NEW YORK – RECEIVERSHIP PROCESS
Time Frame: A receivership application is led as a motion in a foreclosure action. e motion may
be led any time before the nal judgment; however, the recommended time to le is immediately
following the ling of the summons and complaint and Notice of Pendency. Timing depends on the
approach taken. If the foreclosing mortgagee moves by notice of motion or on an ex parte basis (as
described below), the appointment process may take in excess of 30 days. If the foreclosing mortgagee
proceeds by order to show cause, a receiver may be appointed in approximately ve to 10 days.
Common Grounds: Under New York law, a receiver can be appointed in one of two ways. e rst way,
the “Receiver Clause” is the preferred method. is approach may only be used if the mortgage contains
language to the eect of: “e holder of this mortgage, in an action to foreclose, shall be entitled to the
appointment of a receiver.” Such language allows for a mortgage holder to make an ex parte motion to
appoint a receiver. Although inclusion of this language does not provide complete assurance that a court will
grant the mortgage holder’s motion, it provides strong support. In addition, courts will also consider factors
such as whether protection by more benign means is possible or whether the appointment of a receiver
would help to clarify and monitor the use of the subject premises during the pendency of the action.
In the event “Receiver Clause” language is not included in the mortgage, a party with an interest in the
property may move for the appointment of a receiver on notice and by providing clear and convincing
evidence that the property is in danger of being materially injured or destroyed and that a receiver is
necessary to protect parties’ interests in the property.
Qualications: A receiver must be an individual. Subject to certain statutory restrictions as to who
may serve as a receiver, the Chief Administrator of Courts sets the qualications for receivers and those
individuals who wish to serve and satisfy such qualications are placed on a list which judges use to
select a receiver. Judges select the receiver in their discretion, although they may allow proposals from
the party making the motion for appointment. Receivers must le a certicate of compliance and an
oath and must also post a bond.
Foreclosure Necessary: A foreclosure complaint must be led before seeking the appointment of a
receiver. e application for a receiver is led as a motion in the foreclosure action.
Appointment Order: No standard court form, although some courts have a sample form that may be
used. e order must include information about the date and nature of the appointment and must direct
the owner or lessee to turn over all security deposits to the receiver. e order will also require that the
receiver deposit all such deposits into an account set up for that purpose and will limit the ability of the
receiver to withdraw funds from the account. Typically the order will allow the receiver to collect rents
accruing after appointment and to commence actions to protect and preserve the property. e order
may also provide guidelines for when the receiver may enter into leases or set rents.
Reporting Requirements: Receivers must le an accounting with the court at least once per year.
Appointment orders typically require the receiver to le and serve reports, and receivers are subject to
certain statutory reporting requirements in connection with compensation.
Finances: e court will set the commission of a receiver which need not be paid from the income from
the property. Typically the receiver will receive commissions not exceeding 5 percent of the greater of
the sums received by the receiver, or the sums disbursed by the receiver, as the court allows.
Ability of Receiver to Sell the Property: A receiver may not sell the property in New York.
Discharge: After a nal judgment is rendered in the foreclosure action, unless otherwise directed by
the court, the receiver shall request a discharge. e order entered by the court authorizing the receiver’s
discharge will include approval of the receiver’s accounting and proposed distributions and will also
authorize the cancellation of the receiver’s bond.
CONTACTS
Jerey S. Page
646.346.8016
pagej@ballardspahr.com
Raymond A. Quaglia
215.864.8530
quagliaballardspahr.com
Michael Pollack
646.346.8030
pollackmv@ballardspahr.com