Lenders on income-producing property frequently seek a receiver rather than waiting for foreclosure to conclude.

Why. The borrower in default has little incentive to maintain the property or apply rents to the debt. A receiver collects rents, pays operating expenses, maintains the asset and reports to the court.

Grounds. Contractual consent in the mortgage and assignment of rents; statutory grounds; waste; inadequacy of the security; and default combined with a showing that the property is at risk.

Assignment of rents. Whether it is absolute or collateral, and whether it is perfected and enforceable without possession, is state-specific and determines whether the lender has a claim to rents ahead of other creditors.

Powers. Defined by the appointment order: operate, lease, collect, employ managers and brokers, borrow on receiver’s certificates, and in some states sell the property free of liens with court approval, which has become a significant alternative to foreclosure.

Duties. The receiver is an officer of the court owing duties to all interested parties, not the lender’s agent — a distinction lenders sometimes forget and courts do not.

Cost. Fees are paid from the property’s income with court approval, ahead of the debt.