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General Assembly Raised Bill No. 5258
February Session, 2020
LCO No. 1585
Referred to Committee on JUDICIARY
Introduced by:
(JUD)
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, 2020) Sections 1 to 28, inclusive, 1
of this act, may be cited as the Uniform Commercial Real Estate 2
Receivership Act. 3
Sec. 2. (NEW) (Effective October 1, 2020) 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, of 9
(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
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(iv) A sibling, aunt, uncle, great aunt, great uncle, first cousin, niece, 13
nephew, grandniece or grandnephew of the individual, whether related 14
by the whole or the half blood or adoption, or a companion of any of 15
them; or 16
(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 subdivision. 25
(2) "Companion" means the spouse of an individual. 26
(3) "Court" means the Superior Court. 27
(4) "Executory contract" means a contract, including a lease, under 28
which each party has an unperformed obligation and the failure of a 29
party to complete performance would constitute a material breach. 30
(5) "Governmental unit" means an office, department, division, 31
bureau, board, commission or other agency of this state or a subdivision 32
of this state. 33
(6) "Lien" means an interest in property which secures payment or 34
performance of an obligation. 35
(7) "Mortgage" means a record, however denominated, that creates or 36
provides for a consensual lien on real property or rents, even if the 37
record also creates or provides for a lien on personal property. 38
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(8) "Mortgagee" means a person entitled to enforce an obligation 39
secured by a mortgage. 40
(9) "Mortgagor" means a person that grants a mortgage or a successor 41
in ownership of the real property described in the mortgage. 42
(10) "Owner" means the person for whose property a receiver is 43
appointed. 44
(11) "Person" means an individual, estate, business or nonprofit 45
entity, public corporation, government or governmental subdivision, 46
agency, instrumentality or other legal entity. 47
(12) "Proceeds" means the following property: 48
(A) Whatever is acquired on the sale, lease, license, exchange or other 49
disposition of receivership property; 50
(B) Whatever is collected on, or distributed on account of, 51
receivership property; 52
(C) Rights arising out of receivership property; 53
(D) To the extent of the value of receivership property, claims arising 54
out of the loss, nonconformity or interference with the use of, defects or 55
infringement of rights in, or damage to, the property; or 56
(E) To the extent of the value of receivership property and to the 57
extent payable to the owner or mortgagee, insurance payable by reason 58
of the loss or nonconformity of, defects or infringement of rights in, or 59
damage to, the property. 60
(13) "Property" means all of a person's right, title and interest, both 61
legal and equitable, in real and personal property, tangible and 62
intangible, wherever located and however acquired. "Property" includes 63
proceeds, products, offspring, rents or profits of or from the property. 64
(14) "Receiver" means a person appointed by the court as the court's 65
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agent, and subject to the court's direction, to take possession of, manage 66
and, if authorized by sections 1 to 28, inclusive, of this act or court order, 67
transfer, sell, lease, license, exchange, collect or otherwise dispose of 68
receivership property. 69
(15) "Receivership" means a proceeding in which a receiver is 70
appointed. 71
(16) "Receivership property" means the property of an owner which 72
is described in the order appointing a receiver or a subsequent order. 73
"Receivership property" includes any proceeds, products, offspring, 74
rents or profits of or from the property. 75
(17) "Record", used as a noun, means information that is inscribed on 76
a tangible medium or that is stored on an electronic or other medium 77
and is retrievable in perceivable form. 78
(18) "Rents" means: 79
(A) Sums payable for the right to possess or occupy, or for the actual 80
possession or occupation of, real property of another person; 81
(B) Sums payable to a mortgagor under a policy of rental-interruption 82
insurance covering real property; 83
(C) Claims arising out of a default in the payment of sums payable 84
for the right to possess or occupy real property of another person; 85
(D) Sums payable to terminate an agreement to possess or occupy 86
real property of another person; 87
(E) Sums payable to a mortgagor for payment or reimbursement of 88
expenses incurred in owning, operating and maintaining real property 89
or constructing or installing improvements on real property; or 90
(F) Other sums payable under an agreement relating to the real 91
property of another person which constitute rents under the law of this 92
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state other than sections 1 to 28, inclusive, of this act. 93
(19) "Secured obligation" means an obligation the payment or 94
performance of which is secured by a security agreement. 95
(20) "Security agreement" means an agreement that creates or 96
provides for a lien. 97
(21) "Sign" means, with present intent to authenticate or adopt a 98
record: 99
(A) To execute or adopt a tangible symbol; or 100
(B) To attach to or logically associate with the record an electronic 101
sound, symbol or process. 102
(22) "State" means a state of the United States, the District of 103
Columbia, Puerto Rico, the United States Virgin Islands or any territory 104
or insular possession subject to the jurisdiction of the United States. 105
Sec. 3. (NEW) (Effective October 1, 2020) (a) Except as provided in 106
subsection (b) of this section, the court may issue an order under 107
sections 1 to 28, inclusive, of this act only after notice and an opportunity 108
for a hearing that the court deems appropriate in the circumstances. 109
(b) The court may issue an order under sections 1 to 28, inclusive, of 110
this act: 111
(1) Without prior notice if the circumstances require issuance of an 112
order before notice is given; 113
(2) After notice and without a prior hearing if the circumstances 114
require issuance of an order before a hearing is held; or 115
(3) After notice and without a hearing if no interested party timely 116
requests a hearing. 117
Sec. 4. (NEW) (Effective October 1, 2020) (a) Except as provided in 118
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subsection (b) or (c) of this section, sections 1 to 28, inclusive, of this act 119
apply to a receivership for an interest in real property and any personal 120
property related to or used in operating the real property. 121
(b) Sections 1 to 28, inclusive, of this act do not apply to a receivership 122
for an interest in real property improved by one to four dwelling units 123
unless: 124
(1) The interest is used for agricultural, commercial, industrial or 125
mineral-extraction purposes, other than incidental uses by an owner 126
occupying the property as the owner's primary residence; 127
(2) The interest secures an obligation incurred at a time when the 128
property was used or planned for use for agricultural, commercial, 129
industrial or mineral-extraction purposes; 130
(3) The owner planned or is planning to develop the property into 131
one or more dwelling units to be sold or leased in the ordinary course 132
of the owner's business; or 133
(4) The owner is collecting or has the right to collect rents or other 134
income from the property from a person other than an affiliate of the 135
owner. 136
(c) Sections 1 to 28, inclusive, of this act do not apply to a receivership 137
authorized by the law of this state other than sections 1 to 28, inclusive, 138
of this act in which the receiver is a governmental unit or an individual 139
acting in an official capacity on behalf of the governmental unit. 140
(d) Sections 1 to 28, inclusive, of this act do not limit the authority of 141
a court to appoint a receiver under the law of this state other than 142
sections 1 to 28, inclusive, of this act. 143
(e) Unless displaced by a particular provision of sections 1 to 28, 144
inclusive, of this act, the principles of law and equity supplement 145
sections 1 to 28, inclusive, of this act. 146
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Sec. 5. (NEW) (Effective October 1, 2020) The court that appoints a 147
receiver under sections 1 to 28, inclusive, of this act has exclusive 148
jurisdiction to direct the receiver and determine any controversy related 149
to the receivership or receivership property. 150
Sec. 6. (NEW) (Effective October 1, 2020) (a) The court may appoint a 151
receiver: 152
(1) Before judgment, to protect a party that demonstrates an apparent 153
right, title or interest in real property that is the subject of the action, if 154
the property or its revenue-producing potential: 155
(A) Is being subjected to or is in danger of waste, loss, dissipation or 156
impairment; or 157
(B) Has been or is about to be the subject of a voidable transaction; 158
(2) After judgment: 159
(A) To carry the judgment into effect; or 160
(B) To preserve nonexempt real property pending appeal or when an 161
execution has been returned unsatisfied and the owner refuses to apply 162
the property in satisfaction of the judgment; or 163
(3) In an action in which a receiver for real property may be appointed 164
on equitable grounds. 165
(b) In connection with the foreclosure or other enforcement of a 166
mortgage, a mortgagee is entitled to appointment of a receiver for the 167
mortgaged property if: 168
(1) Appointment is necessary to protect the property from waste, loss, 169
transfer, dissipation or impairment; 170
(2) The mortgagor agreed in a signed record to appointment of a 171
receiver on default; 172
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(3) The owner agreed, after default and in a signed record, to 173
appointment of a receiver; 174
(4) The property and any other collateral held by the mortgagee are 175
not sufficient to satisfy the secured obligation; 176
(5) The owner fails to turn over to the mortgagee proceeds or rents 177
the mortgagee was entitled to collect; or 178
(6) The holder of a subordinate lien obtains appointment of a receiver 179
for the property. 180
(c) The court may condition appointment of a receiver without prior 181
notice under subdivision (1) of subsection (b) of section 3 of this act or 182
without a prior hearing under subdivision (2) of subsection (b) of section 183
3 of this act on the giving of security by the person seeking the 184
appointment for the payment of damages, reasonable attorneys' fees 185
and costs incurred or suffered by any person if the court later concludes 186
that the appointment was not justified. If the court later concludes that 187
the appointment was justified, the court shall release the security. 188
Sec. 7. (NEW) (Effective October 1, 2020) (a) The court may not appoint 189
a person as receiver unless the person submits to the court a statement 190
under penalty of perjury that the person is not disqualified. 191
(b) Except as provided in subsection (c) of this section, a person is 192
disqualified from appointment as receiver if the person: 193
(1) Is an affiliate of a party; 194
(2) Has an interest materially adverse to an interest of a party; 195
(3) Has a material financial interest in the outcome of the action, other 196
than compensation the court may allow the receiver; 197
(4) Has a debtor-creditor relationship with a party; or 198
(5) Holds an equity interest in a party, other than a noncontrolling 199
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interest in a publicly traded company. 200
(c) A person is not disqualified from appointment as receiver solely 201
because the person: 202
(1) Was appointed receiver or is owed compensation in an unrelated 203
matter involving a party or was engaged by a party in a matter unrelated 204
to the receivership; 205
(2) Is an individual obligated to a party on a debt that is not in default 206
and was incurred primarily for personal, family or household purposes; 207
or 208
(3) Maintains with a party a deposit account, as defined in 209
subdivision (29) of subsection (a) of section 42a-9-102 of the general 210
statutes. 211
(d) A person seeking appointment of a receiver may nominate a 212
person to serve as receiver, but the court is not bound by the 213
nomination. 214
Sec. 8. (NEW) (Effective October 1, 2020) (a) Except as provided in 215
subsection (b) of this section, a receiver shall post with the court a bond 216
that: 217
(1) Is conditioned on the faithful discharge of the receiver's duties; 218
(2) Has one or more sureties approved by the court; 219
(3) Is in an amount the court specifies; and 220
(4) Is effective as of the date of the receiver's appointment. 221
(b) The court may approve the posting by a receiver with the court of 222
alternative security such as a letter of credit or deposit of funds. The 223
receiver may not use receivership property as alternative security. 224
Interest that accrues on deposited funds must be paid to the receiver on 225
the receiver's discharge. 226
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(c) The court may authorize a receiver to act before the receiver posts 227
the bond or alternative security required by this section. 228
(d) A claim against a receiver's bond or alternative security must be 229
made not later than one year after the date the receiver is discharged. 230
Sec. 9. (NEW) (Effective October 1, 2020) On appointment of a receiver, 231
the receiver has the status of a lien creditor under: 232
(1) Article 9 of title 42a of the general statutes as to receivership 233
property that is personal property or fixtures; and 234
(2) Any provision of the general statutes that provides for filing on 235
the land records of a town a certificate as to receivership property that 236
is real property. 237
Sec. 10. (NEW) (Effective October 1, 2020) Except as provided by the 238
law of this state other than sections 1 to 28, inclusive, of this act, property 239
that a receiver or owner acquires after appointment of the receiver is 240
subject to a security agreement entered into before the appointment to 241
the same extent as if the court had not appointed the receiver. 242
Sec. 11. (NEW) (Effective October 1, 2020) (a) Unless the court orders 243
otherwise, on demand by a receiver: 244
(1) A person that owes a debt that is receivership property and is 245
matured or payable on demand or on order shall pay the debt to or on 246
the order of the receiver, except to the extent the debt is subject to setoff 247
or recoupment; and 248
(2) Subject to subsection (c) of this section, a person that has 249
possession, custody or control of receivership property shall turn the 250
property over to the receiver. 251
(b) A person that has notice of the appointment of a receiver and owes 252
a debt that is receivership property may not satisfy the debt by payment 253
to the owner. 254
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(c) If a creditor has possession, custody or control of receivership 255
property and the validity, perfection or priority of the creditor's lien on 256
the property depends on the creditor's possession, custody or control, 257
the creditor may retain possession, custody or control until the court 258
orders adequate protection of the creditor's lien. 259
(d) Unless a bona fide dispute exists about a receiver's right to 260
possession, custody or control of receivership property, the court may 261
sanction as civil contempt a person's failure to turn the property over 262
when required by this section. 263
Sec. 12. (NEW) (Effective October 1, 2020) (a) Except as limited by court 264
order or law of this state other than sections 1 to 28, inclusive, of this act, 265
a receiver may: 266
(1) Collect, control, manage, conserve and protect receivership 267
property; 268
(2) Operate a business constituting receivership property, including 269
preservation, use, sale, lease, license, exchange, collection or disposition 270
of the property in the ordinary course of business; 271
(3) In the ordinary course of business, incur unsecured debt and pay 272
expenses incidental to the receiver's preservation, use, sale, lease, 273
license, exchange, collection or disposition of receivership property; 274
(4) Assert a right, claim, cause of action or defense of the owner which 275
relates to receivership property; 276
(5) Seek and obtain instruction from the court concerning 277
receivership property, exercise of the receiver's powers and 278
performance of the receiver's duties; 279
(6) On subpoena, compel a person to submit to examination under 280
oath, or to produce and permit inspection and copying of designated 281
records or tangible things, with respect to receivership property or any 282
other matter that may affect administration of the receivership; 283
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(7) Engage a professional, as provided in section 15 of this act; 284
(8) Apply to a court of another state for appointment as ancillary 285
receiver with respect to receivership property located in that state; and 286
(9) Exercise any power conferred by court order, sections 1 to 28, 287
inclusive, of this act or the law of this state other than sections 1 to 28, 288
inclusive, of this act. 289
(b) With court approval, a receiver may: 290
(1) Incur debt for the use or benefit of receivership property other 291
than in the ordinary course of business; 292
(2) Make improvements to receivership property; 293
(3) Use or transfer receivership property other than in the ordinary 294
course of business, as provided in section 16 of this act; 295
(4) Adopt or reject an executory contract of the owner, as provided in 296
section 17 of this act; 297
(5) Pay compensation to the receiver, as provided in section 21 of this 298
act and to each professional engaged by the receiver, as provided in 299
section 15 of this act; 300
(6) Recommend allowance or disallowance of a claim of a creditor, as 301
provided in section 20 of this act; and 302
(7) Make a distribution of receivership property, as provided in 303
section 20 of this act. 304
(c) A receiver shall: 305
(1) Prepare and retain appropriate business records, including a 306
record of each receipt, disbursement and disposition of receivership 307
property; 308
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(2) Account for receivership property, including the proceeds of a 309
sale, lease, license, exchange, collection or other disposition of the 310
property; 311
(3) File on the land records of the town where the real property is 312
located a copy of the order appointing the receiver and, if a legal 313
description of the real property is not included in the order, the legal 314
description; 315
(4) Disclose to the court any fact arising during the receivership 316
which would disqualify the receiver under section 7 of this act; and 317
(5) Perform any duty imposed by court order, sections 1 to 28, 318
inclusive, of this act or the law of this state other than sections 1 to 28, 319
inclusive, of this act. 320
(d) The powers and duties of a receiver may be expanded, modified 321
or limited by court order. 322
Sec. 13. (NEW) (Effective October 1, 2020) (a) An owner shall: 323
(1) Assist and cooperate with the receiver in the administration of the 324
receivership and the discharge of the receiver's duties; 325
(2) Preserve and turn over to the receiver all receivership property in 326
the owner's possession, custody or control; 327
(3) Identify all records and other information relating to the 328
receivership property, including a password, authorization or other 329
information needed to obtain or maintain access to or control of the 330
receivership property, and make available to the receiver the records 331
and information in the owner's possession, custody or control; 332
(4) On subpoena, submit to examination under oath by the receiver 333
concerning the acts, conduct, property, liabilities and financial condition 334
of the owner or any matter relating to the receivership property or the 335
receivership; and 336
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(5) Perform any duty imposed by court order, sections 1 to 28, 337
inclusive, of this act or the law of this state other than sections 1 to 28, 338
inclusive, of this act. 339
(b) If an owner is a person other than an individual, this section 340
applies to each officer, director, manager, member, partner, trustee or 341
other person exercising or having the power to exercise control over the 342
affairs of the owner. 343
(c) If a person knowingly fails to perform a duty imposed by this 344
section, the court may: 345
(1) Award the receiver actual damages caused by the person's failure, 346
reasonable attorneys' fees and costs; and 347
(2) Sanction the failure as civil contempt. 348
Sec. 14. (NEW) (Effective October 1, 2020) (a) Except as provided in 349
subsection (d) of this section or ordered by the court, an order 350
appointing a receiver operates as a stay, applicable to all persons, of an 351
act, action or proceeding: 352
(1) To obtain possession of, exercise control over or enforce a 353
judgment against receivership property; and 354
(2) To enforce a lien against receivership property to the extent the 355
lien secures a claim against the owner which arose before entry of the 356
order. 357
(b) Except as provided in subsection (d) of this section, the court may 358
enjoin an act, action or proceeding against or relating to receivership 359
property if the injunction is necessary to protect the property or facilitate 360
administration of the receivership. 361
(c) A person whose act, action or proceeding is stayed or enjoined 362
under this section may apply to the court for relief from the stay or 363
injunction for cause. 364
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(d) An order under subsection (a) or (b) of this section does not 365
operate as a stay or injunction of: 366
(1) An act, action or proceeding to foreclose or otherwise enforce a 367
mortgage by the person seeking appointment of the receiver; 368
(2) An act, action or proceeding to perfect, or maintain or continue 369
the perfection of, an interest in receivership property; 370
(3) Commencement or continuation of a criminal proceeding; 371
(4) Commencement or continuation of an action or proceeding, or 372
enforcement of a judgment other than a money judgment in an action or 373
proceeding, by a governmental unit to enforce its police or regulatory 374
power; or 375
(5) Establishment by a governmental unit of a tax liability against the 376
owner or receivership property or an appeal of the liability. 377
(e) The court may void an act that violates a stay or injunction under 378
this section. 379
(f) If a person knowingly violates a stay or injunction under this 380
section, the court may: 381
(1) Award actual damages caused by the violation, reasonable 382
attorneys' fees and costs; and 383
(2) Sanction the violation as civil contempt. 384
Sec. 15. (NEW) (Effective October 1, 2020) (a) With court approval, a 385
receiver may engage an attorney, accountant, appraiser, auctioneer, 386
broker or other professional to assist the receiver in performing a duty 387
or exercising a power of the receiver. The receiver shall disclose to the 388
court: 389
(1) The identity and qualifications of the professional; 390
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(2) The scope and nature of the proposed engagement; 391
(3) Any potential conflict of interest; and 392
(4) The proposed compensation. 393
(b) A person is not disqualified from engagement under this section 394
solely because of the person's engagement by, representation of, or other 395
relationship with the receiver, a creditor or a party. Sections 1 to 28, 396
inclusive, of this act do not prevent the receiver from serving in the 397
receivership as an attorney, accountant, auctioneer or broker when 398
authorized by law. 399
(c) A receiver or professional engaged under subsection (a) of this 400
section shall file with the court an itemized statement of the time spent, 401
work performed and billing rate of each person that performed the work 402
and an itemized list of expenses. The receiver shall pay the amount 403
approved by the court. 404
Sec. 16. (NEW) (Effective October 1, 2020) (a) In this section, "good 405
faith" means honesty in fact and the observance of reasonable 406
commercial standards of fair dealing. 407
(b) With court approval, a receiver may use receivership property 408
other than in the ordinary course of business. 409
(c) With court approval, a receiver may transfer receivership property 410
other than in the ordinary course of business by sale, lease, license, 411
exchange or other disposition. Unless the agreement of sale provides 412
otherwise, a sale under this section is free and clear of a lien of the 413
person that obtained appointment of the receiver, any subordinate lien 414
and any right of redemption, but is subject to a senior lien. 415
(d) A lien on receivership property which is extinguished by a 416
transfer under subsection (c) of this section attaches to the proceeds of 417
the transfer with the same validity, perfection and priority the lien had 418
on the property immediately before the transfer, even if the proceeds 419
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are not sufficient to satisfy all obligations secured by the lien. 420
(e) A transfer under subsection (c) of this section may occur by means 421
other than a public auction sale. A creditor holding a valid lien on the 422
property to be transferred may purchase the property and offset against 423
the purchase price part or all of the allowed amount secured by the lien, 424
if the creditor tenders funds sufficient to satisfy in full the reasonable 425
expenses of transfer and the obligation secured by any senior lien 426
extinguished by the transfer. 427
(f) A reversal or modification of an order approving a transfer under 428
subsection (c) of this section does not affect the validity of the transfer 429
to a person that acquired the property in good faith or revive against the 430
person any lien extinguished by the transfer, whether the person knew 431
before the transfer of the request for reversal or modification, unless the 432
court stayed the order before the transfer. 433
Sec. 17. (NEW) (Effective October 1, 2020) (a) In this section, "timeshare 434
interest" means an interest having a duration of more than three years 435
which grants its holder the right to use and occupy an accommodation, 436
facility or recreational site, whether improved or not, for a specific 437
period less than a full year during any given year. 438
(b) Except as provided in subsection (h) of this section, with court 439
approval, a receiver may adopt or reject an executory contract of the 440
owner relating to receivership property. The court may condition the 441
receiver's adoption and continued performance of the contract on terms 442
appropriate under the circumstances. If the receiver does not request 443
court approval to adopt or reject the contract within a reasonable time 444
after the receiver's appointment, the receiver is deemed to have rejected 445
the contract. 446
(c) A receiver's performance of an executory contract before court 447
approval under subsection (b) of this section of its adoption or rejection 448
is not an adoption of the contract and does not preclude the receiver 449
from seeking approval to reject the contract. 450
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(d) A provision in an executory contract which requires or permits a 451
forfeiture, modification or termination of the contract because of the 452
appointment of a receiver or the financial condition of the owner does 453
not affect a receiver's power under subsection (b) of this section to adopt 454
the contract. 455
(e) A receiver's right to possess or use receivership property pursuant 456
to an executory contract terminates on rejection of the contract under 457
subsection (b) of this section. Rejection is a breach of the contract 458
effective immediately before appointment of the receiver. A claim for 459
damages for rejection of the contract must be submitted by the later of: 460
(1) The time set for submitting a claim in the receivership; or 461
(2) Thirty days after the court approves the rejection. 462
(f) If at the time a receiver is appointed, the owner has the right to 463
assign an executory contract relating to receivership property under the 464
law of this state other than sections 1 to 28, inclusive, of this act, the 465
receiver may assign the contract with court approval. 466
(g) If a receiver rejects under subsection (b) of this section an 467
executory contract for the sale of receivership property that is real 468
property in possession of the purchaser or a real-property timeshare 469
interest, the purchaser may: 470
(1) Treat the rejection as a termination of the contract, and in that case 471
the purchaser has a lien on the property for the recovery of any part of 472
the purchase price the purchaser paid; or 473
(2) Retain the purchaser's right to possession under the contract, and 474
in that case the purchaser shall continue to perform all obligations 475
arising under the contract and may offset any damages caused by 476
nonperformance of an obligation of the owner after the date of the 477
rejection, but the purchaser has no right or claim against other 478
receivership property or the receiver on account of the damages. 479
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(h) A receiver may not reject an unexpired lease of real property 480
under which the owner is the landlord if: 481
(1) The tenant occupies the leased premises as the tenant's primary 482
residence; 483
(2) The receiver was appointed at the request of a person other than 484
a mortgagee; or 485
(3) The receiver was appointed at the request of a mortgagee and: 486
(A) The lease is superior to the lien of the mortgage; 487
(B) The tenant has an enforceable agreement with the mortgagee or 488
the holder of a senior lien under which the tenant's occupancy will not 489
be disturbed as long as the tenant performs its obligations under the 490
lease; 491
(C) The mortgagee has consented to the lease, either in a signed 492
record or by its failure timely to object that the lease violated the 493
mortgage; or 494
(D) The terms of the lease were commercially reasonable at the time 495
the lease was agreed to and the tenant did not know or have reason to 496
know that the lease violated the mortgage. 497
Sec. 18. (NEW) (Effective October 1, 2020) (a) A receiver is entitled to 498
all defenses and immunities provided by the law of this state other than 499
sections 1 to 28, inclusive, of this act for an act or omission within the 500
scope of the receiver's appointment. 501
(b) A receiver may be sued personally for an act or omission in 502
administering receivership property only with approval of the court 503
that appointed the receiver. 504
Sec. 19. (NEW) (Effective October 1, 2020) A receiver may file or, if 505
ordered by the court, shall file an interim report that includes: 506
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(1) The activities of the receiver since appointment or a previous 507
report; 508
(2) Receipts and disbursements, including a payment made or 509
proposed to be made to a professional engaged by the receiver; 510
(3) Receipts and dispositions of receivership property; 511
(4) Fees and expenses of the receiver and, if not filed separately, a 512
request for approval of payment of the fees and expenses; and 513
(5) Any other information required by the court. 514
Sec. 20. (NEW) (Effective October 1, 2020) (a) Except as provided in 515
subsection (f) of this section, a receiver shall give notice of appointment 516
of the receiver to creditors of the owner by: 517
(1) Deposit for delivery through first class mail or other commercially 518
reasonable delivery method to the last-known address of each creditor; 519
and 520
(2) Publication as directed by the court. 521
(b) Except as provided in subsection (f) of this section, the notice 522
required by subsection (a) of this section must specify the date by which 523
each creditor holding a claim against the owner which arose before 524
appointment of the receiver must submit the claim to the receiver. The 525
date specified must be at least ninety days after the later of notice under 526
subdivision (1) of subsection (a) of this section or last publication under 527
subdivision (2) of subsection (a) of this section. The court may extend 528
the period for submitting the claim. Unless the court orders otherwise, 529
a claim that is not submitted timely is not entitled to a distribution from 530
the receivership. 531
(c) A claim submitted by a creditor under this section must: 532
(1) State the name and address of the creditor; 533
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(2) State the amount and basis of the claim; 534
(3) Identify any property securing the claim; 535
(4) Be signed by the creditor under penalty of perjury; and 536
(5) Include a copy of any record on which the claim is based. 537
(d) An assignment by a creditor of a claim against the owner is 538
effective against the receiver only if the assignee gives timely notice of 539
the assignment to the receiver in a signed record. 540
(e) At any time before entry of an order approving a receiver's final 541
report, the receiver may file with the court an objection to a claim of a 542
creditor, stating the basis for the objection. The court shall allow or 543
disallow the claim according to the law of this state other than sections 544
1 to 28, inclusive, of this act. 545
(f) If the court concludes that receivership property is likely to be 546
insufficient to satisfy claims of each creditor holding a perfected lien on 547
the property, the court may order that: 548
(1) The receiver need not give notice under subsection (a) of this 549
section of the appointment to all creditors of the owner, but only such 550
creditors as the court directs; and 551
(2) Unsecured creditors need not submit claims under this section. 552
(g) Subject to the provisions of section 21 of this act: 553
(1) A distribution of receivership property to a creditor holding a 554
perfected lien on the property must be made in accordance with the 555
creditor's priority under the law of this state other than sections 1 to 28, 556
inclusive, of this act; and 557
(2) A distribution of receivership property to a creditor with an 558
allowed unsecured claim must be made as the court directs according 559
to the law of this state other than sections 1 to 28, inclusive, of this act. 560
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Sec. 21. (NEW) (Effective October 1, 2020) (a) The court may award a 561
receiver from receivership property the reasonable and necessary fees 562
and expenses of performing the duties of the receiver and exercising the 563
powers of the receiver. 564
(b) The court may order one or more of the following to pay the 565
reasonable and necessary fees and expenses of the receivership, 566
including reasonable attorneys' fees and costs: 567
(1) A person that requested the appointment of the receiver, if the 568
receivership does not produce sufficient funds to pay the fees and 569
expenses; or 570
(2) A person whose conduct justified or would have justified the 571
appointment of the receiver under subdivision (1) of subsection (a) of 572
section 6 of this act. 573
Sec. 22. (NEW) (Effective October 1, 2020) (a) The court may remove a 574
receiver for cause. 575
(b) The court shall replace a receiver that dies, resigns or is removed. 576
(c) If the court finds that a receiver that resigns or is removed, or the 577
representative of a receiver that is deceased, has accounted fully for and 578
turned over to the successor receiver all receivership property and has 579
filed a report of all receipts and disbursements during the service of the 580
replaced receiver, the replaced receiver is discharged. 581
(d) The court may discharge a receiver and terminate the court's 582
administration of the receivership property if the court finds that 583
appointment of the receiver was improvident or that the circumstances 584
no longer warrant continuation of the receivership. If the court finds that 585
the appointment was sought wrongfully or in bad faith, the court may 586
assess against the person that sought the appointment: 587
(1) The fees and expenses of the receivership, including reasonable 588
attorneys' fees and costs; and 589
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(2) Actual damages caused by the appointment, including reasonable 590
attorneys' fees and costs. 591
Sec. 23. (NEW) (Effective October 1, 2020) (a) On completion of a 592
receiver's duties, the receiver shall file a final report including: 593
(1) A description of the activities of the receiver in the conduct of the 594
receivership; 595
(2) A list of receivership property at the commencement of the 596
receivership and any receivership property received during the 597
receivership; 598
(3) A list of disbursements, including payments to professionals 599
engaged by the receiver; 600
(4) A list of dispositions of receivership property; 601
(5) A list of distributions made or proposed to be made from the 602
receivership for creditor claims; 603
(6) If not filed separately, a request for approval of the payment of 604
fees and expenses of the receiver; and 605
(7) Any other information required by the court. 606
(b) If the court approves a final report filed under subsection (a) of 607
this section and the receiver distributes all receivership property, the 608
receiver is discharged. 609
Sec. 24. (NEW) (Effective October 1, 2020) (a) The court may appoint a 610
receiver appointed in another state, or that person's nominee, as an 611
ancillary receiver with respect to property located in this state or subject 612
to the jurisdiction of the court for which a receiver could be appointed 613
under sections 1 to 28, inclusive, of this act, if: 614
(1) The person or nominee would be eligible to serve as receiver 615
under section 7 of this act; and 616
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(2) The appointment furthers the person's possession, custody, 617
control or disposition of property subject to the receivership in the other 618
state. 619
(b) The court may issue an order that gives effect to an order entered 620
in another state appointing or directing a receiver. 621
(c) Unless the court orders otherwise, an ancillary receiver appointed 622
under subsection (a) of this section has the rights, powers and duties of 623
a receiver appointed under sections 1 to 28, inclusive, of this act. 624
Sec. 25. (NEW) (Effective October 1, 2020) A request by a mortgagee for 625
appointment of a receiver, the appointment of a receiver or application 626
by a mortgagee of receivership property or proceeds to the secured 627
obligation does not: 628
(1) Make the mortgagee a mortgagee in possession of the real 629
property; 630
(2) Make the mortgagee an agent of the owner; 631
(3) Constitute an election of remedies that precludes a later action to 632
enforce the secured obligation; 633
(4) Make the secured obligation unenforceable; or 634
(5) Limit any right available to the mortgagee with respect to the 635
secured obligation. 636
Sec. 26. (NEW) (Effective October 1, 2020) In applying and construing 637
sections 1 to 28, inclusive, of this act, consideration must be given to the 638
need to promote uniformity of the law with respect to its subject matter 639
among states that enact it. 640
Sec. 27. (NEW) (Effective October 1, 2020) Sections 1 to 28, inclusive, of 641
this act modify, limit and supersede the Electronic Signatures in Global 642
and National Commerce Act, 15 USC 7001 et seq., but do not modify, 643
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limit or supersede Section 101(c) of said act, 15 USC 7001(c) or authorize 644
electronic delivery of any of the notices described in Section 103(b) of 645
said act, 15 USC 7003(b). 646
Sec. 28. (NEW) (Effective October 1, 2020) Sections 1 to 28, inclusive, of 647
this act do not apply to a receivership for which the receiver was 648
appointed before October 1, 2020. 649
This act shall take effect as follows and shall amend the following
sections:
Section 1 October 1, 2020 New section
Sec. 2 October 1, 2020 New section
Sec. 3 October 1, 2020 New section
Sec. 4 October 1, 2020 New section
Sec. 5 October 1, 2020 New section
Sec. 6 October 1, 2020 New section
Sec. 7 October 1, 2020 New section
Sec. 8 October 1, 2020 New section
Sec. 9 October 1, 2020 New section
Sec. 10 October 1, 2020 New section
Sec. 11 October 1, 2020 New section
Sec. 12 October 1, 2020 New section
Sec. 13 October 1, 2020 New section
Sec. 14 October 1, 2020 New section
Sec. 15 October 1, 2020 New section
Sec. 16 October 1, 2020 New section
Sec. 17 October 1, 2020 New section
Sec. 18 October 1, 2020 New section
Sec. 19 October 1, 2020 New section
Sec. 20 October 1, 2020 New section
Sec. 21 October 1, 2020 New section
Sec. 22 October 1, 2020 New section
Sec. 23 October 1, 2020 New section
Sec. 24 October 1, 2020 New section
Sec. 25 October 1, 2020 New section
Sec. 26 October 1, 2020 New section
Sec. 27 October 1, 2020 New section
Sec. 28 October 1, 2020 New section
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Statement of Purpose:
To adopt the Uniform Commercial Real Estate Receivership Act.
[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except
that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not
underlined.]