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socrateaser, Lawyer
Category: Legal
Satisfied Customers: 39034
Experience:  Retired (mostly)
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I want to know what the law is regarding a receivers (for

Customer Question

I want to know what the law is regarding a receiver's (for a foreclosure property) duties and obligations...I have a receiver on one of my properties who makes improvements (like adding an air conditioner (pretty expensive) without any notice to the note holder or us. i want to know what the rules are regarding improvements like these that he makes, as well as other rules for the receiver regarding his obligations and duties (and if he's required to give us notice at all)...I need some actual sources here (not statutes) as well.
Submitted: 4 years ago.
Category: Legal
Expert:  socrateaser replied 4 years ago.
Receiver appointed by which court?
Customer: replied 4 years ago.

I'm not sure; just in general I guess for a property going through foreclosure.

Expert:  socrateaser replied 4 years ago.
Where is the property located (city, county, state)?
Customer: replied 4 years ago.

New York a borough of new york city. (Bronx I believe)

Expert:  socrateaser replied 4 years ago.

Okay, thanks.

Surprisingly (at least surprising to me), there has been very little discussion of the power of receivers in NY appellate case law since the 19th Century (only one case -- comprising a single paragraph). The current state of the law is discussed in 64 B Venture v. American Realty Co., Respondent, and American Nursing Home et al., 194 A.D.2d 504, 599 N.Y.S.2d 567 (1993), wherein the court writes: "[T]the powers and duties of the receiver appointed pursuant to the court's equity powers are formulated as a matter of judicial discretion (7A Weinstein-Korn-Miller, NY Civ Prac ¶ 6401.16), and the court 'is vested with inherent plenary power (NY Const, art VI, § 7) to fashion any remedy necessary for the proper administration of justice' (People ex rel. Doe v Beaudoin, 102 AD2d 359, 363)."

In plain English, in appointing a receiver, the court can order whatever it wants, absent an order that no reasonable jurist would make, and the receiver's powers are subject to the reasonable bounds of the court's orders.

This is both good and bad for you, if I understand your concern. You can argue that the receiver was appointed to collect rent, not to install capital improvements, and while reasonable maintenance may be within the scope of operating the rental, installation of a new HVAC system is not.

Ultimately, it would be up to the court to decide whether or not the receiver has exceeded his/her authority.

Hope this helps.

Customer: replied 4 years ago.

Where do you see this rule though about what is resaonable and what isn't as well as a receiver only being able to do waht the court tells them to do? I basically want a list of their obligations and duties, of which they are expected to do in NY, as well as what they are legally obligated to do.

Expert:  socrateaser replied 4 years ago.
I believe that you will find the statutory law rather deficient -- because the law really is as interpreted in the case law that I provided, i.e., the receiver can do whatever the court is willing to allow. That said here's the law:

NY Civil Practice Law & Rules § 6401. (b) Powers of temporary receiver. The court appointing a receiver may authorize him to take and hold real and personal property, and sue for, collect and sell debts or claims, upon such conditions and for such purposes as the court shall direct. A receiver shall have no power to employ counsel unless expressly so authorized by order of the court. Upon motion of the receiver or a party, powers granted to a temporary receiver may be extended or limited or the receivership may be extended to another action involving the property.

The phrase, "upon such conditions and for such purposes as the court shall direct," is the language that empowers the receiver to do practically whatever is necessary to "take and hold real and personal property" and "collect and sell claims."

Read the court's appointment order and see if it provides any express limitations or powers. If it does, then those are the limits of what the receiver can do. If the order does not provide express limitations, then the receiver has practically no limitations, unless and until someone objects and the court agrees to modify the orders appropriately.

Hope this helps.