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RECIEVERSHIPS


   Mitchell A. Lieberman
RECEIVERSHIPS
•   735 IMFL 5/15-1701(b)(2)
    Mortgagee is entitled to be placed in possession
    prior to judgment if:
        - Mortgage provides for possession
        - There is reasonable probability that mortgagee will
          prevail at hearing.
•   What constitutes a reasonable probability of success:
        - Real Estate Taxes
        - Maturity
        - Payment default
        - Due on sale violation
Receivership Continued…

•   Petition must be verified
•   Service Issues
•   Statutory presumption in favor of Mortgagee

•   Mortgagor must overcome statutory
    presumption in favor of Mortgagee and show
    good cause to remain in possession.
Good Cause
•   Traveler’s Insurance Company v. LaSalle National Bank as Trustee,
    200 Ill. App. 3d 139, 558 N.E. 2d 579,
    146 Ill. Dec. 616 (2d Dist. 1990)

•   Centerpoint Properties Trust v. Olde Prairie Block Owner LLC 2010
    Ill. App. LEXIS 91 (1-09-1481) (1st Dist. February 10, 2010)

•   Management issues

•   Pending Affirmative Defenses
Mortgagee’s Burden
•   First Federal Saving’s Loan Association v. National Boulevard
    Bank, 104 Ill. App. 3d 1061, 433 N.E. 2d 1036, 60 Ill. Dec 798
    (1st Dist. 1982)

•   Mellon Bank N.A. v. Midwest Bank & Trust as Trustee under
    Trust No. 85-02-4652, 265 Ill. App. 3d 859, 638 N.E. 2d 640,
    202 Ill. Dec 772 (1st Dist. 1993)

•   Traveler’s Insurance as Trustee, 200 Ill. App. 3d 139, 558 N.E.
    2d 579, 146 Ill. Dec. 616 (2d Dist. 1990)
RECEIVER BOND
•   Discretionary

•   Calculation of amount
    – Percentage of principal amount

    – Mathematical computation regarding gross
      income
POWERS OF A RECEIVER
•   735 ILCS 5/15-1704
     – Employment of third parties

•   Standard/ Prudent Person
•   Disbursements
     – Insurance

     – Taxes

     – Building expenses

     – Repairs

•   Court Authority
Powers Continued:

•   Submission of Bids
•   Building Condition/ Status Quo
•   Fees and Costs
•   Income deficient to cover operating expenses
•   Debt Retirement
•   Receiver’s Certificate
    – Paul Gaskill et al.,v. Earl Dean Gordon et al., 1993 WI   64642 (N.D. Ill)
Powers Continued:
•   When is an attorney necessary:
       - Upon petition with notice
       - Lease Issues
       - Condo Issues
       - Possession Issues
       - Document Turnover
       - Rent Turnover
RECEIVER’S AUTHORITY
•   From the court and statute
•   Receiver is an officer of the court
•   Custodial officer
•   Leases : Acceptance/ Rejection
        United States Fidelity & Guaranty Co. v. Old Orchard Plaza Limited
        Partnership, 333 Ill. App. 3d 727, 776 N.E. 2d 812, 267 Ill. Dec. 440
        (1st Dist. 2002)

        735 ILCS 5/15-1702 (g)

        Comerica Bank Illinois v. Harris Bank Hinsdale, 673 N.E. 2d 380, 284
        Ill. App. 3d 1030, 220 Ill. Dec. 468
MORTGAGEE IN POSSESSION

 •   Powers and Duties Distinguished
     from a Receiver
     – Collection of rents and application
     - Appointment not for the benefit of all parties
CONDOMINIUM PROJETS
•   Condo Board
•   What is collateral
•   What duties does receiver have in
    conjunction with the condominium
    management
•   Shared Expenses
RECEIVER’S LIABILITY

•   735 ILCS 5/2-415
•   Effect of Order Approving Reports
•   Res Judicata Effect

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A view from the bench

  • 1. RECIEVERSHIPS Mitchell A. Lieberman
  • 2. RECEIVERSHIPS • 735 IMFL 5/15-1701(b)(2) Mortgagee is entitled to be placed in possession prior to judgment if: - Mortgage provides for possession - There is reasonable probability that mortgagee will prevail at hearing. • What constitutes a reasonable probability of success: - Real Estate Taxes - Maturity - Payment default - Due on sale violation
  • 3. Receivership Continued… • Petition must be verified • Service Issues • Statutory presumption in favor of Mortgagee • Mortgagor must overcome statutory presumption in favor of Mortgagee and show good cause to remain in possession.
  • 4. Good Cause • Traveler’s Insurance Company v. LaSalle National Bank as Trustee, 200 Ill. App. 3d 139, 558 N.E. 2d 579, 146 Ill. Dec. 616 (2d Dist. 1990) • Centerpoint Properties Trust v. Olde Prairie Block Owner LLC 2010 Ill. App. LEXIS 91 (1-09-1481) (1st Dist. February 10, 2010) • Management issues • Pending Affirmative Defenses
  • 5. Mortgagee’s Burden • First Federal Saving’s Loan Association v. National Boulevard Bank, 104 Ill. App. 3d 1061, 433 N.E. 2d 1036, 60 Ill. Dec 798 (1st Dist. 1982) • Mellon Bank N.A. v. Midwest Bank & Trust as Trustee under Trust No. 85-02-4652, 265 Ill. App. 3d 859, 638 N.E. 2d 640, 202 Ill. Dec 772 (1st Dist. 1993) • Traveler’s Insurance as Trustee, 200 Ill. App. 3d 139, 558 N.E. 2d 579, 146 Ill. Dec. 616 (2d Dist. 1990)
  • 6. RECEIVER BOND • Discretionary • Calculation of amount – Percentage of principal amount – Mathematical computation regarding gross income
  • 7. POWERS OF A RECEIVER • 735 ILCS 5/15-1704 – Employment of third parties • Standard/ Prudent Person • Disbursements – Insurance – Taxes – Building expenses – Repairs • Court Authority
  • 8. Powers Continued: • Submission of Bids • Building Condition/ Status Quo • Fees and Costs • Income deficient to cover operating expenses • Debt Retirement • Receiver’s Certificate – Paul Gaskill et al.,v. Earl Dean Gordon et al., 1993 WI 64642 (N.D. Ill)
  • 9. Powers Continued: • When is an attorney necessary: - Upon petition with notice - Lease Issues - Condo Issues - Possession Issues - Document Turnover - Rent Turnover
  • 10. RECEIVER’S AUTHORITY • From the court and statute • Receiver is an officer of the court • Custodial officer • Leases : Acceptance/ Rejection United States Fidelity & Guaranty Co. v. Old Orchard Plaza Limited Partnership, 333 Ill. App. 3d 727, 776 N.E. 2d 812, 267 Ill. Dec. 440 (1st Dist. 2002) 735 ILCS 5/15-1702 (g) Comerica Bank Illinois v. Harris Bank Hinsdale, 673 N.E. 2d 380, 284 Ill. App. 3d 1030, 220 Ill. Dec. 468
  • 11. MORTGAGEE IN POSSESSION • Powers and Duties Distinguished from a Receiver – Collection of rents and application - Appointment not for the benefit of all parties
  • 12. CONDOMINIUM PROJETS • Condo Board • What is collateral • What duties does receiver have in conjunction with the condominium management • Shared Expenses
  • 13. RECEIVER’S LIABILITY • 735 ILCS 5/2-415 • Effect of Order Approving Reports • Res Judicata Effect