In response to your demand for payment, you were advised that the court appointed a receiver. What is a receiver, how are they appointed, and what effect do they have on your debt collection claim?
Receivers are court-appointed individuals who assist in a variety of situations. Receivers are common in mortgage foreclosure scenarios when a lender forecloses on a property. Receivers work to ensure that the building continues to operate and run efficiently. Receivers collect rents and other payments; pay taxes; and hire legal counsel, people, and vendors to service the building.
In order for the court to appoint a receiver, an application must be made to the court. Once appointed, the receiver takes an oath, which is then filed with the court, and posts a bond. The amount of the bond can vary and is generally determined by the financial situation of the building. The amount can range from several hundred dollars to tens of thousands of dollars.
Rule 36 of the Chief Judge of New York provides the requirements to become a receiver. Lawyers and non-lawyers can become receivers through certified training programs. Receivers are compensated hourly for their work, however, receivers can only earn a limited amount per calendar year. To qualify, receivers must not be related to the courts, judges or have a history of wrongdoing.
Receivers in Debt Collection Matters
The following is an example of how receivers may assist in debt collection matters. Let’s say you supplied goods or services to the building at the request of an owner or managing agent and the invoices for services rendered remain unpaid. Given the repeated unpaid invoices, you stop servicing or supplying goods to the building and terminate the underlying agreement, by delivering the required notices and sending the claim out for collection.
After receiving the claim, a review of the cases filed with the New York court revealed that the client was not the only one not getting paid. The owner of the rental building collected rents from tenants and the garage unit but failed to pay utilities, taxes, and the large underlying mortgage. The lender began foreclosure proceedings and, in order to protect the collection of future rental payments and to insure the building operated as it should, requested the court appoint a receiver.
If you are interested in continuing to work with the building, you may qualify to work with a receiver on an ongoing basis. The receiver is in charge of contracting with parties to insure the ongoing continuation of building operations as long as required. Generally, the receiver will not pay expenses or bills for any goods, work, labor, or services provided before the receiver was appointed. That being said, there may be exceptions, as was the case with our elevator client.
If you have a debt collection matter that needs resolving, contact Frank, Frank, Goldstein and Nager. We have the experience that pays.
