§ 15-1704 — Receivers

(a) Receiver. Notwithstanding the provisions of subsections (b), (c) and (d) of Section 15-1701, and except as provided in Section 15-1702, upon request of any party and a showing of good cause, the court shall appoint a receiver for the mortgaged real estate. (b) Powers. A receiver appointed pursuant to this Article shall have possession of the mortgaged real estate and other property subject to the mortgage during the foreclosure, shall have full power and authority to operate, manage and conserve such property, and shall have all the usual powers of receivers in like cases. Without limiting the foregoing, a receiver shall have the power and authority to: (1) secure tenants and execute leases for the real estate, the duration and terms of which are reasonable and customary for the type of use involved, and such leases shall have the same priority as if made by the owner of the real estate; but, unless approved by the Court, the receiver shall not execute oil, gas or other mineral leases, or (even if otherwise allowed by law) leases extending beyond the time of the receiver's possession; provided, however, with respect to residential real estate leased by the receiver, nothing in this Section shall affect the legal rights of any lessee with respect to the safety and habitability of the residential real estate; (2) collect the rents, issues and profits from the mortgaged real estate; (3) insure the mortgaged real estate against loss by fire or other casualty; (4) employ counsel, custodians, janitors and other help; and (5) pay taxes which may have been or may be levied against the mortgaged real estate. (c) Duties. A receiver appointed pursuant to this Article must manage the mortgaged real estate as would a prudent person, taking into account the effect of the receiver's management on the interest of the mortgagor. A receiver may, without an order of the court, delegate managerial functions to a person in the business of managing real estate of the kind involved who is financially responsible, not related to the mortgagee or receiver and prudently selected. However, the receiver shall remain responsible to the mortgagor or other persons for the acts or omissions of such management agent. When fees are paid to such a management agent, the receiver's fees may be adjusted to the extent the court deems appropriate. In managing the mortgaged real estate and other property subject to the mortgage, a receiver or receiver's delegate, to the extent the receiver receives sufficient receipts from the mortgaged real estate, such other property or other sources, except to the extent ordered otherwise by the court: (1) shall maintain the existing casualty and liability insurance required in accordance with the mortgage or applicable to the real estate and other property subject to the mortgage at the time the receiver took possession; (2) shall use reasonable efforts to maintain the real estate and other property subject to the mortgage in at least as good condition as existed at the time the receiver took possession, excepting reasonable wear and tear and damage by any casualty; (2.5) shall accept all rental payments from an occupant of the mortgaged property, and any payments from a third party or any rental assistance program in support of an occupant's housing; (3) shall apply receipts to payment of ordinary operating expenses, including royalties, rents and other expenses of management; (4) shall pay any shared or common expense assessments due to any association of owners of interests in real estate to the extent that such assessments are or may become a lien against the mortgaged real estate; (5) may pay the amounts due under any mortgage if the mortgagee thereof is not a party in the foreclosure; (6) may carry such additional casualty and liability insurance as is reasonably available and reasonable as to amounts and risks covered; (7) may make other repairs and improvements necessary to comply with building, housing, and other similar codes or with existing contractual obligations affecting the mortgaged real estate; (8) may hold receipts as reserves reasonably required for the foregoing purposes; and (9) may take such other actions as may be reasonably necessary to conserve the mortgaged real estate and other property subject to the mortgage, or as otherwise authorized by the court. (d) Allocation of Receipts. Receipts received from operation of the real estate and other property subject to the mortgage by the receiver shall be applied in the following order of priority. (1) to reimbursement of the receiver for all reasonable costs and expenses incurred by the receiver or the receiver's delegates; (2) to payment of insurance premiums authorized in paragraph (1) of subsection (c) of Section 15-1704; (3) to payment of the receiver's delegates of any reasonable management fees for managing real estate of the type involved; (4) to payment of receiver's fees allowed by the court; (5) to payment of expenses authorized in paragraphs (2), (3) and (4) of subsection (c) of Section 15-1704; (6) to payment of amounts authorized in paragraph (5) of subsection (c) of Section 15-1704; (7) to payment of expenses authorized in paragraphs (6) and (7) of subsection (c) of Section 15-1704; and (8) the balance, if any, shall be held or disbursed as ordered by the court. (e) Non-Liability for Allocations. A receiver shall in no event be liable to any person for the allocation of, or failure to allocate, receipts to possible expenditures within the same priority category. (f) Notice to occupants. (1) Following an order appointing a receiver pursuant to Section 15-1704, but no later than 21 days after the entry of such order, the appointed receiver shall make a good faith effort to ascertain the identities and addresses of all occupants of dwelling units of the mortgaged real estate. (2) Following an order appointing a receiver pursuant to Section 15-1704, but no later than 21 days after the entry of such order, the appointed receiver shall notify all known occupants of dwelling units of the mortgaged real estate that the receiver has been appointed receiver of the mortgaged real estate. Such notice shall be in writing and shall: (i) identify the occupant being served by the name known to the receiver; (ii) inform the occupant that the mortgaged real estate at which the dwelling unit is located is the subject of a foreclosure action and that control of the mortgaged real estate has changed; (iii) provide the name, address, and telephone number of the individual or entity whom occupants may contact with concerns about the mortgaged real estate or to request repairs of that property; (iv) include the following language, or language that is substantially similar: "This is NOT a notice to vacate the premises. You may wish to contact a lawyer or your local legal aid or housing counseling agency to discuss any rights that you may have."; (v) include the name of the case, the case number, and the court where the foreclosure action is pending; and (vi) provide instructions on the method of payment of future rent, if applicable. (3) The written notice required by item (2) of this subsection (f) shall be served by delivering a copy thereof to the known occupant, or by leaving the same with some person of the age of 13 years or upwards, who is residing on or in possession of the premises; or by sending a copy of the notice to the known occupant by first-class mail, addressed to the occupant by the name known to the receiver. (4) In the event that a receiver ascertains the identity and address of an occupant of a dwelling unit of the mortgaged real estate more than 21 days after appointment pursuant to Section 15-1704, the receiver shall provide the notice required by item (2) of this subsection (f) within 7 days of ascertaining the identity and address of the occupant. (5)(i) A receiver who fails to comply with items (1), (2), (3), and (4) of this subsection (f) may not collect any rent due and owing from a known occupant, or terminate a known occupant's tenancy for non-payment of such rent, until the receiver has served the notice described in item (2) of this subsection (f) upon the known occupant. After providing such notice, the receiver may collect any and all rent otherwise due and owing the receiver from the known occupant and may terminate the known occupant's tenancy for non-payment of such rent if the receiver otherwise has such right to terminate. (ii) An occupant who previously paid rent for the current rental period to the mortgagor, or other entity with the authority to operate, manage, and conserve the mortgaged real estate at the time of payment, shall not be held liable for that rent by the receiver, and the occupant's tenancy shall not be terminated for non-payment of rent for that rental period. (6) Within 21 days of appointment, the receiver shall post a written notice on the primary entrance of each dwelling unit subject to the foreclosure action that informs occupants that the receiver has been appointed to operate and manage the property. This notice shall: (i) inform occupant that the dwelling unit is the subject of a foreclosure action and that control of the mortgaged real estate has changed; (ii) include the following language: "This is NOT a notice to vacate the premises."; (iii) provide the name, address, and telephone number of the individual or entity whom occupants may contact with concerns about the mortgaged real estate or to request repairs of the property; and (iv) provide instructions on the method of payment of future rent, if applicable. (7)(i) The provisions of item (5) of this subsection (f) shall be the exclusive remedy for the failure of a receiver to provide notice to a known occupant under this Section. (ii) This Section shall not abrogate any right that a receiver may have to possession of the mortgaged real estate and to maintain a proceeding against an occupant of a dwelling unit for possession under Article IX of this Code or subsection (h) of Section 15-1701. (g) Increase of rents. Notwithstanding any other provision of this Article, a receiver shall not charge an occupant of the mortgaged real estate a rental amount above that which the occupant had been paying for use and occupancy of the mortgaged real estate prior to the appointment of a receiver without leave of court. The court may allow an increase of rent if, upon motion by the receiver, the court finds by a preponderance of the evidence, that the increase of rent is necessary to operate, manage, and conserve the mortgaged real estate pursuant to this Section. A list of the current rents for each unit in the mortgaged real estate, and a list of the proposed rent increase for each of those units, must be attached to a motion for a rent increase under this subsection (g). All occupants of the mortgaged real estate who may be affected by the motion for a rent increase, if not otherwise entitled to notice, shall be notified in writing of the nature of the motion, the date and time of the motion, and the court where the motion will be heard. Such notice shall be by personal service or first-class mail. In the event that the receiver and an occupant of a dwelling unit agree to a rent increase for that dwelling unit, the receiver is excused from the requirements of this subsection (g) as to that dwelling unit. Nothing in this subsection (g) shall alter the terms of any lease agreement. (h) Removal. The court may remove a receiver upon a showing of good cause, in which case a new receiver may be appointed in accordance with subsection (b) of Section 15-1702 and subsection (a) of Section 15-1704.

Legislative History

(Source: P.A. 98-514, eff. 11-19-13.)