There’s an urban legend (or unconfirmed rumor) circulating in Maricopa County that appointed receivers may be selling commercial properties in the near future that they have been appointed to oversee. Receivers are officers of the court, and report to (via accountings) the judges supervising cases where title to the property is in contention (such as those where a mortgagee seeks foreclosure). But receivers conveying property? Hold the phone–and watch the ball, if you’re a prospective auction bidder or arm’s length buyer.

To begin with, there are only a few enumerated categories of persons, besides the record title owner, who can convey title. My mental checklist includes these “eligible persons”:

Personal Representatives of the estate of a decedent, conveying out of a probate proceeding;

Trustees conveying a deed out of a foreclosure sale, permitted under a recorded deed of trust and in compliance with Title 33 of the Arizona Revised Statutes;

Sheriffs under the authority of A.R.S. §33-455, conveying pursuant to a writ of execution; and

Judges via a judgment’s recordation, under the authority of A.R.S. §33-456, where the judgment (directing a conveyance of property) effectively “shall pass title to such property” without any action by the record title owner; this, I believe, arises more in connection with condemnation than any other circumstance.

In Norwest Bank Arizona v. Superior Court In and For County of Maricopa, 963 P.2d 319, 192 Ariz. 240 (1998), our Court of Appeals made these observations about the authority of a receiver:

“A.R.S. §33-702(B) authorizes enforcement of an assignment of rents through the appointment of a receiver, it does not purport to affect title. ‘In the case of a receivership on a mortgage foreclosure, the receivership adds nothing to the title or interest of the mortgagee.’ 65 Am. Jur. 2d Receivers §160 (1972). The United States Supreme Court in a railroad case long ago discussed the effect of a court-appointed receiver’s taking possession of a railroad: The possession taken by the receiver is only that of the court, whose officer he is, and adds nothing to the previously existing title of the mortgagees. He holds, pending the litigation, for the benefit of whomsoever in the end it shall be found to concern, and in the mean time the court proceeds to determine the rights of the parties upon the same principles it would if no change of possession had taken place. Fosdick v. Schall, 99 U.S. 235, 251 (1878). We reject the notion that the appointment of a receiver affected title . . . .”

The message above is a bit stiffly communicated, perhaps, but it seems to indicate that a Receiver in Arizona is a management-level employee of the court, without authority, in the absence of a signed judgment ordering the conveyance of the realty, to accomplish a sale. While it makes sense to “entertain offers,” and possibly even to enter into a letter of intent to sell a parcel subject to receivership, the idea of making a binding commitment to convey real property or executing and delivering a deed to a third party without a judgment ordering the sale to take place seems completely out of bounds, and subject to attack in a declaratory judgment action. There is a statute giving a receiver a limited power to sell land, found in Title 44 of the Arizona Revised Statutes:

44-1529. Powers of receiver

When a receiver is appointed by the court pursuant to this article, he shall have the power to sue for, collect, receive, or take into his possession all the goods, and chattels, rights and credits, monies and effects, lands and tenements, books, records, documents, papers, choses in action, bills, notes and property of every description, . . . and to sell, convey, and assign the same and hold and dispose of the proceeds thereof under the direction of the court.

This statute is from the section pertaining to businesses selling merchandise in such manner as to be guilty of consumer fraud, and occurs in connection with unwinding the “outlaw business.” Even here, the receiver has to act under the direction of a court. Folks who want to give receivers in commercial property takeovers the authority to sell had best review the statutes and the receivers had better review the orders issued by their appointing judges with great circumspection.

–MNW