Receivership in Commercial Foreclosure in Illinois
Illinois Appellate Courts, in a recent line of cases, have addressed the issue of what constitutes "good cause" albeit by rejected arguments demonstrating "good cause." Among the rejected arguments was that Plaintiff failed to allege fraud, waste, mismanagement or other dissipation of the mortgaged real estate. Another failed argument included the demonstration of "good cause" as the harm that would be incurred by the mortgagor if a receiver was appointed outweighed the harm incurred by the mortgagee if the mortgagor remained in possession of the property. Finally the Court rejected the argument that the current management of the real estate property is more qualified than the receiver.
Nevertheless, in Centerpoint Properties Trust v. Old Prairie Block Owner LLC. 398 Ill.App.3d 388, 923 N.E.2d 878 (1st Dist, 2010) the Court discussed circumstances that may constitute "good cause." The Court stated that evidence of an "imminent" funding for the development of the property or an "imminent" loan to refinance may persuade the Court to find "good cause" to permit the mortgagor to retain possession of the subject property in the interim. The Court stressed that the transaction would have to be "imminent" and not merely a possibility at some unknown future date.
In sum, there is a strong presumption in favor of the mortgagee seeking to appoint a receiver in commercial foreclosure cases. The mortgagor's burden of demonstrating "good cause" as to why a receiver should not be appointed is rather difficult to overcome.
Legal Articles Additional Disclaimer