real estate agreement Archives - Ira SmithTrustee & Receiver Inc.

What does a court appointed receiver do: Introduction

Earlier this week I wrote my blog COURT APPOINTED RECEIVER REAL ESTATE: ALL PURCHASE TERMS AREN’T EQUAL. In that blog, I described 5 common conditions that a buyer wants in a real estate agreement of purchase and sale. I also showed why a court appointed receiver cannot agree to those requested conditions. The purpose of today’s Brandon’s Blog is to answer the question what does a court appointed receiver do in setting the vendor’s conditions in a real estate sale.

What does a court appointed receiver do: The 5 most common vendor terms

In the earlier blog this week, I listed the 5 most common seller terms that the court appointed receiver cannot agree to. Here are the five most common terms that the court appointed receiver as seller requires.

Capacity – The court appointed receiver requires the buyer to acknowledge that the vendor is selling solely in its court-appointed role.
Title – Buyer agrees to accept title to the property as will be conveyed by the Court order conveying title which is called a Vesting Order. Also, the buyer must acknowledge that it is accepting title subject to any site plan agreements, restrictions, easements for the supply of utilities, services or otherwise. Also, the buyer will accept title subject to any rights of way, encroachments on or by the subject property onto adjoining properties, leases or licences. This is why it is important for the buyer’s lawyer to do a careful search of title and explain any and all issues to the buyer before the purchaser agrees to accept title.
Inspections – A buyer from a court appointed receiver must be very careful in doing its due diligence. The court appointed receiver will allow for reasonable inspections. The buyer must acknowledge that he/she/it relies entirely upon its own inspection and investigation with respect to quantity, quality and value of the property. The buyer must also agree that it is purchasing and accepts the property on an “as is” basis, as of the date of acceptance and as of the closing date.
Fixtures and chattels – Every buyer obviously wants to get the most possible out of the real estate purchase. It is normal for all buyers to want to confirm that they are receiving good title to all chattels and fixtures. The buyer is also looking for a warranty that they will all be in good working order on the date of closing. This is not possible in a court appointed receiver real estate sale. Rather, in a Court-appointed receivership, the receiver will insist on the condition that notwithstanding anything contained to the contrary in the agreement of purchase and sale, the Buyer acknowledges that the seller does not have title to the chattels or fixtures presently located on or used in connection with the property. The buyer and seller can agree that the chattels and fixtures set out in the schedule to the agreement remain at the property. However the buyer must also agree to take it on an “as is” basis. There is no warranty or representation and the seller won’t provide a bill of sale on closing for any chattels or fixtures. The court appointed receiver probably cannot verify that ownership of the fixtures and chattels are the property of the owner of the real estate. The receiver won’t rely on what is affixed to the premises to to prove or infer title.
Court approval – A court appointed receiver must obtain court approval to the method of offering the property for sale (obtained before the sales process begins) and certainly for a specific sale. The court appointed receiver must seek that approval in order to have the sales process and sale sanctioned. The Court will issue an Approval and Vesting Order. This is the Court order allowing the transfer of title to the buyer. A court appointed receiver will put together its motion material and attend in Court for such approvals once it knows that it has a firm deal, all buyer conditions have been waived and the necessary deposit funds have been received. A Court will not approve a transaction that isn’t firm. The Court will question why the court appointed receiver is wasting resources in making the approval request at that time.

What does a court appointed receiver do: Is your mortgagor in trouble?

I hope this information will help you understand better the most common terms and conditions a court appointed receiver selling real estate requires. A court appointed receiver does this in setting the vendor’s conditions in a real estate sale.

Are you a mortgagor over industrial or commercial realty where the debtor remains in default? There may be reasons that you have to take into consideration for putting in a court appointed receiver.

If yes, call the Ira Smith Team. Our approach for each file is to create an end result where Starting Over, Starting Now takes place. This starts the minute you are in the door. You’re simply one phone call away from taking the necessary steps to get back to leading a healthy, balanced hassle-free life, recover your money and move on to the next investment opportunity.

Court appointed receiver real estate: Introduction

Over the last 5 years, (and of course for many years before then), we have taken on many Court appointments for commercial real estate receivership files. In August 2017 we wrote BUYING REAL ESTATE FROM A RECEIVER: READ, REMEMBER AND FOLLOW THE CONTRACT LAW FINE PRINT. In that blog, we described a BC Court of Appeal decision to show how tricky both the sale and purchase of court appointed receiver real estate can be. For this Brandon’s Blog, I list certain purchaser terms normal in an arm’s length non-distress situation. I explain why they can’t always work when purchasing from a receiver.

Court appointed receiver real estate: 558 Dovercourt Road, Toronto

One of our current assignments is the sale of real property with a civic address of 558 Dovercourt Road, Toronto. This is a residential income property (with a commercial storage component). Given the potential for competing claims, the second mortgagee wanted to go the court appointed receiver route, rather than a traditional mortgagee power of sale. This is so the Court is available to sort out any issues of competing claims or other claims.

We have to date received two offers to purchase. Unfortunately, both offers weren’t acceptable. Our sign back of the first offer was not accepted by the potential purchaser. The second offer was not even worthy of a sign back.

It was not only an issue of price. The potential purchasers also included various terms that were unacceptable to any court appointed receiver. This is notwithstanding that they may be fine to a normal vendor.

Court appointed receiver real estate: Unacceptable terms

Below are some common terms that we see potential purchasers include in an offer. I give the reason(s) why a court appointed receiver cannot include them in an acceptable agreement of purchase and sale. Keep in mind that the court appointed receiver is not trying to be difficult or mean. Hopefully, these explanations will help.

The seller – The seller is not just the court appointed receiver’s company name. Rather, the vendor is court appointed receiver’s company name, solely in its capacity as court appointed receiver of [legal name of property owner]. It is only the official court appointed receiver capacity selling the real estate. The court appointed receiver’s power to offer the property for sale and enter into an agreement as seller comes from the court appointment order. The Court also supervises the administration and sale.

All equipment/appliances will be in good working order on closing – A court-appointed receiver cannot give such a warranty. A private receiver or a court-appointed receiver sells assets on an “as is where is” basis, with no warranties. It’s just the way it is.

The court appointed receiver will obtain court approval for the sale before the purchaser has waived all of the purchaser’s conditions – A court appointed receiver can’t and won’t go to Court to obtain approval to a transaction that may not even exist later on because the purchaser won’t waive one or more conditions and the deal goes dead. The court appointed receiver won’t incur the cost of preparing its motion and going to Court before knowing there is a firm deal. This obviously includes the payment of the deposit funds.

Seller will discharge work orders – A court appointed receiver will not do the repairs or upgrades to the property in order to discharge work orders. The court appointed receiver will, of course, give clear title to the property by discharging mortgages or liens. The Court approval Order, called a Vesting Order, does this. The purchaser has the time to have his/her/its lawyer inspect title. The deal ends if proper title can’t be given. If the purchaser does not want to inherit certain work orders, then that should be another condition.

Seller will provide the buyer with keys that work to every exterior and interior door lock – A court appointed receiver will not agree to this. The court appointed receiver will certainly provide any keys in its possession.

These are the most common buyer conditions that a court-appointed receiver real estate sale won’t be able to handle. In my next blog, I will look at common conditions a court appointed receiver seller uses.

Court appointed receiver real estate: Is your mortgagor in trouble?

Are you a mortgagee over a commercial real estate property where the mortgagor is in default? Are there reasons why you need to consider applying to Court for a court appointed receiver + real estate sale?

If yes, contact the Ira Smith Team. Our philosophy for every person and company is to develop an outcome where Starting Over, Starting Now happens, beginning the minute you come in the door. You’re just one call away from taking the essential action steps to get back to leading a healthy and balanced stress-free life.