Receivership

Understand receivership in Canadian real estate: when it’s used, how it works, and what it means for borrowers, lenders, and distressed assets.

Receivership



What is Receivership?

Receivership is a legal process where a court or secured creditor appoints a receiver to take control of a borrower’s assets, such as property or businesses, when the borrower defaults on their obligations.

Why Receivership Matters in Real Estate

In Canadian real estate and finance, receivership is commonly used when lenders seek to recover debt by managing or selling assets, especially during insolvency or foreclosure scenarios.



A receiver may:
  • Operate, lease, or sell the property
  • Collect rental income and pay operating expenses
  • Protect asset value while enforcing creditor rights
  • Report to the court or creditor on asset disposition



Receivers are usually court-appointed professionals (often accountants or legal trustees).



Understanding receivership helps investors and creditors navigate distressed property scenarios and asset recovery.

Example of Receivership in Action

After the borrower defaulted on their commercial mortgage, the lender obtained a court order to place the property into receivership for sale.

Key Takeaways

  • Occurs when an asset is controlled by a receiver
  • Used to recover debt during default or insolvency
  • May involve court oversight
  • Receiver manages or sells the property
  • Protects lender interests and asset value

Related Terms

Additional Terms

Recourse Loan

A recourse loan is a type of loan where the lender can pursue the borrower’s personal assets, beyond the collateral, in the event of default.. more

Pari Passu

A pari passu clause is a contractual provision ensuring that multiple creditors share equally in repayment priority from the borrower’s assets.. more

Non-Recourse Loan

A non-recourse loan is a type of loan where the lender’s only remedy in case of default is to seize the collateral property; the borrower is not. more

Net Operating Income

Net operating income (NOI) is the total income generated by a property after operating expenses are deducted but before taxes and financing costs.. more

Mechanic's Lien

A mechanic’s lien is a legal claim by a contractor, subcontractor, or supplier for unpaid work or materials provided for a property.. more

Lis Pendens

Lis pendens is a legal notice filed in the land registry indicating that a property is subject to ongoing litigation that may affect its title.. more

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