The distrust occasioned by a mortgagor’s default understandably moves a foreclosing secured lender to seek the appointment of a temporary receiver and thereby to remove the financial and managerial reins from the borrower. However, many lenders mistakenly believe that an application for the appointment of a receiver in a foreclosure context is a fait accompli. In reality, the mere fact that a default exists will not alone be sufficient to obtain the appointment of a temporary receiver—a remedy the courts regard as “drastic,” “intrusive” and “extraordinary.” Thus, a court will not grant an application for appointment unless it is satisfied that the value of the property securing the mortgage and the parties’ interests in it are at risk if a temporary receiver is not appointed.1
In this article we will lay out the procedural mechanisms for applying for the appointment of a temporary receiver and the potential pitfalls that may present themselves.
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