of which is secured by a security agreement. 97 Substitute Bill No. 7271
LCO {\\PRDFS1\HCOUSERS\BARRYJN\WS\2019HB-07271-
R01-HB.docx }
5 of 26
(20) "Security agreement" means an agreement that creates or 98
provides for a lien. 99
(21) "Sign" means, with present intent to authenticate or adopt a 100
record: 101
(A) To execute or adopt a tangible symbol; or 102
(B) To attach to or logically associate with the record an electronic 103
sound, symbol or process. 104
(22) "State" means a state of the United States, the District of 105
Columbia, Puerto Rico, the United States Virgin Islands or any 106
territory or insular possession subject to the jurisdiction of the United 107
States. 108
Sec. 3. (NEW) (Effective October 1, 2019) (a) Except as otherwise 109
provided in subsection (b) of this section, the court may issue an order 110
under sections 1 to 28, inclusive, of this act only after notice and an 111
opportunity for a hearing that the court deems appropriate in the 112
circumstances. 113
(b) The court may issue an order under sections 1 to 28, inclusive, of 114
this act: 115
(1) Without prior notice if the circumstances require issuance of an 116
order before notice is given; 117
(2) After notice and without a prior hearing if the circumstances 118
require issuance of an order before a hearing is held; or 119
(3) After notice and without a hearing if no interested party timely 120
requests a hearing. 121
Sec. 4. (NEW) (Effective October 1, 2019) (a) Except as otherwise 122
provided in subsection (b) or (c) of this section, sections 1 to 28, 123
inclusive, of this act apply to a receivership for an interest in real 124
property and any personal property related to or used in operating the 125 Substitute Bill No. 7271
LCO {\\PRDFS1\HCOUSERS\BARRYJN\WS\2019HB-07271-
R01-HB.docx }
6 of 26
real property. 126
(b) Sections 1 to 28, inclusive, of this act do not apply to a 127
receivership for an interest in real property improved by one to four 128
dwelling units unless: 129
(1) The interest is used for agricultural, commercial, industrial or 130
mineral-extraction purposes, other than incidental uses by an owner 131
occupying the property as the owner's primary residence; 132
(2) The interest secures an obligation incurred at a time when the 133
property was used or planned for use for agricultural, commercial, 134
industrial or mineral-extraction purposes; 135
(3) The owner planned or is planning to develop the property into 136
one or more dwelling units to be sold or leased in the ordinary course 137
of the owner's business; or 138
(4) The owner is collecting or has the right to collect rents or other 139
income from the property from a person other than an affiliate of the 140
owner. 141
(c) Sections 1 to 28, inclusive, of this act do not apply to a 142
receivership authorized by the law of this state other than sections 1 to 143
28, inclusive, of this act in which the receiver is a governmental unit or 144
an individual acting in an official capacity on behalf of the 145
governmental unit. 146
(d) Sections 1 to 28, inclusive, of this act do not limit the authority of 147
a court to appoint a receiver under the law of this state other than 148
sections 1 to 28, inclusive, of this act. 149
(e) Unless displaced by a particular provision of sections 1 to 28, 150
inclusive, of this act, the principles of law and equity supplement 151
sections 1 to 28, inclusive, of this act. 152
Sec. 5. (NEW) (Effective October 1, 2019) The court that appoints a 153 Substitute Bill No. 7271
LCO {\\PRDFS1\HCOUSERS\BARRYJN\WS\2019HB-07271-
R01-HB.docx }
7 of 26
receiver under sections 1 to 28, inclusive, of this act has exclusive 154
jurisdiction to direct the receiver and determine any controversy 155
related to the receivership or receivership property. 156
Sec. 6. (NEW) (Effective October 1, 2019) (a) The court may appoint a 157
receiver: 158
(1) Before judgment, to protect a party that demonstrates an 159
apparent right, title or interest in real property that is the subject of the 160
action, if the property or its revenue-producing potential: 161
(A) Is being subjected to or is in danger of waste, loss, dissipation or 162
impairment; or 163
(B) Has been or is about to be the subject of a voidable transaction; 164
(2) After judgment: 165
(A) To carry the judgment into effect; or 166
(B) To preserve nonexempt real property pending appeal or when 167
an execution has been returned unsatisfied and the owner refuses to 168
apply the property in satisfaction of the judgment; or 169
(3) In an action in which a receiver for real property may be 170
appointed on equitable grounds. 171
(b) In connection with the foreclosure or other enforcement of a 172
mortgage, a mortgagee is entitled to appointment of a receiver for the 173
mortgaged property if: 174
(1) Appointment is necessary to protect the property from waste, 175
loss, transfer, dissipation or impairment; 176
(2) The mortgagor agreed in a signed record to appointment of a 177
receiver on default; 178
(3) The owner agreed, after default and in a signed record, to 179 Substitute Bill No. 7271
LCO {\\PRDFS1\HCOUSERS\BARRYJN\WS\2019HB-07271-
R01-HB.docx }
8 of 26
appointment of a receiver; 180
(4) The property and any other collateral held by the mortgagee are 181
not sufficient to satisfy the secured obligation; 182
(5) The owner fails to turn over to the mortgagee proceeds or rents 183
the mortgagee was entitled to collect; or 184
(6) The holder of a subordinate lien obtains appointment of a 185
receiver for the property. 186
(c) The court may condition appointment of a receiver without prior 187
notice under subdivision (1) of subsection (b) of section 3 of this act or 188
without a prior hearing under subdivision (2) of subsection (b) of 189
section 3 of this act on the giving of security by the person seeking the 190
appointment for the payment of damages, reasonable attorneys' fees 191
and costs incurred or suffered by any person if the court later 192
concludes that the appointment was not justified. If the court later 193
concludes that the appointment was justified, the court shall release 194
the security. 195
Sec. 7. (NEW) (Effective October 1, 2019) (a) The court may not 196
appoint a person as receiver unless the person submits to the court a 197
statement under penalty of perjury that the person is not disqualified. 198
(b) Except as otherwise provided in subsection (c) of this section, a 199
person is disqualified from appointment as receiver if the person: 200
(1) Is an affiliate of a party; 201
(2) Has an interest materially adverse to an interest of a party; 202
(3) Has a material financial interest in the outcome of the action, 203
other than compensation the court may allow the receiver; 204
(4) Has a debtor-creditor relationship with a party; or 205
(5) Holds an equity interest in a party, other than a noncontrolling 206 Substitute Bill No. 7271
LCO {\\PRDFS1\HCOUSERS\BARRYJN\WS\2019HB-07271-
R01-HB.docx }
9 of 26
interest in a publicly traded company. 207
(c) A person is not disqualified from appointment as receiver solely 208
because the person: 209
(1) Was appointed receiver or is owed compensation in an unrelated 210
matter involving a party or was engaged by a party in a matter 211
unrelated to the receivership; 212
(2) Is an individual obligated to a party on a debt that is not in 213
default and was incurred primarily for personal, family or household 214
purposes; or 215
(3) Maintains with a party a deposit account, as defined in 216
subdivision (29) of subsection (a) of section 42a-9-102 of the general 217
statutes. 218
(d) A person seeking appointment of a receiver may nominate a 219
person to serve as receiver, but the court is not bound by the 220
nomination. 221
Sec. 8. (NEW) (Effective October 1, 2019) (a) Except as otherwise 222
provided in subsection (b) of this section, a receiver shall post with the 223
court a bond that: 224
(1) Is conditioned on the faithful discharge of the receiver's duties; 225
(2) Has one or more sureties approved by the court; 226
(3) Is in an amount the court specifies; and 227
(4) Is effective as of the date of the receiver's appointment. 228
(b) The court may approve the posting by a receiver with the court 229
of alternative security such as a letter of credit or deposit of funds. The 230
receiver may not use receivership property as alternative security. 231
Interest that accrues on deposited funds must be paid to the receiver 232
on the receiver's discharge. 233 Substitute Bill No. 7271
LCO {\\PRDFS1\HCOUSERS\BARRYJN\WS\2019HB-07271-
R01-HB.docx }
10 of 26
(c) The court may authorize a receiver to act before the receiver 234
posts the bond or alternative security required by this section. 235
(d) A claim against a receiver's bond or alternative security must be 236
made not later than one year after the date the receiver is discharged. 237
Sec. 9. (NEW) (Effective October 1, 2019) On appointment of a 238
receiver, the receiver has the status of a lien creditor under: 239
(1) Article 9 of title 42a of the general statutes as to receivership 240
property that is personal property or fixtures; and 241
(2) Any provision of the general statutes that provides for filing on 242
the land records of a town a certificate as to receivership property that 243
is real property. 244
Sec. 10. (NEW) (Effective October 1, 2019) Except as otherwise 245
provided by the law of this state other than sections 1 to 28, inclusive, 246
of this act, property that a receiver or owner acquires after 247
appointment of the receiver is subject to a security agreement entered 248
into before the appointment to the same extent as if the court had not 249
appointed the receiver. 250
Sec. 11. (NEW) (Effective October 1, 2019) (a) Unless the court orders 251
otherwise, on demand by a receiver: 252
(1) A person that owes a debt that is receivership property and is 253
matured or payable on demand or on order shall pay the debt to or on 254
the order of the receiver, except to the extent the debt is subject to 255
setoff or recoupment; and 256
(2) Subject to subsection (c) of this section, a person that has 257
possession, custody or control of receivership property shall turn the 258
property over to the receiver. 259
(b) A person that has notice of the appointment of a receiver and 260
owes a debt that is receivership property may not satisfy the debt by 261 Substitute Bill No. 7271
LCO {\\PRDFS1\HCOUSERS\BARRYJN\WS\2019HB-07271-
R01-HB.docx }
11 of 26
payment to the owner. 262
(c) If a creditor has possession, custody or control of receivership 263
property and the validity, perfection or priority of the creditor's lien on 264
the property depends on the creditor's possession, custody or control, 265
the creditor may retain possession, custody or control until the court 266
orders adequate protection of the creditor's lien. 267
(d) Unless a bona fide dispute exists about a receiver's right to 268
possession, custody or control of receivership property, the court may 269
sanction as civil contempt a person's failure to turn the property over 270
when required by this section. 271
Sec. 12. (NEW) (Effective October 1, 2019) (a) Except as limited by 272
court order or law of this state other than sections 1 to 28, inclusive, of 273
this act, a receiver may: 274
(1) Collect, control, manage, conserve and protect receivership 275
property; 276
(2) Operate a business constituting receivership property, including 277
preservation, use, sale, lease, license, exchange, collection or 278
disposition of the property in the ordinary course of business; 279
(3) In the ordinary course of business, incur unsecured debt and pay 280
expenses incidental to the receiver's preservation, use, sale, lease, 281
license, exchange, collection or disposition of receivership property; 282
(4) Assert a right, claim, cause of action or defense of the owner 283
which relates to receivership property; 284
(5) Seek and obtain instruction from the court concerning 285
receivership property, exercise of the receiver's powers and 286
performance of the receiver's duties; 287
(6) On subpoena, compel a person to submit to examination under 288
oath, or to produce and permit inspection and copying of designated 289 Substitute Bill No. 7271
LCO {\\PRDFS1\HCOUSERS\BARRYJN\WS\2019HB-07271-
R01-HB.docx }
12 of 26
records or tangible things, with respect to receivership property or any 290
other matter that may affect administration of the receivership; 291
(7) Engage a professional, as provided in section 15 of this act; 292
(8) Apply to a court of another state for appointment as ancillary 293
receiver with respect to receivership property located in that state; and 294
(9) Exercise any power conferred by court order, sections 1 to 28, 295
inclusive, of this act or the law of this state other than sections 1 to 28, 296
inclusive, of this act. 297
(b) With court approval, a receiver may: 298
(1) Incur debt for the use or benefit of receivership property other 299
than in the ordinary course of business; 300
(2) Make improvements to receivership property; 301
(3) Use or transfer receivership property other than in the ordinary 302
course of business, as provided in section 16 of this act; 303
(4) Adopt or reject an executory contract of the owner, as provided 304
in section 17 of this act; 305
(5) Pay compensation to the receiver, as provided in section 21 of 306
this act and to each professional engaged by the receiver, as provided 307
in section 15 of this act; 308
(6) Recommend allowance or disallowance of a claim of a creditor, 309
as provided in section 20 of this act; and 310
(7) Make a distribution of receivership property, as provided in 311
section 20 of this act. 312
(c) A receiver shall: 313
(1) Prepare and retain appropriate business records, including a 314
record of each receipt, disbursement and disposition of receivership 315 Substitute Bill No. 7271
LCO {\\PRDFS1\HCOUSERS\BARRYJN\WS\2019HB-07271-
R01-HB.docx }
13 of 26
property; 316
(2) Account for receivership property, including the proceeds of a 317
sale, lease, license, exchange, collection or other disposition of the 318
property; 319
(3) File on the land records of the town where the real property is 320
located a copy of the order appointing the receiver and, if a legal 321
description of the real property is not included in the order, the legal 322
description; 323
(4) Disclose to the court any fact arising during the receivership 324
which would disqualify the receiver under section 7 of this act; and 325
(5) Perform any duty imposed by court order, sections 1 to 28, 326
inclusive, of this act or the law of this state other than sections 1 to 28, 327
inclusive, of this act. 328
(d) The powers and duties of a receiver may be expanded, modified 329
or limited by court order. 330
Sec. 13. (NEW) (Effective October 1, 2019) (a) An owner shall: 331
(1) Assist and cooperate with the receiver in the administration of 332
the receivership and the discharge of the receiver's duties; 333
(2) Preserve and turn over to the receiver all receivership property 334
in the owner's possession, custody or control; 335
(3) Identify all records and other information relating to the 336
receivership property, including a password, authorization or other 337
information needed to obtain or maintain access to or control of the 338
receivership property, and make available to the receiver the records 339
and information in the owner's possession, custody or control; 340
(4) On subpoena, submit to examination under oath by the receiver 341
concerning the acts, conduct, property, liabilities and financial 342
condition of the owner or any matter relating to the receivership 343 Substitute Bill No. 7271
LCO {\\PRDFS1\HCOUSERS\BARRYJN\WS\2019HB-07271-
R01-HB.docx }
14 of 26
property or the receivership; and 344
(5) Perform any duty imposed by court order, sections 1 to 28, 345
inclusive, of this act or the law of this state other than sections 1 to 28, 346
inclusive, of this act. 347
(b) If an owner is a person other than an individual, this section 348
applies to each officer, director, manager, member, partner, trustee or 349
other person exercising or having the power to exercise control over 350
the affairs of the owner. 351
(c) If a person knowingly fails to perform a duty imposed by this 352
section, the court may: 353
(1) Award the receiver actual damages caused by the person's 354
failure, reasonable attorneys' fees and costs; and 355
(2) Sanction the failure as civil contempt. 356
Sec. 14. (NEW) (Effective October 1, 2019) (a) Except as otherwise 357
provided in subsection (d) of this section or ordered by the court, an 358
order appointing a receiver operates as a stay, applicable to all 359
persons, of an act, action or proceeding: 360
(1) To obtain possession of, exercise control over or enforce a 361
judgment against receivership property; and 362
(2) To enforce a lien against receivership property to the extent the 363
lien secures a claim against the owner which arose before entry of the 364
order. 365
(b) Except as otherwise provided in subsection (d) of this section, 366
the court may enjoin an act, action or proceeding against or relating to 367
receivership property if the injunction is necessary to protect the 368
property or facilitate administration of the receivership. 369
(c) A person whose act, action or proceeding is stayed or enjoined 370
under this section may apply to the court for relief from the stay or 371 Substitute Bill No. 7271
LCO {\\PRDFS1\HCOUSERS\BARRYJN\WS\2019HB-07271-
R01-HB.docx }
15 of 26
injunction for cause. 372
(d) An order under subsection (a) or (b) of this section does not 373
operate as a stay or injunction of: 374
(1) An act, action or proceeding to foreclose or otherwise enforce a 375
mortgage by the person seeking appointment of the receiver; 376
(2) An act, action or proceeding to perfect, or maintain or continue 377
the perfection of, an interest in receivership property; 378
(3) Commencement or continuation of a criminal proceeding; 379
(4) Commencement or continuation of an action or proceeding, or 380
enforcement of a judgment other than a money judgment in an action 381
or proceeding, by a governmental unit to enforce its police or 382
regulatory power; or 383
(5) Establishment by a governmental unit of a tax liability against 384
the owner or receivership property or an appeal of the liability. 385
(e) The court may void an act that violates a stay or injunction under 386
this section. 387
(f) If a person knowingly violates a stay or injunction under this 388
section, the court may: 389
(1) Award actual damages caused by the violation, reasonable 390
attorneys' fees and costs; and 391
(2) Sanction the violation as civil contempt. 392
Sec. 15. (NEW) (Effective October 1, 2019) (a) With court approval, a 393
receiver may engage an attorney, accountant, appraiser, auctioneer, 394
broker or other professional to assist the receiver in performing a duty 395
or exercising a power of the receiver. The receiver shall disclose to the 396
court: 397 Substitute Bill No. 7271
LCO {\\PRDFS1\HCOUSERS\BARRYJN\WS\2019HB-07271-
R01-HB.docx }
16 of 26
(1) The identity and qualifications of the professional; 398
(2) The scope and nature of the proposed engagement; 399
(3) Any potential conflict of interest; and 400
(4) The proposed compensation. 401
(b) A person is not disqualified from engagement under this section 402
solely because of the person's engagement by, representation of, or 403
other relationship with the receiver, a creditor or a party. Sections 1 to 404
28, inclusive, of this act do not prevent the receiver from serving in the 405
receivership as an attorney, accountant, auctioneer or broker when 406
authorized by law. 407
(c) A receiver or professional engaged under subsection (a) of this 408
section shall file with the court an itemized statement of the time spent, 409
work performed and billing rate of each person that performed the 410
work and an itemized list of expenses. The receiver shall pay the 411
amount approved by the court. 412
Sec. 16. (NEW) (Effective October 1, 2019) (a) In this section, "good 413
faith" means honesty in fact and the observance of reasonable 414
commercial standards of fair dealing. 415
(b) With court approval, a receiver may use receivership property 416
other than in the ordinary course of business. 417
(c) With court approval, a receiver may transfer receivership 418
property other than in the ordinary course of business by sale, lease, 419
license, exchange or other disposition. Unless the agreement of sale 420
provides otherwise, a sale under this section is free and clear of a lien 421
of the person that obtained appointment of the receiver, any 422
subordinate lien and any right of redemption, but is subject to a senior 423
lien. 424
(d) A lien on receivership property which is extinguished by a 425 Substitute Bill No. 7271
LCO {\\PRDFS1\HCOUSERS\BARRYJN\WS\2019HB-07271-
R01-HB.docx }
17 of 26
transfer under subsection (c) of this section attaches to the proceeds of 426
the transfer with the same validity, perfection and priority the lien had 427
on the property immediately before the transfer, even if the proceeds 428
are not sufficient to satisfy all obligations secured by the lien. 429
(e) A transfer under subsection (c) of this section may occur by 430
means other than a public auction sale. A creditor holding a valid lien 431
on the property to be transferred may purchase the property and offset 432
against the purchase price part or all of the allowed amount secured by 433
the lien, if the creditor tenders funds sufficient to satisfy in full the 434
reasonable expenses of transfer and the obligation secured by any 435
senior lien extinguished by the transfer. 436
(f) A reversal or modification of an order approving a transfer under 437
subsection (c) of this section does not affect the validity of the transfer 438
to a person that acquired the property in good faith or revive against 439
the person any lien extinguished by the transfer, whether the person 440
knew before the transfer of the request for reversal or modification, 441
unless the court stayed the order before the transfer. 442
Sec. 17. (NEW) (Effective October 1, 2019) (a) In this section, 443
"timeshare interest" means an interest having a duration of more than 444
three years which grants its holder the right to use and occupy an 445
accommodation, facility or recreational site, whether improved or not, 446
for a specific period less than a full year during any given year. 447
(b) Except as otherwise provided in subsection (h) of this section, 448
with court approval, a receiver may adopt or reject an executory 449
contract of the owner relating to receivership property. The court may 450
condition the receiver's adoption and continued performance of the 451
contract on terms appropriate under the circumstances. If the receiver 452
does not request court approval to adopt or reject the contract within a 453
reasonable time after the receiver's appointment, the receiver is 454
deemed to have rejected the contract. 455
(c) A receiver's performance of an executory contract before court 456 Substitute Bill No. 7271
LCO {\\PRDFS1\HCOUSERS\BARRYJN\WS\2019HB-07271-
R01-HB.docx }
18 of 26
approval under subsection (b) of this section of its adoption or 457
rejection is not an adoption of the contract and does not preclude the 458
receiver from seeking approval to reject the contract. 459
(d) A provision in an executory contract which requires or permits a 460
forfeiture, modification or termination of the contract because of the 461
appointment of a receiver or the financial condition of the owner does 462
not affect a receiver's power under subsection (b) of this section to 463
adopt the contract. 464
(e) A receiver's right to possess or use receivership property 465
pursuant to an executory contract terminates on rejection of the 466
contract under subsection (b) of this section. Rejection is a breach of the 467
contract effective immediately before appointment of the receiver. A 468
claim for damages for rejection of the contract must be submitted by 469
the later of: 470
(1) The time set for submitting a claim in the receivership; or 471
(2) Thirty days after the court approves the rejection. 472
(f) If at the time a receiver is appointed, the owner has the right to 473
assign an executory contract relating to receivership property under 474
the law of this state other than sections 1 to 28, inclusive, of this act, the 475
receiver may assign the contract with court approval. 476
(g) If a receiver rejects under subsection (b) of this section an 477
executory contract for the sale of receivership property that is real 478
property in possession of the purchaser or a real-property timeshare 479
interest, the purchaser may: 480
(1) Treat the rejection as a termination of the contract, and in that 481
case the purchaser has a lien on the property for the recovery of any 482
part of the purchase price the purchaser paid; or 483
(2) Retain the purchaser's right to possession under the contract, and 484
in that case the purchaser shall continue to perform all obligations 485 Substitute Bill No. 7271
LCO {\\PRDFS1\HCOUSERS\BARRYJN\WS\2019HB-07271-
R01-HB.docx }
19 of 26
arising under the contract and may offset any damages caused by 486
nonperformance of an obligation of the owner after the date of the 487
rejection, but the purchaser has no right or claim against other 488
receivership property or the receiver on account of the damages. 489
(h) A receiver may not reject an unexpired lease of real property 490
under which the owner is the landlord if: 491
(1) The tenant occupies the leased premises as the tenant's primary 492
residence; 493
(2) The receiver was appointed at the request of a person other than 494
a mortgagee; or 495
(3) The receiver was appointed at the request of a mortgagee and: 496
(A) The lease is superior to the lien of the mortgage; 497
(B) The tenant has an enforceable agreement with the mortgagee or 498
the holder of a senior lien under which the tenant's occupancy will not 499
be disturbed as long as the tenant performs its obligations under the 500
lease; 501
(C) The mortgagee has consented to the lease, either in a signed 502
record or by its failure timely to object that the lease violated the 503
mortgage; or 504
(D) The terms of the lease were commercially reasonable at the time 505
the lease was agreed to and the tenant did not know or have reason to 506
know that the lease violated the mortgage. 507
Sec. 18. (NEW) (Effective October 1, 2019) (a) A receiver is entitled to 508
all defenses and immunities provided by the law of this state other 509
than sections 1 to 28, inclusive, of this act for an act or omission within 510
the scope of the receiver's appointment. 511
(b) A receiver may be sued personally for an act or omission in 512
administering receivership property only with approval of the court 513 Substitute Bill No. 7271
LCO {\\PRDFS1\HCOUSERS\BARRYJN\WS\2019HB-07271-
R01-HB.docx }
20 of 26
that appointed the receiver. 514
Sec. 19. (NEW) (Effective October 1, 2019) A receiver may file or, if 515
ordered by the court, shall file an interim report that includes: 516
(1) The activities of the receiver since appointment or a previous 517
report; 518
(2) Receipts and disbursements, including a payment made or 519
proposed to be made to a professional engaged by the receiver; 520
(3) Receipts and dispositions of receivership property; 521
(4) Fees and expenses of the receiver and, if not filed separately, a 522
request for approval of payment of the fees and expenses; and 523
(5) Any other information required by the court. 524
Sec. 20. (NEW) (Effective October 1, 2019) (a) Except as otherwise 525
provided in subsection (f) of this section, a receiver shall give notice of 526
appointment of the receiver to creditors of the owner by: 527
(1) Deposit for delivery through first class mail or other 528
commercially reasonable delivery method to the last-known address of 529
each creditor; and 530
(2) Publication as directed by the court. 531
(b) Except as otherwise provided in subsection (f) of this section, the 532
notice required by subsection (a) of this section must specify the date 533
by which each creditor holding a claim against the owner which arose 534
before appointment of the receiver must submit the claim to the 535
receiver. The date specified must be at least ninety days after the later 536
of notice under subdivision (1) of subsection (a) of this section or last 537
publication under subdivision (2) of subsection (a) of this section. The 538
court may extend the period for submitting the claim. Unless the court 539
orders otherwise, a claim that is not submitted timely is not entitled to 540
a distribution from the receivership. 541 Substitute Bill No. 7271
LCO {\\PRDFS1\HCOUSERS\BARRYJN\WS\2019HB-07271-
R01-HB.docx }
21 of 26
(c) A claim submitted by a creditor under this section must: 542
(1) State the name and address of the creditor; 543
(2) State the amount and basis of the claim; 544
(3) Identify any property securing the claim; 545
(4) Be signed by the creditor under penalty of perjury; and 546
(5) Include a copy of any record on which the claim is based. 547
(d) An assignment by a creditor of a claim against the owner is 548
effective against the receiver only if the assignee gives timely notice of 549
the assignment to the receiver in a signed record. 550
(e) At any time before entry of an order approving a receiver's final 551
report, the receiver may file with the court an objection to a claim of a 552
creditor, stating the basis for the objection. The court shall allow or 553
disallow the claim according to the law of this state other than sections 554
1 to 28, inclusive, of this act. 555
(f) If the court concludes that receivership property is likely to be 556
insufficient to satisfy claims of each creditor holding a perfected lien 557
on the property, the court may order that: 558
(1) The receiver need not give notice under subsection (a) of this 559
section of the appointment to all creditors of the owner, but only such 560
creditors as the court directs; and 561
(2) Unsecured creditors need not submit claims under this section. 562
(g) Subject to the provisions of section 21 of this act: 563
(1) A distribution of receivership property to a creditor holding a 564
perfected lien on the property must be made in accordance with the 565
creditor's priority under the law of this state other than sections 1 to 28, 566
inclusive, of this act; and 567 Substitute Bill No. 7271
LCO {\\PRDFS1\HCOUSERS\BARRYJN\WS\2019HB-07271-
R01-HB.docx }
22 of 26
(2) A distribution of receivership property to a creditor with an 568
allowed unsecured claim must be made as the court directs according 569
to the law of this state other than sections 1 to 28, inclusive, of this act. 570
Sec. 21. (NEW) (Effective October 1, 2019) (a) The court may award a 571
receiver from receivership property the reasonable and necessary fees 572
and expenses of performing the duties of the receiver and exercising 573
the powers of the receiver. 574
(b) The court may order one or more of the following to pay the 575
reasonable and necessary fees and expenses of the receivership, 576
including reasonable attorneys' fees and costs: 577
(1) A person that requested the appointment of the receiver, if the 578
receivership does not produce sufficient funds to pay the fees and 579
expenses; or 580
(2) A person whose conduct justified or would have justified the 581
appointment of the receiver under subdivision (1) of subsection (a) of 582
section 6 of this act. 583
Sec. 22. (NEW) (Effective October 1, 2019) (a) The court may remove a 584
receiver for cause. 585
(b) The court shall replace a receiver that dies, resigns or is 586
removed. 587
(c) If the court finds that a receiver that resigns or is removed, or the 588
representative of a receiver that is deceased, has accounted fully for 589
and turned over to the successor receiver all receivership property and 590
has filed a report of all receipts and disbursements during the service 591
of the replaced receiver, the replaced receiver is discharged. 592
(d) The court may discharge a receiver and terminate the court's 593
administration of the receivership property if the court finds that 594
appointment of the receiver was improvident or that the circumstances 595
no longer warrant continuation of the receivership. If the court finds 596 Substitute Bill No. 7271
LCO {\\PRDFS1\HCOUSERS\BARRYJN\WS\2019HB-07271-
R01-HB.docx }
23 of 26
that the appointment was sought wrongfully or in bad faith, the court 597
may assess against the person that sought the appointment: 598
(1) The fees and expenses of the receivership, including reasonable 599
attorneys' fees and costs; and 600
(2) Actual damages caused by the appointment, including 601
reasonable attorneys' fees and costs. 602
Sec. 23. (NEW) (Effective October 1, 2019) (a) On completion of a 603
receiver's duties, the receiver shall file a final report including: 604
(1) A description of the activities of the receiver in the conduct of the 605
receivership; 606
(2) A list of receivership property at the commencement of the 607
receivership and any receivership property received during the 608
receivership; 609
(3) A list of disbursements, including payments to professionals 610
engaged by the receiver; 611
(4) A list of dispositions of receivership property; 612
(5) A list of distributions made or proposed to be made from the 613
receivership for creditor claims; 614
(6) If not filed separately, a request for approval of the payment of 615
fees and expenses of the receiver; and 616
(7) Any other information required by the court. 617
(b) If the court approves a final report filed under subsection (a) of 618
this section and the receiver distributes all receivership property, the 619
receiver is discharged. 620
Sec. 24. (NEW) (Effective October 1, 2019) (a) The court may appoint a 621
receiver appointed in another state, or that person's nominee, as an 622 Substitute Bill No. 7271
LCO {\\PRDFS1\HCOUSERS\BARRYJN\WS\2019HB-07271-
R01-HB.docx }
24 of 26
ancillary receiver with respect to property located in this state or 623
subject to the jurisdiction of the court for which a receiver could be 624
appointed under sections 1 to 28, inclusive, of this act, if: 625
(1) The person or nominee would be eligible to serve as receiver 626
under section 7 of this act; and 627
(2) The appointment furthers the person's possession, custody, 628
control or disposition of property subject to the receivership in the 629
other state. 630
(b) The court may issue an order that gives effect to an order entered 631
in another state appointing or directing a receiver. 632
(c) Unless the court orders otherwise, an ancillary receiver 633
appointed under subsection (a) of this section has the rights, powers 634
and duties of a receiver appointed under sections 1 to 28, inclusive, of 635
this act. 636
Sec. 25. (NEW) (Effective October 1, 2019) A request by a mortgagee 637
for appointment of a receiver, the appointment of a receiver or 638
application by a mortgagee of receivership property or proceeds to the 639
secured obligation does not: 640
(1) Make the mortgagee a mortgagee in possession of the real 641
property; 642
(2) Make the mortgagee an agent of the owner; 643
(3) Constitute an election of remedies that precludes a later action to 644
enforce the secured obligation; 645
(4) Make the secured obligation unenforceable; or 646
(5) Limit any right available to the mortgagee with respect to the 647
secured obligation. 648
Sec. 26. (NEW) (Effective October 1, 2019) In applying and construing 649 Substitute Bill No. 7271
LCO {\\PRDFS1\HCOUSERS\BARRYJN\WS\2019HB-07271-
R01-HB.docx }
25 of 26
sections 1 to 28, inclusive, of this act, consideration must be given to 650
the need to promote uniformity of the law with respect to its subject 651
matter among states that enact it. 652
Sec. 27. (NEW) (Effective October 1, 2019) Sections 1 to 28, inclusive, 653
of this act modify, limit and supersede the Electronic Signatures in 654
Global and National Commerce Act, 15 USC 7001 et seq., but do not 655
modify, limit or supersede Section 101(c) of said act, 15 USC 7001(c) or 656
authorize electronic delivery of any of the notices described in Section 657
103(b) of said act, 15 USC 7003(b). 658
Sec. 28. (NEW) (Effective October 1, 2019) Sections 1 to 28, inclusive, 659
of this act do not apply to a receivership for which the receiver was 660
appointed before October 1, 2019. 661
This act shall take effect as follows and shall amend the following
sections:
Section 1 October 1, 2019 New section
Sec. 2 October 1, 2019 New section
Sec. 3 October 1, 2019 New section
Sec. 4 October 1, 2019 New section
Sec. 5 October 1, 2019 New section
Sec. 6 October 1, 2019 New section
Sec. 7 October 1, 2019 New section
Sec. 8 October 1, 2019 New section
Sec. 9 October 1, 2019 New section
Sec. 10 October 1, 2019 New section
Sec. 11 October 1, 2019 New section
Sec. 12 October 1, 2019 New section
Sec. 13 October 1, 2019 New section
Sec. 14 October 1, 2019 New section
Sec. 15 October 1, 2019 New section
Sec. 16 October 1, 2019 New section
Sec. 17 October 1, 2019 New section
Sec. 18 October 1, 2019 New section
Sec. 19 October 1, 2019 New section
Sec. 20 October 1, 2019 New section
Sec. 21 October 1, 2019 New section Substitute Bill No. 7271
LCO {\\PRDFS1\HCOUSERS\BARRYJN\WS\2019HB-07271-
R01-HB.docx }
26 of 26
Sec. 22 October 1, 2019 New section
Sec. 23 October 1, 2019 New section
Sec. 24 October 1, 2019 New section
Sec. 25 October 1, 2019 New section
Sec. 26 October 1, 2019 New section
Sec. 27 October 1, 2019 New section
Sec. 28 October 1, 2019 New section
Statement of Legislative Commissioners:
In Section 28, the reference to "October 1, 2018" was changed to
"October 1, 2019" for accuracy.
JUD Joint Favorable Subst. -LCO