In the State of California, the Code of Civil Procedure Section 564 is a broad statute outlining the duties required that allow a court to appoint a receiver and provide them with certain responsibilities in a case before the court.
One of the major responsibilities of a receiver is to preserve common funds or properties that are in dispute and in danger of dissipation, as well as preserving liened property in the midst of foreclosure proceedings. A receiver may also be appointed to enforce judgments handed down by the court, or protecting property pending an upcoming appeal.
Corporate assets may also be controlled if the company is insolvent. A state regulatory commission may also request the use of a receiver. Rents, issues or profits may be collected in real estate litigation, or a lender may utilize a receiver to inspect a property for hazardous materials or conditions.
Although this statute is the broadest in California outlining uses and duties of a receiver, other statutes also outline reasons for appointing them in specific types of litigation.
The Corporations Code Section 15028 allows a receiver to be appointed to enforce an order against a partner's interest in a partnership. Code of Civil Procedure Section 565 allows a receiver to dissolve a corporate estate to liquidate and distribute assets, and Corporations Code Section 1803 allows for preserving assets until an involuntary liquidation suit is determined.
The Code of Civil Procedure Section 699.070 gives a receiver the ability to preserve perishable property until ownership is determined, and the Code of Civil Procedure Section 564 (b)(6) allows for preserving property pending the outcome of an unlawful detainer suit.
Law enforcement and other regulatory agencies are also given the authority to seek appointment of a receiver in California to assist in several of their duties. These duties may include winding up a corporation at the request of the State Attorney General, overseeing a corporation at the request of the California Commissioner of Corporations, or overseeing a real estate licensee in violation of the state's laws by the California Commissioner of Real Estate.
California's court rules also include ten Civil Rules which govern the operation of receivers or receivership estates. These rules apply to any receiver appointed in the state, and are written to outline the recordkeeping duties and guidance for retaining counsel. All receivers in the State of California should closely study the rules in order to ensure compliance while performing their duties.
