ARIZONA
HOUSE OF REPRESENTATIVES
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SB 1216: uniform receivership act; commercial property |
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PRIME SPONSOR: Senator Livingston, LD 22 BILL STATUS: Commerce |
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Establishes the Uniform Commercial Real
Estate Receivership Act (Act)
History
A.R.S. § 12-1241, grants the superior court authority to appoint a receiver to protect and preserve property or the rights of parties therein, even if the action includes no other claim for relief.
Pursuant to A.R.S. § 12-1242, an application for the appointment of a receiver must be in writing, supported by an affidavit, and served to the adverse party, together with reasonable notice of the time of a hearing. The adverse party may file, and must considered on hearing the application, counter affidavits with such testimony as the court admits.
Provisions
Uniform Commercial Real Estate Receivership Act (Sec. 1)
1. Permits the superior court to issue an order under the Act only after notice and opportunity for a hearing appropriate in the circumstances.
a. Outlines circumstances in which the court may issue an order without notice or hearing.
2. Applies the Act to a receivership for an interest in real property and any personal property related to or used in operating the real property.
3. Specifies a receivership for an interest in real property improved by one to four dwelling units is not applicable to the Act unless certain criteria are met.
4. Specifies a receivership authorized by another law other than this Act in which the receiver is a governmental unit or an individual acting in an official capacity on behalf of the unit is not applicable to the Act.
5. Asserts the Act does not limit the authority of a court to appoint a receiver under another law other than this Act.
6. Specifies the principles of law and equity supplement the Act.
Court Powers
7. Grants a receiver that is appointed by the court exclusive jurisdiction to direct the receiver and determine any controversy related to the receivership or receivership property.
8. Permits a court to appoint a receiver for specified purposes.
9. Stipulates a court may appoint a receiver for mortgaged property under a foreclosure or other enforcement if certain requirements are met.
10. Allows the court to condition appointment of a receiver without prior notice or a hearing on the giving of security by the person seeking the appointment for the payment of damages, attorney's fees incurred if the court later concludes that the appointment was not justified.
a. Requires the court to release the security if the court concludes that the appointment was justified.
11. Prohibits a court from appointing a person as a receiver provided the person submits to the court a statement that the person is not disqualified.
a. Outlines criteria for disqualification.
12. Asserts a person is not disqualified as a receiver solely because the person:
a. Was appointed receiver or is owed compensation in an unrelated matter involving a party or was engaged by a party in a matter unrelated to the receivership;
b. Is an individual obligated to a party on a debt that is not in default and was incurred primarily for personal, family or household purposes; or
c. Maintains with a party a deposit account.
13. Allows a person seeking the appointment of a receiver to nominate a person to serve as receiver and adds the court is not bound by the nomination.
Receiver's Bond
14. Requires a receiver to post a bond with the court.
a. Outlines the requirements of the bond.
15. Permits a court to approve the posting of alternative security, such as a letter of credit or deposit of funds.
a. Prohibits receivership property as alternative security.
b. Requires interest that accrues on deposited funds to be paid to the receiver upon discharge.
16. Allows the court to authorize a receiver act prior to posting the bond or alternative security.
17. Requires a claim against a receiver's bond or alternative security be made no later than 30 days after the date the receiver is discharged.
Receivership Property
18. Designates the status of a receiver as a lien creditor under the uniform commercial code, upon appointment.
19. Subjects property that a receiver acquires after appointment to a security agreement.
20. Outlines requirements for the collection and turnover of receivership property.
Powers and Duties of Receiver
21. Delineates powers and duties of the receiver, including duties that require court approval.
22. Instructs the receiver to:
a. Prepare and retain appropriate business records of receivership property;
b. Account for the proceeds of a sale, lease, license, exchange, collection of the receivership property;
c. Record in the office of the county recorder a copy of the order of appointment and a legal description of the real property;
d. Disclose to the court any fact that would disqualify the receiver; and
e. Perform any duty imposed by a court order.
23. Allows the powers and duties to be expanded, modified, or limited by a court order.
24. Permits a receiver, with court approval, to engage an attorney, accountant, appraiser, or other professional to assist the receiver in performing a duty or exercising a power of the receiver.
a. Provides certain disclosure and filing requirements.
b. Adds a person is not disqualified from engagement solely because of the person's engagement by, representation of, or other relationship with the receiver, a creditor or a party.
c. Specifies the Act does not prevent the receiver from serving as an attorney, accountant, auctioneer or broker when authorized by law.
Duties of Owner
25. Delineates the duties of the owner.
26. Stipulates the duties of the owner apply to each officer, director, manager, member, partner, trustee or other person exercising or having the power to exercise control over the affairs of the owner, if the owner is a person other than an individual.
27. Permits the court, if a person knowingly fails to perform the duty of an owner, to:
a. Award the receiver actual damages caused by the person's failure, reasonable attorney fees and costs; and
b. Sanction the failure as civil contempt.
Injunction Orders
28. Specifies an order appointing a receiver operates as a stay of an act, action or proceeding:
a. To obtain possession of, exercise control over or enforce a judgment against receivership property.
b. To enforce a lien against receivership property to the extent the lien secures a claim against the owner that arose prior entry of the order.
29. Stipulates a court to enjoin an act, action or proceeding against or relating to receivership property if the injunction is necessary to protect the property or facilitate administration of the receivership.
30. Allows a person whose act, action or proceeding is stayed or enjoined to apply to the court for relief from the stay or injunction for cause.
31. Specifies certain orders do not operate as a stay or injunction under specified criteria.
32. Permits the court to void an act that violates a stay or injunction.
33. Allows a court, if a person knowingly violates a stay or injunction, to:
a. Award actual damages caused by the violation, reasonable attorney's fees and costs; and
b. Sanction the violation as civil contempt.
Use or Transfer of Receivership Property
34. Permits a receiver, with court approval, to use receivership property other than in the ordinary course of business.
35. Allows a receiver, with court approval, to transfer receivership property other than in the ordinary course of business by sale, lease, license, exchange or other disposition.
a. Adds the sale is free and clear of certain liens, but is subject to a senior lien, unless the agreement of sale provides otherwise.
b. Specifies a lien on receivership property that is extinguished by such transfer attaches to the proceeds of the transfer with the same validity, perfection, and priority.
36. Specifies a transfer may occur by means other than a public auction sale.
a. Allows a creditor holding a valid lien to purchase the property and offset against the purchase price part or all of the allowed amount secured by the lien.
37. Specifies a reversal or modification of an order approving a transfer does not affect the validity of the transfer to a person that acquired the property in good faith.
a. Defines good faith.
Executory contracts
38. Allows a receiver to adopt or reject a contract of the owner relating to receivership property, with court approval.
a. Allows the court to condition the receiver's adoption and continued performance of the contract.
b. Deems the contract as rejected if the receiver does not request approval to adopt or reject the contract within a reasonable time after appointment.
39. Specifies the receiver's performance of a contract is not an adoption of the contract and does not preclude the receiver from seeking approval to reject the contract.
40. Specifies that a provision in a contract which requires or permits a forfeiture, modification or termination of the contract for specified reasons does not affect a receiver's power to adopt the contract.
41. Specifies that a receiver's right to possess or use receivership property pursuant to a contract terminates upon rejection of the contract.
a. Adds rejection is a breach of the contract.
b. Outlines the time frame for which a claim for damage for rejection of the contract must be submitted.
42. Grants the owner the right to assign a contract relating to receivership property under another law.
a. Allows the receiver to assign the contract with court approval.
43. Outlines allowable actions for a purchaser in which a receiver rejects a contract for the sale of receivership property that is real property in possession of the purchaser.
44. Prohibits a receiver from rejecting an unexpired lease of real property under which the owner is the landlord if:
a. The tenant occupies the leased premises as the primary residence; and
b. Specified criteria apply.
Notice of Appointment; Creditors
45. Instructs a receiver to give notice of appointment to creditors of the owner either by first-class mail or publication.
46. Outlines the requirements for a creditor who has a claim against the owner to submit the claim with the receiver.
a. Adds a claim that is not submitted timely is not entitled to a distribution form the receivership.
47. Stipulates an assignment by a creditor of a claim against the owner is effective against the receiver provided the assignee gives timely notice of the assignment to the receiver in a signed record.
48. Allows a receiver to file an objection to a claim of a creditor with the court stating the basis of the objection any time before entry of an order approving a receiver's final report.
a. Requires a court to allow or disallow a claim according to any laws other than the Act.
49. Outlines allowable actions of the court that concludes that receivership property is likely to be insufficient to satisfy claims of each creditor holding a perfected lien on the property.
50. Requires a distribution of receivership property:
a. Be made in accordance with the creditor's priority, for a creditor holding a perfected lien on the property.
b. Be made as the court directs, for a creditor with an allowed unsecured claim.
Removal and Replacement of a Receiver
51. Permits a court to remove a receiver for cause.
52. Requires a court to replace a receiver that dies, resigns or is removed.
53. Outlines the requirements for a discharging a replaced receiver.
54. Allows a court to discharge a receiver and terminate the court's administration of the receivership property if the court finds that appointment of the receiver was improvident or that the circumstances no longer warrant continuation of the receivership.
55. Allows a court that finds that an appointment was sought wrongfully or in bad faith to assess against the person that sought the appointment:
a. The fees and expenses of the receivership, including reasonable attorney fees and costs; and
b. Actual damages caused by the appointment, including reasonable attorney fees and costs.
Ancillary Receivership
56. Permits a court to appoint a receiver appointed in another state provided certain requirements are met.
57. Allows a court to issue an order that gives effect to an order entered in another state appointing or directing a receiver.
58. Grants an appointed ancillary receiver the rights, powers and duties of a receiver, unless the court orders otherwise.
Miscellaneous
59. Entitles a receiver to all defenses and immunities provided by law for an act or omission within the scope of the receiver's appointment.
60. Allows a receiver to be sued personally for an act or omission in administering receivership property only with approval of the court, and if the court finds that the receiver acted without authority.
61. Permits a receiver to file, or if ordered must file, an interim report and outlines the contents of the report.
62. Permits a court to award a receiver from receivership property the reasonable and necessary fees and expenses of performing the duties of the receiver and exercising the powers of the receiver.
63. Allows the court to order one more of the specified person to pay the reasonable and necessary fees and expenses of the receivership.
64. Instructs the receiver, on completion of duties, to file a final report and outlines the contents of the report.
a. Adds that on approval of the final report the receiver is discharged.
65. Stipulates that a request by a mortgagee for appointment of a receiver, the appointment of a receiver or application by a mortgagee of receivership property or proceeds to the secured obligations does not:
a. Make the mortgagee a mortgagee in possession of the real property;
b. Make the mortgagee an agent of the owner;
c. Constitute an election of remedies that precludes a later action to enforce the secured obligation;
d. Make the secured obligation unenforceable;
e. Limit any right available to the mortgagee with respect to the secured obligation; or
f. Bar a deficiency judgement pursuant to any other law governing or relating to a deficiency judgement.
66. Subjects the ability of a creditor to enforce an obligation that had been secured by the lien to laws that otherwise apply to a deficiency judgement, if a receiver sells receivership property that is free and clear of a lien.
67. Permits a court to issue an order, process a judgment that is necessary or appropriate to carry out the Act.
68. Asserts consideration must be given to the need to promote uniformity of the law with respect to its subject matter among states that enact it.
69. Declares the Act modifies, limits or supersedes certain provisions of the Electronic Signatures in Global and National Commerce Act; however, does not authorize electronic delivery of any of the notices as described in such federal law.
70. Contains an applicability clause. (Sec. 2)
71. Designate this legislation as the "Uniform Commercial Real Estate Receivership Act." (Sec. 3)
72.
73.
74. ---------- DOCUMENT FOOTER ---------
75. Fifty-fourth Legislature SB 1216
76. First Regular Session Version 1: Commerce
77.
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