RECIEVERSHIPS

Mitchell A. Lieberman

RECEIVERSHIPS

• 735 IMFL 5/15-1701(b)(2)

Mortgagee is entitled to be placed in possession prior to judgment if:

- Mortgage provides for possession

- There is reasonable probability that mortgagee will

prevail at hearing.

• What constitutes a reasonable probability of success:- Real Estate Taxes

- Maturity

- Payment default

- Due on sale violation

• Petition must be verified

• Service Issues

• Statutory presumption in favor of Mortgagee

• Mortgagor must overcome statutory presumption in favor of Mortgagee and show

good cause to remain in possession.

Receivership Continued…

Good Cause

• Traveler’s Insurance Company v. LaSalle National Bank as Trustee, 200 Ill. App. 3d 139, 558 N.E. 2d 579, 146 Ill. Dec. 616 (2d Dist. 1990)

• Centerpoint Properties Trust v. Olde Prairie Block Owner LLC 2010 Ill. App. LEXIS 91 (1-09-1481) (1st Dist. February 10, 2010)

• Management issues

• Pending Affirmative Defenses

Mortgagee’s Burden

• First Federal Saving’s Loan Association v. National Boulevard Bank, 104 Ill. App. 3d 1061, 433 N.E. 2d 1036, 60 Ill. Dec 798 (1st Dist. 1982)

• Mellon Bank N.A. v. Midwest Bank & Trust as Trustee under Trust No. 85-02-4652, 265 Ill. App. 3d 859, 638 N.E. 2d 640, 202 Ill. Dec 772 (1st Dist. 1993)

• Traveler’s Insurance as Trustee, 200 Ill. App. 3d 139, 558 N.E. 2d 579, 146 Ill. Dec. 616 (2d Dist. 1990)

RECEIVER BOND

• Discretionary

• Calculation of amount

– Percentage of principal amount

– Mathematical computation regarding gross income

POWERS OF A RECEIVER

• 735 ILCS 5/15-1704

– Employment of third parties

• Standard/ Prudent Person

• Disbursements

– Insurance

– Taxes

– Building expenses

– Repairs

• Court Authority

Powers Continued:

• Submission of Bids

• Building Condition/ Status Quo

• Fees and Costs

• Income deficient to cover operating expenses

• Debt Retirement

• Receiver’s Certificate – Paul Gaskill et al.,v. Earl Dean Gordon et al., 1993 WI 64642 (N.D. Ill)

Powers Continued:

• When is an attorney necessary: - Upon petition with notice

- Lease Issues

- Condo Issues

- Possession Issues

- Document Turnover

- Rent Turnover

RECEIVER’S AUTHORITY

• From the court and statute • Receiver is an officer of the court • Custodial officer • Leases : Acceptance/ Rejection

United States Fidelity & Guaranty Co. v. Old Orchard Plaza Limited Partnership, 333 Ill. App. 3d 727, 776 N.E. 2d 812, 267 Ill. Dec. 440 (1st Dist. 2002)

735 ILCS 5/15-1702 (g)

Comerica Bank Illinois v. Harris Bank Hinsdale, 673 N.E. 2d 380, 284 Ill. App. 3d 1030, 220 Ill. Dec. 468

MORTGAGEE IN POSSESSION

• Powers and Duties Distinguished

from a Receiver

– Collection of rents and application

- Appointment not for the benefit of all parties

CONDOMINIUM PROJETS

• Condo Board

• What is collateral

• What duties does receiver have in conjunction with the condominium management

• Shared Expenses

RECEIVER’S LIABILITY

• 735 ILCS 5/2-415

• Effect of Order Approving Reports

• Res Judicata Effect