Appointing a receiver reduces the exposure to a lender and the expense of managing a distressed property. The receiver takes over the management of the asset and all associated operational, insurance and tax aspects as a neutral third party. The length of this appointment will vary, but can help to avoid several problems the lender could face otherwise.
 
Receivers not only limit the liability a lender will face, but will provide the daily management and operations activities required to produce income from the property. This receiver may also provide construction advice and expertise without disrupting any current business taking place on the property.
 
Appointing a receiver permits the receiver to sell the property "as is", as well as to hold the property to maximize the distressed property's value through improvements or appreciation, and can help prevent the borrower from further reducing the value of the property as a result of deferred maintenance.
 
Asking the court to appoint a receiver will save the lender time and money in allowing them to concentrate on their area of expertise as opposed to them managing the property themselves, and will help to promote cooperation from the borrower. However, a receivership action does not waive the lender's rights against the borrower.
 
Possibly the most important aspect to the lender is that appointing a receiver will preserve and increase the value of the property through proper management and assurance of all compliances required. Receivers can control the finances of the property, pay for maintenance and needed improvements through the receivership assets, and prevent further decay to the property.

Why Should a Receiver be Appointed?