Present law authorizes courts to appoint receivers for the safekeeping, management, and disposition of property in litigation within such courts. A "receiver" is a person appointed by the court as the court's agent to take possession of, manage, and, if authorized, transfer, sell, lease, license, exchange, collect, or otherwise dispose of receivership property. This bill prohibits a receivership proceeding from interfering with the rights of a holder of an interest in a receivership property if the holder's interest is superior to that of the party initiating the receivership, without the express consent of the superior interest holder. This bill further prohibits a judge or chancellor from limiting, impeding, or enjoining the rights of a holder of an interest in a receivership property if the holder's interest is superior to that of the party initiating the receivership. This bill clarifies that a superior interest holder's actions to establish or enforce a priority interest do not constitute consent to a receivership. DEFINITION OF SUPERIOR INTEREST This bill defines "superior" as an interest that has priority over other interests in the same property under state law. This includes, but is not limited to, all of the following:  The interest of the holder or beneficiary of a prior recorded deed of trust, security instrument, or other instrument evidencing an interest in the same property, is superior to the interest of a holder, beneficiary, or owner of a later recorded deed of trust or other security instrument, or other instrument evidencing an interest in the same property.  The interest of the holder or beneficiary of a prior-filed Uniform Commercial Code financing statement is superior to the interest of a later-filed Uniform Commercial Code financing statement in the same property.  The interest of the holder or beneficiary of any recorded deed of trust, financing statement, other security instrument, or other instrument evidencing an interest in the same property, is superior to the interest in the same property of a person, including the person's heirs, successors, and assigns, who made or granted the deed of trust, financing statement, or other security instrument, or against whom the instrument is asserted. JURISDICTION Present law grants the court that appoints a receiver exclusive jurisdiction to direct the receiver and to determine any controversy related to the receivership or receivership property. This bill clarifies that establishing exclusive jurisdiction over the receivership or receivership property does not supersede or defeat any enforceable venue, jurisdiction, or choice of law agreement of the party whose interest in the property subject to the receivership is superior to that of the party initiating the receivership. STAYS AND INJUNCTIONS Present law provides that an order appointing a receiver operates as a stay of an act, action, or proceeding (i) to obtain possession of, exercise control over, or enforce a judgment against receivership property; and (ii) to enforce a lien against receivership property to the extent the lien secures a claim against the owners that arose before entry of the order. The court may enjoin an 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. This bill provides that any order appointing a receiver or any order to enjoin an act, action, or proceeding against or relating to receivership property, does not operate as a stay or injunction of an act, action, or proceeding to enforce or exercise the rights of an interest holder in property subject to a receivership that is superior to the interest of the party initiating the receivership proceeding. INTERVENTION IN A RECEIVERSHIP ACTION BY A SUPERIOR INTEREST HOLDER This bill prohibits a judge or chancellor from issuing an order that limits, impedes, or enjoins the rights of an interest holder in property subject to a receivership that is superior to the interest of the party initiating the receivership proceeding. This bill clarifies that, in the event a party elects to intervene in a receivership proceeding so that the court may determine the priority of the superior interest of the property subject to the receivership proceeding, such intervention is not consent to the receivership. If the court determines that the interest of the intervening party is superior to the interest of the party initiating the receivership, this bill provides that the court adhere to the following:  Must not issue an order or take action to limit, impede, or enjoin the rights of an interest holder in property subject to a receivership that is superior to the interest of the party initiating the receivership proceeding.  Must award the intervening party holding the superior interest reasonable attorney's fees and costs incurred in seeking the determination.

Statutes affected:
Introduced: 29-1-103, 29-40-102, 29-40-105, 29-40-114(d), 29-40-114