Understanding Florida’s Uniform Commercial Real Estate Receivership Act by Daniel S. Hughes, CPA/CFF/CGMA, CVA, and Roberta Bazotti, CPA, CFE
Posted on October 11, 2023
by
Daniel Hughes
On July 1, 2020, Florida adopted the Uniform Commercial Real Estate Receivership Act (UCRERA), establishing comprehensive rules, standards and legal processes for the entire receivership process, from commencement to termination. Generally, the law enhances the court’s authority to appoint receivers to take control, custody and management of property involved in litigation while also expanding receivers’ authority and duties.
Appointment of a Receiver
Section 714.06 of the UCRERA reiterates the court’s discretion to appoint a receiver before or after judgment based on the specific circumstances described within the act. This may include considerations as to whether an appointment would be required to protect commercial property from waste or impairment or whether the property owner agreed to appoint the receiver after default.
Authority of a Receiver
The act expands a receiver’s authority to do the following without court approval:
- collect and manage receivership property,
- operate a business constituting receivership property,
- incur unsecured debt and pay expenses in the ordinary course of business and
- assert a cause of action or defense of the owner that relates to the receivership property.
By contrast, some of the actions that still require the court’s approval include:
- incurring debt for reasons other than in the ordinary course of business,
- making improvements to the property, and
- paying compensation to the receiver or a professional engaged by the receiver.
Furthermore, upon a court’s approval, the receiver may sell the property provided it is free and clear of liens.
Duties of a Receiver
Some of the receiver’s duties may be expanded, modified or limited by court order under Section 714.12, including the preparation and maintenance of business records; accounting for receivership property, including proceeds of sales, leases or other dispositions; and filing a copy of the order of appointment with the recording office.
The act also specifies the circumstances under which individuals would be disqualified from acting as receivers, such as when those people are affiliates of or have debtor-creditor relationships with a party to the court action. As it relates to the receivers’ defenses, the act provides that they may be sued personally only upon approval of the court that appointed them. Further, termination of the receivership may occur if the court finds that the circumstances no longer warrant continuation of the same.
With the implementation of the comprehensive set of rules covering topics from the appointment of a receiver to the termination of a receivership, the UCRERA sets forth a clear standard for a valuable non-bankruptcy statutory receivership remedy.
About the Authors: Daniel S. Hughes, CPA/CFF/CGMA, CVA, is a director with Berkowitz Pollack Brant’s Forensic and Advisory Services practice, where he helps clients in the United States and abroad prepare, present and settle complex real estate disputes. He can be reached at the CPA firm’s Miami office at (305) 379-7000 or info@bpbcpa.com.
Roberta Bazotti, CPA, CFE, is a manager with Berkowitz Pollack Brant’s Forensic and Advisory Services practice, where she works with clients on matters that include fraud investigations, economic damages, valuations and legal disputes. She can be reached at the CPA firm’s Miami office at (305) 379-7000 or info@bpbcpa.com.
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