Colorado § 38-38-601 - Receiver appointed upon application.

§ 38-38-601. Receiver appointed upon application.

(1) When an action or proceeding has been commenced to foreclose a mortgage, trust deed, or other instrument securing an indebtedness, a receiver of the property affected shall be appointed upon application at any time prior to the sale, if it appears that the security is clearly inadequate or that the premises are in danger of being materially injured or reduced in value as security by removal, destruction, deterioration, accumulation of prior liens, or otherwise so as to render the security inadequate.

(2) If the facts would justify the appointment of a receiver under this section but one is not applied for and if the premises are abandoned by the owner thereof, the holder of the lien may take possession until the sale and shall be subject to the same duties and liabilities for the care of the premises and for the application of the rents and profits as would a receiver.

Source: L. 90: Entire article R&RE, p. 1673, § 2, effective October 1.

Editor's note: This section is similar to former § 38-39-112, as it existed prior to 1990.

ANNOTATION

Law reviews. For article, "Foreclosure by Sale by Public Trustee of Deeds of Trust in Colorado", see 14 Dicta 5 (1936). For article, "Foreclosure by Sale by Public Trustee of Deeds of Trust in Colorado", see 28 Dicta 437 (1951). For article, "A Decade of Colorado Law: Conflict of Laws, Security, Contracts and Equity", see 23 Rocky Mt. L. Rev. 247 (1951). For article, "Deeds in Lieu of Foreclosure", see 15 Colo. Law. 394 (1986). For article, "Limitation of Bank's Liabilities in Letters of Credit Agreements", see 15 Colo. Law. 1019 (1986). For article, "Use of Receivers in Real Estate Foreclosures", see 16 Colo. Law. 988 (1987).

Annotator's note. Since § 38-38-601 is similar to § 38-39-112 as it existed prior to the 1990 repeal and reenactment of this article and article 39, relevant cases construing that provision have been included in the annotations to this section.

Ex parte appointments. While the ex parte appointment of a receiver may be permissible under emergency circumstances or where notice is impractical, a case must be pending at the time of the appointment. Johnson v. McCaughan, Carter & Scharrer, 672 P.2d 221 (Colo. App. 1983).

Common law governs claims against receivers appointed pursuant to this section. Four Strong Winds, Inc. v. Lyngholm, 826 P.2d 414 (Colo. App. 1992) (decided under former § 38-39-112).

Claim based upon receiver's alleged breach of fiduciary obligation may be asserted in the receivership proceedings and supervising court retains jurisdiction until receiver is discharged. Four Strong Winds, Inc. v. Lyngholm, 826 P.2d 414 (Colo. App. 1992) (decided under former § 38-39-112).

Court's order discharging receiver is a final judgment subject to appellate review, and any claim based on misfeasance or malfeasance of the receiver must be presented prior to discharge, if at all, unless grounds exist for relief from judgment under C.R.C.P. Rule 60. Four Strong Winds, Inc. v. Lyngholm, 826 P.2d 414 (Colo. App. 1992) (decided under former § 38-39-112).

Court did not abuse its discretion by appointing a receiver pursuant to a written agreement between the parties permitting such appointment in the event of default without regard to the adequacy or value of the property or the solvency of any party bound for its payment. Bank of Am. v. Denver Hotel Ass'n, 830 P.2d 1138 (Colo. App. 1992).

However, where a deed of trust permits the appointment of a receiver but does not expressly allow the appointment of a receiver without notice, the trial court abused its discretion when it appointed a receiver on an ex parte motion. GE Life & Annuity Assur. Co. v. Ft. Collins Assemblage, Ltd., 53 P.3d 703 (Colo. App. 2001).

Holder's possession permitted without applying for appointment of receiver. This section and § 38-39-113, permit the holder of a certificate of purchase to take possession of the property sold without applying for the appointment of a receiver by the court where the property has been abandoned by the owner. Graham v. Alcoves, Inc., 148 Colo. 379, 366 P.2d 375 (1961).

Mortgagee may take possession of mortgaged property only after a foreclosure proceeding has been commenced. Martinez v. Cont'l Enters., 730 P.2d 308 (Colo. 1986).

Mortgagees entitled to appointment of receiver. Where the owner not only defaulted in an installment payment but also in the performance of many of the obligations assumed by her in the deed of trust, the mortgagees were clearly entitled to the appointment of a receiver under the terms of the instrument. Phillips v. Webster, 162 Colo. 315, 426 P.2d 774 (1967).

Mortgagee not entitled to rents from the mortgaged property during period of possession because inchoate right granted by deed of trust to collect rents incident to rightful possession of property never became a vested right because mortgagee did not initiate a foreclosure action prior to taking possession of the mortgaged property. Martinez v. Cont'l Enters., 730 P.2d 308 (Colo. 1986).

Court may appoint a receiver in the event of default without regard to the adequacy or value of collateral property or the solvency of any party liable on the debt where the parties have agreed by contract for such appointment. Bank of Am. Nat'l Trust & Sav. Ass'n v. Denver Hotel Ass'n Ltd. P'ship, 830 P.2d 1138 (Colo. App. 1992).