QUESTION: I am a receiver for a shopping center. I want to enter into a five year lease for one of the stores. Is there a statute or rule that limits the term of leases a receiver can execute?
ANSWER: There is no California statute or case that limits the term of leases a receiver can execute. However, limits are often placed on the term of such leases by the order appointing the receiver and often depend on the type of receiver appointed, i.e., a rents, issues and profits receiver versus an equity receiver. You don’t indicate which you are. In rents cases, the practice developed, at least in Southern California, to limit the term of such leases to no more than one year. That practice was based on general receivership law that receivers should not enter into leases beyond the probable term of the receivership, so as to not unnecessarily bind the receiver’s successors and the ultimate owners of the property. See Clark on Receivers, §450 (1992). When the Judicial Counsel form receivership order for rents receivers was drafted, with the help of a number of receivers from Southern California, the following provision was included:
“The receiver may without court approval enter into leases for a term not exceeding one year, obtain and evict tenants, and set and modify the amounts and terms of leases.”
If you are a rents receiver and you believe it is in the best interest of the estate to enter into a long term lease, you can do so if you get court approval. If you are an equity receiver, this limitation does not apply, unless it is set forth in your order of appointment. However, the best practice would be to either get court approval of the proposed long term lease or of parameters for leases you may enter into.
- Senior Partner
Peter A. Davidson is a Partner in the Bankruptcy, Receivership and Creditors’ Rights Department.
Since 1977 Peter has represented receivers, plaintiffs and defendants in receivership actions in state and federal court and ...
Subscribe
Recent Posts
- FDA Clarifies Food Traceability Rule and Extends Comment Period
- FDA Announces 2024 Compliance Date for 2021-2022 Food Labeling Regulations
- Consolidated Appropriations Act: Additional Paycheck Protection Program Loans
- Employer Reminder: Minimum Wage Increases for 2021
- LA County Considers Mandated $5/Hour “Hero Pay” Increase For Grocery Workers
- Los Angeles County Issues Mandatory Self-Quarantine for Non-Essential Travel
- New Dietary Guidelines "Make Every Bite Count"
- Southern California Regional Stay at Home Order Extended
- Sources of Foodborne Illness Report Released
- New Lawsuits Challenge State COVID-19 Measures
Blogs
Contributors
Archives
- January 2021
- December 2020
- November 2020
- October 2020
- September 2020
- August 2020
- July 2020
- June 2020
- May 2020
- April 2020
- March 2020
- February 2020
- January 2020
- December 2019
- November 2019
- October 2019
- September 2019
- August 2019
- July 2019
- June 2019
- May 2019
- March 2019
- February 2019
- January 2019
- November 2018
- October 2018
- September 2018
- August 2018
- July 2018
- June 2018
- May 2018
- April 2018
- February 2018
- January 2018
- December 2017
- November 2017
- October 2017
- September 2017
- August 2017
- July 2017
- June 2017
- May 2017
- April 2017
- March 2017
- February 2017
- January 2017
- December 2016
- November 2016
- October 2016
- September 2016
- August 2016
- July 2016
- June 2016
- May 2016
- April 2016
- January 2016
- December 2015
- November 2015
- October 2015
- September 2015
- August 2015
- July 2015
- June 2015
- May 2015
- April 2015
- March 2015
- February 2015
- January 2015
- December 2014
- November 2014
- October 2014
- September 2014
- August 2014
- July 2014
- June 2014
- May 2014
- April 2014
- March 2014
- February 2014
- January 2014