Legislature Passes Uniform Commercial Real Estate Receivership Act

Public Act 16 of the Public Acts of 2018 enacts a version of the Uniform Commercial Real Estate Receivership Act.  The Act provides for the appointment of receivers for commercial real estate and describes the powers and duties of receivers thereunder.  The act does not apply to residential properties of less than four units, unless the property was acquired in the normal course of the owner’s business for the purpose of constructing and/or renting out the units, the owner has the right to collect rents from someone not an affiiliate of the owner, of the property was acquired or used for agricultural, commercial, industrial, or mineral-extraction purposes.

The Act requires receivers to post a bond.  It sets forth the powers and duties of the receiver as well as the powers and duties of the owner with respect to the receivership property.  Notably, it grants the receiver the status of a lien creditor either under real property laws or under Article 9 of the Michigan Commercial Code.  The appointment of a receiver operates as a stay, similar to a bankruptcy stay, for certain acts to obtain possession or control of the receivership property, or to enforce a lien in the property to the extent that the lien secures a claim tha arose prior to the appointment of the receiver.  The Act also provides the grounds and method for removal of a receiver.

A companion Act, also passed, provides that appointment of a receiver under Public Act 16 does not constitute an action to recover a debt that would bar a foreclosure by advertisement.

© Steve Sowell 2018