Frequently Asked Questions

What is receivership?
A number of situations can lead to a receivership. It is very common for a company’s creditors to request the appointment of a receiver with the goal of preserving as much of the assets as possible so that they will be repaid.

Receivership is covered in section 2735 of the Ohio Revised Code.
A receiver may be appointed by a supreme court judge, a court of appeals judge, or a common pleas judge, depending on the type of case. Once a receiver has been appointed by a judge, he must be sworn in, taking an oath to perform his duties faithfully.

Under the control of the court which appointed him, a receiver may bring and defend actions in his own name as receiver, take and keep possession of property, receive rents, collect, compound for, and compromise demands, make transfers, and generally do such acts respecting the property as the court authorizes.


Can you sell a property that is in receivership?
Yes! In Huntington Natl. Bank v. Motel 4 BAPS, Inc., 2010-Ohio-5792, the Eighth Appellate District Court of Appeals of Ohio affirmed that a sale or auction could take place provided all the parties are given due process. The following is from paragraph 18 of the decision:

“Due process requires that persons whose property interests are jeopardized by the filing of legal proceedings be given notice reasonably calculated, under all the circumstances, to apprise those persons of the pendency of the action and afford them an opportunity to present their objections.” Galt Alloys, Inc. v. KeyBank Natl. Assoc. (1999), 85 Ohio St.3d 353, 708 N.E.2d 701, paragraph one of the syllabus.

In determining whether notice was reasonably calculated to reach an interested party, a court must examine each case upon its particular facts. Akron-Canton Regional Airport Auth. v. Swinehart (1980), 62 Ohio St.2d 403, 406-407, 16 O.O.3d 436, 406 N.E.2d 811. Further, the Ohio Supreme Court has held that “a constitutional challenge to the notice provisions of a state statute cannot be sustained where the party claiming a denial of procedural due process possessed actual knowledge of the facts which form the basis of the notice.” Palazzi v. Estate of Gardner (1987), 32 Ohio St.3d 169, 174, 512 N.E.2d 971.


Do you need a court hearing to get a receiver appointed?
Not necessarily. It’s possible that the terms of a mortgage give the mortgage holder the right to petition a court to appoint a receiver. In the case of US Bank v. Manillo, it was determined that under certain circumstances, a receiver may be appointed without a hearing.

Do receiverships have to run on for several years?
No, not at all. In fact, our policy is to bring about a favorable resolution to the problem as quickly as possible. We have completed some assignments in just a few months, where others might take years. In addition, the creditor may ask for a termination of the receivership.

Does a receiver have the ability to nullify contracts?
Yes, in a properly crafted court order. Remember, a receiver’s job is to protect the assets under his control. Some rental contracts, for example, may have been improperly drawn up in order to protect the interest of a landlord or tenant. The receiver has the right to nullify such a contract.

Why should I hire a company to manage my properties? Why not hire a rent collector as an independent contractor and give him a 1099 at the end of the year?
This is a huge mistake for a lot of reasons, not the least of which is that the IRS will be all over you. Once you start directing the work of a collector, that person becomes an employee, and you have a responsibility to pay social security, medicare, withholding taxes, etc. Failure to make these federal tax deposits brings the wrath of the IRS down on you, complete with fines, penalties, audits and more headaches than you can imagine.

Absolutely everyone who works at Rent Due is an employee who works under our supervision. This takes a huge liability off your hands, which allows you to concentrate on those parts of the business that most need your personal efforts. For additional information, refer to this 20-factor Test for Independent Contractors.