Money & Finance › Commercial real estate lending › Commercial foreclosure: trustee's sales and judicial foreclosure
Receivership: a court-appointed receiver runs the property
· Law or rule
Fact, law or dataA rule, statute, definition or measured number.
A court appoints a neutral receiver to take control of a defaulted property, collect rents and run it while the case proceeds.
See it on the Money & Finance map →How it works
The lender sues and asks the court, under California Code of Civil Procedure 564 and the loan's assignment-of-rents clause, to appoint a receiver, sometimes within days. The receiver, an officer of the court, collects rent, pays expenses, signs leases, fixes code problems and reports to the judge, paid from the property's cash. California courts can also let a receiver sell the property, sometimes free of junior liens. The owner loses control but keeps title until a foreclosure or sale.
Why it matters
It stops rent diversion and neglect early, and has become a standard step for troubled office buildings, especially those with CMBS loans.
Facts, rules and data
Court dockets in receivership cases, California CCP 564–570 and Civil Code 2938, California Rules of Court 3.1175–3.1184, and servicer reports noting receivers on troubled loans.
Debates and risks
How far a receiver can sell property free of liens, without a foreclosure's protections for the owner, is still argued in California courts.
Connections (2)
▸Receivership: a court-appointed receiver runs the property often comes before Commercial foreclosure: trustee's sales and judicial foreclosureFact, law or data
The connection
A lender files suit and asks for a receiver right away, so a neutral party controls rent and upkeep during the months a foreclosure takes. The receiver stabilizes leasing and finances; then the property is sold at a trustee's sale, sold by the receiver, or handed over by deed.
When and why
Common in California commercial defaults, especially troubled office and hotel properties since 2023.
How we know
Court dockets show receiver appointments alongside recorded notices of default on the same properties.
Debates and risks
Whether a receiver's cost, paid from rents, is worth it compared with a quick trustee's sale depends on the building.
▸Receivership: a court-appointed receiver runs the property is often sought by CMBS master and special servicersFact, law or data
The connection
When a CMBS loan defaults, the special servicer often asks a court to appoint a receiver early, to stop rent diversion, keep the property maintained and give buyers clean information. It also lets the servicer market the asset while the borrower no longer controls it.
When and why
Across US CMBS office and retail defaults, including downtown Los Angeles towers since 2023.
How we know
Servicer commentary noting 'receiver appointed', and court filings by CMBS trustees acting through their special servicers.
Debates and risks
Whether servicers' early push for receivers speeds recoveries or adds fees that come out of bondholders' pockets is debated.