A receiver for your property: how receivership works on a CMBS loan

A receiver is a neutral person a court appoints to take control of a property, collect its rents and run it while a defaulted CMBS loan is enforced. The lender asks; the court decides under state law. The owner loses control of the cash and operations, but not title, and must cooperate. It usually comes with or before a foreclosure.

State law governs receiverships and it varies widely. This page uses Florida’s statute, an adoption of the Uniform Commercial Real Estate Receivership Act, as the worked example, and the pooling and servicing agreement (PSA) of BANK5 2025-5YR14 for what the trust does. Your state’s law and your loan documents govern. This is not legal advice: if a receiver has been requested, you need a lawyer now.

Why lenders ask for a receiver

A defaulted loan’s collateral is mostly the property’s income. Under an assignment of rents the owner keeps a license to collect rents until a default, but the BANK5 2025-5YR14 prospectus notes that local law may require the lender to take possession or “obtain a court-appointed receiver” before it can collect them. A receiver protects the property and the cash during a foreclosure that can take months or years, and keeps the lender out of the risks of operating the building itself. The prospectus also notes that in New York, a mortgage with the statutory covenant lets the lender seek a receiver without notice and regardless of whether the property covers the debt.

How the trust treats a receivership

Event	Effect in BANK5 2025-5YR14	Source
The special servicer seeks a receiver	An exercise of remedies after default: a Major Decision the Directing Certificateholder can block while it holds control	PSA 6.08(a), Major Decision (xviii)
The borrower consents to a receiver	Servicing Transfer Event: the loan moves to the special servicer	PSA 1.01, “Servicing Transfer Event” (vi)
A court order appoints a receiver in an insolvency proceeding and stays in force 60 days	Servicing Transfer Event	“Servicing Transfer Event” (v)
A receiver is appointed for the property	Appraisal Reduction Event 30 days later (at once if already specially serviced)	“Appraisal Reduction Event” (iii)

How appointment works: Florida as the example

Florida adopted the Uniform Commercial Real Estate Receivership Act as chapter 714 of the Florida Statutes. Other states that adopted the act follow a similar outline; states that did not have their own rules.

• Grounds. Before judgment, a court may appoint a receiver for property “in danger of waste, loss, substantial diminution in value” or similar harm (s. 714.06(1)). In a mortgage case the court weighs, among other facts, whether the owner agreed in a signed record before default that a receiver could be appointed, whether the collateral is worth less than the debt, and whether the owner has failed to turn over rents the lender is entitled to (s. 714.06(2)).
• Who serves. The receiver must swear it is not disqualified, for example as an affiliate of a party or as someone with a materially adverse interest. The lender may nominate one, but the court is not bound by the nomination (s. 714.07).
• Powers. The receiver may collect, control, manage, conserve and protect the property, operate the business on it, and lease or sell in the ordinary course (s. 714.12). A transfer outside the ordinary course needs court approval, and the court may order it free and clear of liens, which then attach to the proceeds (s. 714.16).
• Your duties. The owner must cooperate, turn over property, identify records and access credentials, and can be examined under oath. Knowingly failing to do so can bring damages and contempt (s. 714.13).
• Costs. The court awards the receiver’s reasonable fees and expenses, paid mainly from the property. If the property cannot cover them, the court can order the party that sought the receiver to pay, and it can also order a person whose conduct justified the appointment to pay (s. 714.21).

What to do when a receivership is coming

1. Call your lawyer the day you hear of it. Receivership motions can move fast, and some states allow appointment before you are heard.
2. Read your loan documents for a consent to receiver. Many CMBS mortgages contain one. Your lawyer will know how much weight your state gives it.
3. Protect yourself under the guaranty. Diverting rents or withholding records once a receiver is sought can be a carve-out under many non-recourse guaranties. Ask counsel what your guaranty covers before you move any money.
4. Organize the property’s records. Leases, rent roll, service contracts, insurance, permits, bank accounts and access credentials. You will have to turn them over, and a clean handover limits disputes.
5. Put a better option on the table. A receivership is expensive for everyone. A credible discounted payoff, a forbearance while a sale closes, or a consensual deed in lieu can each be cheaper for the trust than a receiver and a contested foreclosure.

Janover Capital LLC can talk through a refinance, rescue capital or a sale on the troubled loan desk. It is not your servicer, lender or law firm, and contacting it notifies no one. For what comes before this stage, see CMBS loan default and special servicing.

Sources: Florida Statutes chapter 714 (2024), ss. 714.06, 714.07, 714.12, 714.13, 714.16, 714.21; BANK5 2025-5YR14 PSA, dated as of April 1, 2025, section 1.01 and section 6.08(a); BANK5 2025-5YR14 prospectus, “Certain Legal Aspects of Mortgage Loans”.