A rents and profits receivership is a court-authorized tool used to enforce a mortgage, deed of trust, or related assignment of rents. It most commonly arises when a property owner defaults on a mortgage and the lender petitions the court to appoint a receiver to protect the collateral while foreclosure proceedings move forward.
Most deeds of trust include both a receivership provision and an assignment of rents clause — giving lenders a contractual basis to seek court intervention when a borrower defaults. Once appointed, the receiver steps into a neutral, court-supervised role with authority to take possession and control of all collateral property as directed.
When Is a Receiver Appointed?
A receiver may be appointed when the conditions of a mortgage or deed of trust have not been performed, or when the property's value has fallen below the amount of the debt it secures. In either scenario, the goal is to stabilize the asset and stop further deterioration — financial or physical — before the foreclosure is resolved.
It's worth noting that rents and profits generated by a property are not the personal property of the owner. Under California law, they are treated as real property collateral and are therefore subject to receivership.
What Does a Rents and Profits Receiver Do?
Once appointed, the receiver takes custody and control of the property with a clear mandate: preserve value, collect income, and protect all parties with an interest in the asset. This includes:
- Collecting rents and managing tenant relationships
- Paying property taxes, insurance, and operating expenses
- Addressing health, safety, and code compliance issues
- Maintaining the physical condition of the property
- Curtailing ongoing losses or liability exposure
A receiver also has the authority to sell the property, subject to final court approval, if circumstances warrant.
Working With Griswold Receivers
Richardson "Red" Griswold of Griswold Receivers has been appointed by courts across the Western region to serve as a rents and profits receiver for both residential and commercial income properties.
To learn more about rents and profits receiverships or to discuss an active matter, contact us today.
