Florida’s New Commercial Real Estate Receivership Act: A Roadmap for Judges and Practitioners
A receiver is “a person appointed by the court to take control, custody, or management of property involved in litigation and to preserve the property, and receive rents, issues and profits.” The right to the appointment of a receiver is a long-recognized equitable remedy, tracing its lineage to the English chancery courts, protecting real property and rents and profits arising therefrom.
A receiver pendente lite acts to preserve property that is the subject matter of pending litigation to prevent waste. Post judgment, a receiver can be utilized to preserve property pending an appeal or to enforce the judgment. Receivers are also used in a context of corporate disputes, preserving the assets during dissolution or winding up, or in the case of deadlock in management. Additionally, by statute, states may provide for receivership to protect the public interest in regard to insurance companies, financial institutions, or utilities.
Receiverships for income producing real estate continue to be utilized, frequently at the request of a foreclosing mortgagee. Mortgagees may be motivated by various considerations to seek the appointment of a receiver. Where the realty generates rental income, the foreclosing mortgagee may seek receivership so that the rents are not diverted to the owner or other creditors. Further, a mortgagee who assumes control of the collateral is exposed to liability, and the appointment of a receiver shields the mortgagee from that exposure. A mortgagee may wish to avoid taking title to the real estate due to potential exposure to liability for environmental contamination on the property. Additionally, empowering a receiver to sell the mortgaged property may bring about an arms-length market value sale price, as opposed to a distress sale at foreclosure.
Prior to July 1, 2020, the substantive and procedural aspects of receiverships in Florida were governed by a combination of decisional law and reference to Fla. R. Civ. P. 1.610 and 1.620. However, effective July 1, 2020, Florida’s legislature enacted H.B. 783, “An act relating to the Uniform Commercial Real Estate Receivership Act,” creating F.S. Ch. 714 (the act). As indicated, Ch. 714 is based upon the Uniform Commercial Real Estate Receivership Act (the Uniform Act), which was completed by the Uniform Law Commission in 2015. To date, the Uniform Act has also been adopted in North Carolina, Maryland, Arizona, Michigan, Tennessee, Utah, and Oregon.
By way of overview, the act eliminates the need to wade through case law by providing a statutory road map to follow, from commencement to termination of a receivership. As listed below, the act adopts familiar injunction and bankruptcy procedures, and in some respects expands the powers of a receiver beyond those recognized in prior decisional law. It also is structured to conform to the procedural due process protections found in Rules 1.610 and 1.620.
Scope of the Act
With certain exceptions, the scope of Ch. 714 covers receiverships initiated by a court in Florida for an interest in real property and any incidental personal property related to or used in operating the real property. However, it does not apply to a receivership for which the receiver was appointed prior to July 1, 2020. Moreover, §714.28 does not address the application of the new statute to receivership actions filed after July 1 based on contract provisions signed before that date. Florida recognizes the general principle that contracts are construed based on the governing law in effect when the contract is signed. As to procedural provisions of the new law, there could arguably be issues concerning separation of powers because ordinarily procedural rules are to be promulgated by the Florida Supreme Court rather than the legislature. Generally, the legislature has the power to enact substantive laws creating substantive rights and obligations while the Florida Supreme Court has the power to enact procedural law. Although there is a presumption against retroactive application of substantive law especially if existing rights are implicated, remedial statutes are more readily construed retroactively. As a general matter,…[p]rocedural law concerns the means and methods to apply those duties and rights.
While these principles may be implicated by the Receivership Act, its procedural provisions largely track existing Florida Rules of Civil Procedure, and it is therefore unlikely that significant constitutional problems will arise from these enactments. As the Supreme Court has observed:
Of course, statutes at times may not appear to fall exclusively into either a procedural or substantive classification. We have held that where a statute contains some procedural aspects, but those provisions are so intimately intertwined with the substantive rights created by the statute, that statute will not impermissibly intrude on the practice and procedure of the courts in a constitutional sense, causing a constitutional challenge to fail.
The act is intended to apply to commercial — not residential — real estate. Where use is mixed, the act does not apply where the principle use is not commercial. Example: Borrower lives on the property in a single-family home with a garden providing vegetables for his personal use; the statute is inapplicable. Example: duplex is subject to a mortgage; owner occupies one unit as his personal resident and leases the other unit to a non-relative. Owner defaults on the mortgage. The court may appoint a receiver because the owner has the right to collect rent. Where the commercial use is incidental to residential use, the act does not apply.
The categories in §714.04(2) are intended to draw a line of demarcation between residential and commercial use. The act does not apply to the following: 1) Actions in which a state agency or officer is expressly authorized by statute to seek or obtain the appointment of a receiver; 2) actions authorized by or commenced under federal law; 3) real property improved by one or two dwelling units which include the homestead of an individual owner or an affiliate of an individual owner; 4) property of an individual which is exempt from forced sale, execution or seizure under the laws of Florida; or 5) personal property of an individual that is used primarily for personal, family, or household purposes.
Initiating the Receivership
• Notice and Opportunity To Be Heard — Generally, decisional law requires that a person moving for the appointment of a receiver must have a legal or equitable right to apply for the relief, such as holding a lien or property right in the property in question or a right to payment therefrom. A judgment creditor whose execution remains unsatisfied has standing to seek receivership. A stockholder may apply for the receivership for an existing corporation. Where corporate property is being mismanaged or is in danger of being lost through mismanagement, collusion, or fraud, a minority stockholder may secure the appointment of a receiver. However, where the corporation is a going concern, in the absence of fraud, significant self-dealing or loss of corporate assets, a minority stockholder cannot obtain a receivership.
The appointment of a receiver is a not a matter of right. As receivership is an extraordinary remedy, being in derogation of a titleholder’s rights to possess his or her property, it is a remedy exercised with caution. Its purpose is to enable the court to accomplish justice between the parties, including the preservation and proper disposition of property that is the subject of the litigation. The receiver, therefore, is a custodian for the court through which the court controls the assets of the receivership. A receivership clause in a mortgage does not guarantee that the court will appoint a receiver, although such provisions are accorded “considerable weight.”
F.S. §714.06, “Appointment of Receiver,” follows these concepts, providing the court with discretion in regard to appointing a receiver. The court may appoint a receiver before judgment to protect a party who demonstrates an apparent right, title, or interest in the real estate that is the subject of the action if the property or its revenue — producing potential is being subject to or is in danger or waste, loss, dissipation, or impairment; or has been or is about to be the subject of a voidable transaction. Subsection 6(a)(2) thereof also provides that the court may appoint a receiver after judgment to carry a judgment into effect or to preserve non-exempt real estate pending an appeal, or where an execution has been returned unsatisfied and the owner refuses to apply the property in satisfaction of the judgment.
A receiver may be appointed in connection with foreclosure of a mortgage if necessary to protect the property from waste, loss, transfer, dissipation or impairment; the mortgagor agreed in a signed record to the appointment of a receiver on default; the owner agreed after default and in a signed record to the appointment of a receiver; in the event the property and other collateral held by the mortgagee are not sufficient to satisfy the secured obligation; or the owner has failed to turn over to the mortgagee proceeds or rents to which the mortgagee is entitled; or the holder of a subordinate lien obtains appointment of a receiver for the property.
The court may also appoint a receiver on “equitable grounds,” provided that the “equitable grounds” include protecting against waste, loss, substantial diminution in value, dissipation or impairment, or when the property is about to be the subject of a voidable transaction. Failure to keep taxes current, or defaults in payments to a senior mortgage holder, can be raised as “waste.”
Although the act lists substantive criteria for granting a receivership, there does not appear to be a substantial revision of prior law and, in all events, the new provisions would be construed, where possible, to be consistent with the “pre-existing common law.
By decisional law, the court must be satisfied by affidavit that a receiver is necessary to preserve the property and, absent urgent necessity, the court will not appoint a receiver until the defendant has an opportunity to be heard. A trial court should not grant a motion to appoint a receiver absent testimony, sworn pleadings or affidavits submitted in support thereof. Notice and hearing may be dispensed with if the property is at immediate risk of being diverted, destroyed, subject to deterioration or waste. The act tracks these principles and prescribes specific required steps in order to protect procedural due process and to conform the statutory requirements to the requirements in the Florida Rules of Civil Procedure.
Procedurally, Rule 1.620(a), “Receivers,” adopts for receivership actions the provisions in Rule 1.610, “Injunction.” The mandatory protocols in §714.03 mirror the requirements in Rule 1.610(a), which govern the granting of a temporary injunction without written or oral notice to the adverse party. Under §714.03, the court may issue an order appointing a receiver without written or oral notice to the adverse party only upon an affidavit or verified pleading or motion containing specific facts demonstrating that immediate and irreparable injury or loss will result to the movant, or that waste, dissipation, impairment or substantial diminution in value will result to the real estate before any adverse party could be heard in opposition. The movant’s attorney must certify in writing all efforts that have been made to give notice to all known adverse parties, or provide reasons why such notice should not be required.
Section 714.03(3) mandates that only an affidavit, declaration or verified pleading may be used to support the application for the appointment of a receiver, unless the adverse party appears at the hearing or has received reasonable prior notice of the hearing. This concept precisely follows the format of Rule 1.610(2), governing permissible evidentiary support of an application for temporary injunction. This section also requires that the order appointing a receiver without notice must reflect the date and hour of entry, must be filed forthwith with the clerk’s office, must define the injury, must state findings by the court as to why the injury may be irreparable, and must give reasons why the order was granted with no notice if notice was not given. These requirements mirror the required contents for a temporary injunction order under Rule 1.610(2).
• The Bond — The court may condition the appointment of a receiver, without notice or without prior hearing, on the giving of security by the person seeking the appointment, for the payment of damages, reasonable attorney’s fees and costs incurred or suffered by any person if the court later concludes that the appointment was not justified. If the court later concludes that the appointment was justified, the court “shall release the security.” The security secures the payment of damages, attorneys fees and costs, and shall be released if the court later concludes that the appointment was justified, once the order of appointment has become final and is no longer subject to appeal. The purpose of the bond is to insure the receiver’s performance of his duties, obeying court orders and rendering a true accounting of the property, receipts and disbursements. The receiver must post with the court either a bond or alternative security, such as letter of credit or deposit of funds, to be conditioned upon the faithful discharge of the receiver’s duties. If a bond is utilized, it must have one or more sureties approved by the court, must be in an amount the court specifies, and becomes effective as of the date of the receiver’s appointment. The receiver may not use receivership property as alternative security. If funds are deposited as alternative security, interest accruing on the deposit must be paid to the receiver on the receiver’s discharge.
Section 714.08(3) specifically conditions the power of the receiver to act before posting of bond or alternative security: the receiver is so authorized if the action is necessary to prevent or mitigate immediate injury, loss or damage to the party who sought the receivership, or to prevent immediate waste, dissipation, impairment or substantial diminution of value to a receivership property. Any claim against the receiver’s bond or alternative security must be made no later than one year after the date of discharge of the receiver. When the order appointing a receiver is issued on a pleading of a municipality or the state, or any officer, agency or political subdivision thereof, the court has the discretion to require or dispense with the bond, with or without surety “having due regard for public interest.”
If a party moves to dissolve or modify the receivership order, the motion must be heard within five days after the movant applies for a hearing, or at such time as the court determines is reasonable and appropriate under the circumstances after the movant applies for a hearing on the motion. The court may grant relief for cause shown, after notice and a hearing. The “five day” criterion tracks the hearing requirement regarding temporary injunctions found in Rule 1.610(d).
• Qualifications — Identifying a qualified person to serve as a receiver is generally left to the discretion of the trial court. The Act removes certain matters which might be raised in opposition to a candidate. F.S. §714.07 provides that the court may not appoint a person as a receiver unless the person submits to the court a statement under penalty of perjury that the person is “not disqualified”. A person is disqualified if the person is an affiliate of a party; has an interest materially adverse to the interest of a party; has a material financial interest in the outcome of an action other than being compensated as a receiver; has a debtor — creditor relationship with a party; or holds an equity interest in a party, other than a non-controlling interest in a publicly — traded company. However, a person is not disqualified solely because the person was previously appointed as a receiver in a matter involving a party, or is owed compensation in an unrelated matter involving a party, or was engaged by a party in the matter unrelated to the receivership; or is an individual obligated to a party on a debt that is not in default and was incurred primarily for personal, family or household purposes; or maintains with a party a deposit account. The person seeking employment of the receiver may nominate a person to so serve, but the court is not bound by the nomination.
Pursuant to F.S. §660.41(2) all corporations are prohibited from serving as a receiver under appointment by any court in this state. Excluded from the prohibition are banks or associations and trust companies incorporated in Florida holding trust powers; banks or associations and trust companies resulting from an interstate merger with a Florida bank and having trust powers, and national banking associations or federal associations authorized and qualified to exercise trust powers in Florida.
• Ancillary Receiver — Section 714.24 provides that the court may appoint a receiver appointed in another state, or that person’s nominee, as an ancillary receiver with respect to property located in Florida, provided that the person or nominee meets the eligibility to serve as a receiver under §7 of the act and the appointment furthers the person’s possession, custody, or control or disposition of property subject to the receivership in the other state. The court is authorized to issue orders giving effect to orders entered into another state appointing or directing a receiver. Unless the court orders otherwise, an ancillary receiver has the rights, powers, and duties of a receiver appointed under the act.
Operating the Receivership
The receiver has the status of lien creditor under Ch. 679 (Florida’s art. 9 of the Uniform Commercial Code) as to “receivership property or fixtures.” “Receivership property” is defined in §714.02(16) as being the property of an owner described in the order appointing the receiver, including any proceeds, products, offspring, rents or profits of or from the property. While the definition of “receivership property” includes realty, the scope of Ch. 679 does not include realty per se. As a lien creditor, the receiver would have a priority not only against subsequent creditors but also as to any prior but unperfected security interests in accordance with Ch. 695, the recording statute governing priority of liens.
Except as limited by court order or state law other than the act, a receiver may collect, control, manage, conserve and protect the receivership property; operate a business which is receivership property, including preserving, using, selling, licensing, exchanging, collecting or disposing of the property in the ordinary course; incur unsecured debt and pay expenses incidental to the preservation or use, sale, lease, license, exchange, collection or disposition of a receivership property in the ordinary course; assert rights, claims, causes of action or defenses of the owner which relate to receivership property; seek and obtain instruction from the court concerning receivership property, exercise of the receiver’s powers and performance of receiver’s duties; compel subpoenaed persons to submit to examination under oath or to produce and permit inspection and copying of designated records or tangible things with respect to receivership property or any other matter than may effect administration of the receivership; engage professionals as provided elsewhere in the act; apply to a court of another state or appointment as an ancillary receiver; and exercise any power conferred by court order, the act, or state law other than the act.
With court approval, a receiver may (as provided in the act) incur debt for the receivership property other than in the ordinary course; make improvements for receivership property; use or transfer receivership property other than the ordinary course the act; adopt or reject an executory contract of the act; pay compensation to the receiver and to each professional engaged by the receiver; recommend allowance or disallowance of a creditor claim; and make a distribution of receivership property.
The receiver shall perform the following, which may be expanded, modified or limited by court order:
1) Prepare and maintain appropriate business records including a record of each receipt, disbursement and disposition of receivership property.
2) Account for receivership property including proceeds of sale, lease, license, exchange, collection or other disposition.
3) File with the appropriate recording office a copy of the order of appointment and a legal description of the real property if not included in the order.
4) Disclose to the court any fact arising during the receivership which would disqualify the receiver; and
5) Perform any duty imposed by court order, the Act, or the law of the state other than the Act.
• Prior Security Interests — Except as provided by law outside of Ch. 714, property acquired by the receiver or the owner after the appointment of the receiver is subject to a security agreement entered into before the appointment to the same extent as if the court had not appointed the receiver. A security interest which includes after-acquired property, of course, attaches to property that the receiver acquires after being appointed only if the owner has an interest. For example, if the receiver purchases an accounting system with his own funds for use in the receivership of a business, and the mortgagee has a security interest with an after — acquired property clause, the mortgagee does not acquire a lien on the item purchased by the receiver because the owner has no interest in it.
• Collecting Assets — The receiver is authorized to collect the debts owed to the debtor similar to the power of a bankruptcy trustee under 11 U.S.C. §542. A debtor of the owner who knows of the appointment of a receiver cannot pay the owner. This concept tracks the concept in the Uniform Commercial Code.
Unless the court orders otherwise, on demand by a receiver, a person who owes a debt that is receivership property and is matured or payable on demand or on order shall pay the debt to or on the order of the receiver, except to the extent that the debt is subject to a setoff of recoupment. Further, except for a creditor in possession, or where custody or control of receivership property must be maintained to validate, perfect or provide priority to the creditor’s lien on the property, anyone in possession, custody or control of receivership property shall turn the property over to the receiver. In the case of a creditor in possession as detailed above, the creditor may retain possession, custody or control until the court orders adequate protection of the creditor’s lien.
Absent a bona fide dispute regarding receiver’s right to possession, custody or control of receivership property, the court having jurisdiction may sanction a failure to turnover as a civil contempt.
• Duties of the Owner — The act defines the obligations of the owner, who must assist and cooperate with the receiver in administering the receivership and discharge of a receiver’s duty; preserve and turn over to the receiver all receivership property in the owner’s possession, custody or control; identify all records and other information relating to the receivership property which are needed to obtain or maintain access to or control of the receivership property, making available to the receiver the records and information in the owner’s possession, custody or control; submit to examination under oath by the receiver, on subpoena, concerning the acts, conduct, property liability and financial condition of the owner or any matter relating to the receivership property or the receivership; and perform any duty imposed by court order, the act, or law of the state other than the act.
The foregoing duties apply to each officer, director, manager, member, partner, trustee or other person exercising or having the power to exercise the control over the affairs of the owner if the owner is not an individual.
Upon failure to perform a duty imposed by §714.13, the court may award actual damages to the receiver resulting from the failure, as well as reasonable attorney’s fees and costs; and may sanction the failure as a civil contempt.
• Exclusive Jurisdiction — The court appointing a receiver has exclusive jurisdiction to direct the receiver and to determine any controversy relating to the receivership or receivership property. The Legislative Note to Section 5 of the Uniform Act suggests that where, under state law, an order entered by a court in one county, circuit or district lacks statewide affect, the state should modify §5 so that an order of a court appointed receiver under this act has “statewide affect.” The Florida Legislature did not provide expressly for statewide affect and, accordingly, one might anticipate an argument in the future that an order appointing a receiver in a court sitting in a particular judicial circuit has exclusive jurisdiction over the receiver and receivership property only in that particular judicial circuit. At least one district court, though, has held that “(N)o action for a receiver directly affects the title to the property. It is thus no more than a transitory claim which is not governed by the local action rule.”
• Stay/Injunction — With certain exceptions, the order appointing a receiver operates as a stay, applicable to all persons, of any act, action or proceeding to obtain possession of, exercise control over or enforce a judgment against receivership property, and actions to enforce a lien against receivership property to the extent the lien secures the claim against the owner which arose before the entry of the order.
The stay power is narrower than the automatic stay in bankruptcy. The stay provisions of the act do not prevent the owner from filing for bankruptcy or prevent creditors from putting the owner into bankruptcy. While an action might be stayed where directed to the owner, the act does not authorize the court to stay an action against a guarantor of the debt.
The court may enjoin any act, action or proceeding against or relating to receivership property if the injunction is necessary to protect the property or facilitate administration of the receivership. However, the movant must show that the injunction is necessary “to protect against misappropriation of, or waste relating directly to, the receivership property.” The injunction order must specify the reasons for entry and must describe in reasonable detail the act or acts restrained without reference to a pleading or other document. The injunction order is binding on the parties as well as their officers, agents, employees and attorneys as well as any person who receives actual notice of the injunction and is in active concert or participation with the parties. These protocols follow the provisions of Rule 1.610(c).
Section 714.14(1) provides procedural safeguards: except as otherwise provided in subsection (5), after notice and opportunity for a hearing, the court may enter an order providing for a stay, applicable to all persons, of any act, action or proceeding to obtain possession of, exercise control over, or enforce a judgment against all or a portion of a receivership property “as defined in the order creating the stay”; and to enforce a lien against all or a portion of the receivership property to the extent the lien secures a claim against the owner, which arose before the entry of the order. This section then specifically provides that the court shall include in the order a specific description of the receivership property subject to the stay, and shall include the following language in the title of the order: “Order Staying Certain Actions to Enforce Claims Against Receivership Property.” The foregoing provision reflects the legislature’s intent to provide protections against potential procedural due process attacks on Ch. 714’s provision.
Consistent with the objective of conforming to the procedural protocols in the Florida Rules of Civil Procedure, §714.14(4) provides that if a person moves for relief from the stay or injunction, the motion must be heard within five days after the movant applies for a hearing on the motion or as such time as the court determines if reasonable and appropriate under the circumstances after the movant applies for a hearing. This protocol again provides specifics to enhance procedural due process, following the procedures set forth in Rule 1.610(d), as adopted by reference in Rule 1.620, governing receivers.
Excluded from the scope of a stay or injunction are actions to foreclose or otherwise enforce a mortgage by the person who sought the appointment of the receiver; acts or proceedings to perfect or maintain or continue to perfection of interests in receivership property; commencement or continuation of criminal proceedings; commencement or continuation of an action or proceeding, or enforcement of a judgment other than a money judgment, in an action or proceeding by a governmental unit to enforce its police or regulatory power; or establishment by a governmental unit of a tax liability against the owner or receivership property or an appeal of the liability.
The scope of the receivership properties subject to a stay may be modified upon request of the receiver or other person, after notice and opportunity for hearing. Once a stay or injunction order is entered, the court shall determine whether additional bond or alternative security will be required as a condition to the order; and if required, the court shall direct the party requesting the stay or injunction to post a bond or alternative security as a condition for the stay or injunction to become effective.
• Appointment of Professionals — With court approval, the receiver may appoint professionals such as attorneys, accountants, appraisers, auctioneers, brokers, or other professionals. The receiver is required to disclose to the court: 1) the identity and qualifications of the professional; 2) the scope and nature of the proposed engagement; 3) any potential conflict of interest; and 4) the proposed compensation.
A professional is not disqualified solely because he or she has been engaged by or has represented or has some other relationship with a receiver, or with a creditor or a party. Further, the law does not prevent the receiver from serving in the receivership as an attorney, accountant, auctioneer, or broker where authorized by law.
A receiver or professional so engaged must file with the court an itemized statement of time spent, work performed, and billing rate of each person performing the work, and an itemized list of expenses. The receiver shall pay the amount approved by the court.
• Sale or Use of the Property — The ability to sell the property may be an effective alternative to foreclosure and bring about a better price. However, under prior caselaw, the court cannot authorize a receiver to sell the property free and clear of liens or the right of redemption. The court should approve a proposed sale of receivership property only when there is a showing of necessity, such as where the property is in peril of loss through foreclosure. Thus, under prior law, courts were often reluctant to authorize a receiver to “market and contract to sell or lease all or part of the subject property.”
The act provides that the receiver — with court approval — may use receivership property other than in the ordinary course of business, including sale, lease, license, exchange, or other dispositions. Unless otherwise provided in a sale contract, a sale is free and clear of the lien of the person obtaining the appointment of the receiver as well as any subordinate liens and any right or redemption but is subject to a senior lien. Liens so extinguished attached to the proceeds of the transfer with the same validity, protection, and priority that the lien had on the property immediately prior to the transfer. A transfer may occur by means other than a public auction sale. A creditor holding a valid lien on the property to be transferred may purchase the property and offset against the purchase price part or all of the allowed amounts secured by the lien, provided that the creditor tenders funds sufficient to satisfy in full the reasonable expenses of the transfer and the obligations secured by any senior lien being extinguished by the transfer.
In order to protect the procedural due process rights of the owner before judgment is entered in the receivership action, following a notice to all parties with an interest in the property including lien holders, the court after a hearing may authorize the receiver to use or transfer receivership property other than in the ordinary course if the owner has expressly consented in writing to the receiver’s proposed use or transfer of the receivership property, which consent must be in writing signed after the commencement of the action. The receiver must note the property owner’s express consent in the motion to approve the proposed use or transfer. Alternatively, absent express consent from the owner, the receiver may receive court authorization if he or she in good faith has provided reasonable advance written notice to the property owner of the proposed use of transfer; the owner has failed to object thereto “before or at the hearing on the receiver’s motion”; and the receiver demonstrates in the motion that the proposed use or transfer is necessary to prevent waste, loss, substantial diminution in value, dissipation or impairment of the property or its revenue-producing potential or to prevent a voidable transaction involving the property.
Any lienholders who are not parties to the action must be served with notice, pursuant to Ch. 48 for service of initial process (or, in the case of financial institution lienholder, as provided for in F.S. §655.0201), of the hearing on the receiver’s request to use or transfer receivership property not in the ordinary course. If service of the notice cannot be effectuated as aforesaid, the court may enter an order authorizing the receiver to effect service of notice on non-party lienholders constructively under Ch. 49 or as otherwise ordered by the court.
After judgment has been entered against the property owner, and with court approval in the receivership action, the receiver may use or transfer receivership property, other than in the ordinary course, to carry the judgment into effect or to preserve non-exempt real property pending an appeal, or when an execution has been returned unsatisfied and the owner refuses to apply the property in satisfaction of the judgment.
A subsequent reversal or modification of an order approving a transfer does not affect the validity of the transfer to a person that acquired the property in good faith, nor does it revive against the acquiring person any lien extinguished by the transfer, whether the acquiring person knew before the transfer of the request for reversal or modification, unless the court stayed the order before the transfer. Conceptionally, this protection of the purchaser follows the policy in F.S. §702.036, providing finality of a foreclosure sale in the event of a subsequent invalidation of the final judgment of foreclosure.
• Executory Contracts — Under caselaw, the receiver is not obligated to honor executory contracts, and has the option of either accepting or rejecting them. Chapter 714 follows this rule but provides specific procedures in regard to treatment of executory contracts. Section 714.02(4) defines an executory contract as one under which each party has an unperformed obligation, and failure to complete performance would constitute a material breach. Accordingly, §17 does not allow the receiver to reject a contract where one party has made full or substantial performance.
With court approval, the receiver may adopt or reject an executory contract of the owner relating to the receivership property. The court may condition the receiver’s adoption and continued performance on terms appropriate under the circumstances. The receiver is deemed to have rejected a contract if the receiver does not request court approval to adopt or reject within a reasonable time after the appointment of the receiver. However, the fact that the receiver performed under an executory contract before court approval is not deemed an adoption of the contract and does not preclude the receiver from thereafter seeking approval to reject the contract.
A contractual provision that requires or permits a forfeiture, modification, or termination of the contract due to the appointment of the receiver or the financial position of the owner (commonly referred to as an “ipso facto clause”) is ineffective under the act and does not impair the receiver’s power to adopt the contract.
Once the receiver rejects, the right to possess or use the receivership property terminates. Rejection constitutes a breach of contract, effective immediately before appointment of the receiver. A claim for rejection damages must be submitted by the latter of the time set for submitting claims or 30 days after approval of the rejection.
Similar to the protection afforded in the Bankruptcy Code to purchasers of real estate, if the rejected contract is for the sale of the real property that is in the possession of the purchaser, the purchaser may treat the rejection as a termination, in which case the purchaser has a lien on the property for recovery of any part of the price paid; or the purchaser may retain the right to possession under the contract, continuing to perform all obligations arising under the contract, and may offset any damages caused by non-performance of an obligation of the owner after the date of rejection, but the purchaser has no right or claim against other receivership property or the receiver on account of such damages.
A receiver may not reject an unexpired lease of real property where any of the following conditions exist: 1) The owner is landlord if the tenant occupies the lease premises as a primary residence; 2) the receiver was appointed at the request of a person other than the mortgagee; 3) the receiver was appointed at the request of the mortgagee, and the lease is superior to the lien of the mortgage; 4) if the tenant had an enforceable agreement with the mortgagee for non-disturbance; 5) if the mortgagee has consented to the lease; and 6) the terms of the lease were commercially reasonable at the time the lease was agreed to and the tenant did not know or have reason to know that the lease violated the mortgage.
• Receiver’s Defenses and Immunities — The act provides that the receiver is entitled to all defenses and immunities provided by the laws of the state (other than this act) for an act or omission within the scope of the receiver’s appointment. Further, under F.S. §714.18 (2), a receiver may be sued personally for an act or omission in administering receivership property only with approval of the court that appointed the receiver.
These provisions follow the basic premise that the receiver is an officer of the court, shielded by judicial immunity for actions performed under the lawful authority of the order appointing the receiver. The receiver’s entitlement to defense and immunities provided by the laws “of this state,” as provided in §714.18, is intended to resolve problems involving ancillary receivership. A receiver appointed by a Florida court who becomes an ancillary receiver in another state with a narrower provision for defenses and immunities will, nonetheless, be entitled to the greater scope of defenses and immunities provided by Florida law. The statute does not address a scenario in which the state of the principal receivership confers less immunity than the ancillary receiver is accorded under Florida. Conversely, the statute does not speak to whether an ancillary receivership in another state is governed by Florida immunities in the event Florida is the forum of primary receivership.
• Reports — The receiver may file, or if ordered by the court, shall file, an interim report including: 1) activities of the receiver since appointment or a previous report; 2) receipts and disbursements including payments paid or proposed to be made to professionals engaged by the receiver; 3) receipts and dispositions of receivership property; 4) fees and expenses of the receiver including (if not filed separately) a request for approval of payment of the fees and expenses; and 5) any other information required by the court.
• Claims — The receiver (with one exception) shall notify the owner’s creditors as to the appointment by first class mail or a commercially reasonable delivery method to the last known address of each creditor and by publication as directed by the court. The notice must specify the date by which the creditor holding a claim against the owner (which arose before the appointment of the receiver) must submit the claim to the receiver. The date specified must be at least 90 days after the later of the giving of notice by first class mail or other commercially reasonable delivery method or the last publication, if publication is directed by the court. However, the court may extend the period for submitting claims. Absent court order to the contrary, a claim not timely submitted is not entitled to a distribution from the receivership.
A claim submitted by a creditor must 1) state the name and address of the creditor; 2) state the amount and basis of the claim; 3) identify any property securing the claim; 4) be signed by the creditor under penalty of perjury; and 5) include a copy of any record on which the claim is based.
The assignee of a creditor’s claim against the owner is effective against the receiver only if the assignee gives timely notice of the assignment to the receiver in a signed record.
At any time before the court enters an order approving the receiver’s final report, the receiver may file with the court objections to creditor claims, stating the basis for the objection. The court shall then allow or disallow the claim according to the law other than this act.
Notice of the appointment of the receiver need not be given to all creditors if the court concludes that the receivership property is likely to be insufficient to satisfy the claims of each creditor holding a perfected lien on the property, in which case the court may order that the receiver only notify such creditors as the court directs; and order that unsecured creditors need not submit claims. This provision presents potential due process issues. An unsecured creditor, not having notice of the appointment of the receiver, may be deprived of the opportunity to contest the court’s conclusion that the receivership property is likely to be insufficient to satisfy secured creditors.
A distribution of receivership property to a creditor holding a perfected lien on the property must be made in accordance with the creditor’s priority under the law other than the act; and a distribution of receivership property to a creditor with an allowed unsecured claim must be made as the court directs, according to the law other than the act.
• Receiver Fees — The court may award to the receiver the reasonable and necessary fees and expenses from the receivership property. Further, the court may order the person that requested the appointment of the receiver to pay the fees and expenses if the receivership does not produce sufficient funds to pay the fees and expenses (including reasonable attorneys’ fees and costs); additionally, the court may order those fees and expenses paid by the person whose conduct justified or would have justified the appointment of the receiver.
• Removal/Replacement — Section 714.22 provides that the court may remove a receiver for cause or replace a receiver who dies, resigns, or is removed. The replaced receiver will be discharged if the court finds that he (or his representative in the event of death) has accounted fully for and turned over to the successor receiver all receivership property and has filed a report of all receipts and disbursements during the service of the replaced receiver.
The court may discharge a receiver and terminate the court’s administration of the receivership property if the court finds that the appointment of the receiver was improvident or that circumstances no longer warrant continuation of the receivership. Upon the finding that the appointment was sought wrongfully or in bad faith, the court may access against the person who sought the appointment the fees and expenses of the receivership, including reasonable attorneys’ fees and costs; and any actual damages caused by the appointment, including reasonable attorneys’ fees and costs.
Section 714.23 provides the required contents of the receiver’s final report, including items such as a description of the activities of the receiver and the conduct of the receivership; a list of receivership property that the commencement of the receivership and any receivership property received during the term of the receivership; a list of disbursements, including payment to professionals engaged by the receiver; a list of distributions made or proposed to be made from the receivership for creditor claims; and any other information required by the court.
If the court approves the final report and the receiver distributes all receivership property, the receiver is discharged.
The new act, in large part, codifies existing case law doctrines in substance and, in procedural terms, largely parallels the applicable Florida Rules of Civil Procedure. Perhaps the most significant new elements are found in the sections expanding the receiver’s right to sell receivership assets during the pendency of the underlying action. Because it generally follows the provisions of the Uniform Act enacted in other states, there will be guidance from other state courts as different jurisdictions develop their versions of the receivership legislation. While there will inevitably be disputed issues, this act will contribute clarity and stability to this important area of law.
 See Official Comments to Fla. R. Civ. P. 1.620.
 Plata v. Schwartznegger, 2005 WL 2932253 at * 22 (N.D. Ca. Oct. 31, 2005).
 The Uniform Law Commission is the National Conference of Commissioners on Uniform State Laws. The commission was founded in 1892 with the goal of bringing clarity and stability to critical areas of the statutory law across the various jurisdictions. The definitional scheme in §714.02 provides a broad variety of concepts arranged alphabetically, providing definitions for items such as “affiliate,” “executory contract,” “mortgage,” “person,” “rents,” and other commonly used — but not always specifically defined — terms. In accordance with the overriding purpose of providing uniformity, the definitions were derived from a variety of other uniform acts, including the Uniform Commercial Code.
 Fla. Stat. §714.28.
 Gordon v. State, 608 So. 2d 800 (Fla. 1992).
 DeLisle v. Crane Co., 258 So. 3d 1219, 1224 (Fla. 2018).
 Remedial statutes are construed liberally. Golf Channel v. Jenkins, 752 So. 2d 561 (Fla. 2000). While retroactivity with respect to substantive change is typically disfavored, procedural laws are generally applied in pending cases. Smiley v. State, 966 So. 2d 330, 334 (Fla. 2007).
 Benyard and Wainwright, 579 So. 2d 730, 745 (Fla. 1975).
 Weaver v. Myers, 229 So. 3d 1118, 1151 (Fla. 2017).
 Example: Borrower lives on the property in a single-family home with a garden providing vegetables for his personal use; the statute is inapplicable.
 Example: Duplex is subject to a mortgage; owner occupies one unit as his personal resident and leases the other unit to a non-relative. Owner defaults on the mortgage. The court may appoint a receiver because the owner has the right to collect rent.
 Plaza v. Plaza, 78 So. 3d 4 (Fla. 3d DCA 2011).
 Piambino v. Bailey, 757 F.2d 1112 (11th Cir. 1985).
 Tampa Waterworks Co. v. Wood, 121 So. 789 (Fla. 1929).
 Mills Development Corp. v. Shipp & Head, 171 So. 533 (Fla. 1936).
 Jones v. Harvey, 82 So. 2d 371 (Fla. 1955).
 Armour Fertilizer Works v. First National Bank, 100 So. 362 (Fla. 1924), the judiciary has discretion to apply the remedy as an ancillary proceeding in connection with some other action brought to obtain relief. Akers v. Corbett, 190 So. 28 (Fla. 1939).
 Barnett Bank of Alachua County, N.A. v. Steinberg, 632 So. 2d 233 (Fla. 1st DCA 1994).
 Boyd v. Banc One Mortgage Corp., 509 So. 2d 966 (Fla. 3d DCA 1987). Note that under §6(b)(3), a foreclosing mortgagee may be entitled to the appointment of a receiver for the mortgage property if “the owner agreed, after default and in a signed record, to appointment of a receiver.” This provision follows the general case law proposition that the mere provision for the appointment of a receiver as a matter of right, within a mortgage document itself, is not sufficient to warrant the appointment of a receiver.
 Carolina Portland Cement Co. v. Baumgartner, 128 So. 2d 247 (1930); McEwen v. Growers Bank & Guar. Co., 139 So. 805, 812 (Fla. 1932).
 Appointment of a receiver at the request of a junior lienholder will trigger a stay but a prior lienholder can get relief from the stay, discussed in §14.
 Fla. Stat. §714.06 (i)(c).
 Smith v. State Life Ins. Co., 114 Fla. 371, 153 So. 842 (1934). But see Atco Const. & Dev. Corp. v. Beneficial Savings Bank, F.S.B., 523 So. 2d 747 (Fla. 5th DCA 1988).
 Silver Pines Partner, Ltd. v. Resolution Trust Corp., 588 So. 2d 63 (Fla. 5th DCA 1991).
 Hardee County v. FINR II, Inc., 221 So. 2d 1163 (Fla. 2017); Hess v. Walton, 898 So. 2d 1046,1048-49 (Fla. 2d DCA 2005).
 Mirror Lake Company v. Kirk Securities Corporation, 124 So. 2d 719 (Fla. 1929).
 In re: Fredcris, Inc., 108 So. 2d 901 (Fla. 3d DCA 1959).
 DeSilva v. First Community Bank of America, 42 So. 3d 285 (Fla. 2d DCA 2010).
 Fla. Stat. §714.06(3).
 Fla. Stat. §714.07.
 Fla. Stat. §714.11.
 Fla. Stat. §714.12.
 See Fla. Stat. §679-4061(1) applicable to collection of accounts receivable.
 Fla. Stat. §714.09(l).
 Fla. Stat. §714.11.
 Fla. Stat. §714.13.
 Spector v. Old Town Key West Development, Ltd., 567 So. 2d 1017, 1018 (Fla. 3d DCA 1990).
 Fla. Stat. §714.14.
 See, e.g., Gilcrest v. GE Capital Corp., 262 F.3d 295 (4th Cir. 2003): bankruptcy filing trumps previously established receivership.
 Fla. Stat. §714.14(d).
 Section 714.14(8).
 Fla. Stat. §714(15).
 Shubh Hotels Boca, LLC v. FDIC, 46 So. 3d 163 (Fla. 4th DCA 2010). See also 11 U.S.C. §363(f) — absent consent of lienor, trustee can sell the property free and clear of lien only if the sale price exceeds the aggregate value of all liens. The act is to the contrary. Where the property is subject to multiple liens and the value is not sufficient to satisfy the senior debt, the junior lienor should not hold a veto power over a sale. The junior lienor has the power to redeem by paying off the senior debt.
 Bailey v. Treasure, 462 So. 2d 537 (Fla. 4th DCA 1985).
 Interdevco, Inc. v. Brickellbanc Sav. Ass’n, 524 So. 2d 1087 (Fla. 3d DCA 1990).
 Under §16, with court approval the receiver can sell the property. Contrast with 28 U.S.C. §2001, where a receiver appointed in federal court is authorized to sell mortgaged property.
 Subsection (b) of §16 allows the court to authorize the receiver to use the property other than in the ordinary course, which might include changing the use of the property.
 Receivers operating under 28 U.S.C. §§2001-2004 have the right to sell the collateral free and clear of liens.
 This requirement would nullify any boilerplate “consent” drafted into loan or security documents.
 Fla. Stat. §714.16(2).
 Fla. Stat. §714.16(3).
 Fla. Stat. §714.16(c).
 Real Estate Marketers, Inc. v. Wheeler, 298 So. 2d 481 (Fla. 1st DCA 1974).
 See 11 U.S.C. §365(i) regarding protection to purchasers of real estate.
 A “record” is defined in §2(17) of the Uniform Act as information that is inscribed on a tangible medium or that is stored on an electronic or other medium and is retrievable in perceivable form.
 Comment 6 to §20 of the Uniform Act deals with the circumstance in which a court orders the receiver to forego notice to unsecured creditors, only to discover later that the receivership generated receipts in excess of the amount needed to satisfy secured claims. “In this case, Section 5 preserves to the court the authority to order the receiver to re-institute the default notice and claims process provided in Section 20….”
 Fla. Stat. §714.20(g).
 Fla. Stat. §714.21.
 Fla. Stat. §714.22.
David Freedman is a partner with Coffey Burlington in Miami and has represented receivers and litigated commercial disputes as well as land use and takings cases for more than 40 years. He has served as an adjunct professor at the University of Miami School of Law for commercial law as well as remedies, and as an editor of the Florida Lawyers’ Diary and Manual.
This column is submitted on behalf of the Business Law Section, Kacy Donlon, chair, and Andrew Layden, editor.