A receivership allows an association to intercept a tenant’s rent payments.  The rent payments are applied to the delinquent homeowner’s balance until paid in full.  The process of the receivership is handled by the receiver, an independent third party appointed by the court.  If you are interested in a receivership to collect against a particular delinquent homeowner, you should consider the following factors:

  1. Does the homeowner live at the unit?  We cannot proceed with a receivership if the homeowner resides at the unit.  However, a receivership is an available collections option if the unit is vacant or if there is currently a tenant living at the unit.  If the unit is vacant, the receiver can market the unit for rent and collect the rent payments from the tenant on behalf of the association.  If the unit is already rented to a tenant, even better!  The receiver can contact the tenant and begin collecting rent right away.
  2. How is the rental market in your community?  If the unit is vacant, the receiver will need to locate a tenant for the unit.  In the current economy finding tenants for a property is relatively easy, but each community is different.  If there are many vacant rental units in your community, it may be more challenging for the receiver to locate a tenant for the unit, which would increase the cost of the receivership and delay the receipt of any rental income.
  3. What is the condition of the property?  The unit must be in rentable condition before a tenant can be placed in a property.  The receiver does have the authority to make a unit rentable, but the costs of doing so will be passed on to the association.  If the property is successfully rented, the association will then be reimbursed through the rent payments.  Costs to make a property rentable can be relatively simple and inexpensive like having the property professionally cleaned.  However, the property may need more substantial changes in order to be rented.  For instance, if all the kitchen appliances were removed by the homeowner before abandoning the property, the receiver would need to replace them before renting to a tenant.  Some changes can be very costly and may make a receivership a less viable option.  Try to obtain as much information as you can about condition of the unit before proceeding with a receivership.
  4.  How much money does the homeowner owe the association?  What is the average rent for similar properties in the community?  Rental price will impact how quickly the association will be paid.  For example, if a homeowner owes the association $4,500.00 (plus the costs of the receivership) and rental prices in the community average $1,000.00 per month, a receivership may be a good option.  The receiver should be able to recover the balance due to the association within approximately six months, including the costs of the receivership.  However, if a homeowner owes the association $20,000.00 and the rental prices in the community average $1,000.00 per month, a receivership may not be the best collection option, as it would likely take years to collect the full balance due.  In that case, it may be better to proceed with a more aggressive collection option, such as a foreclosure.


In the right circumstances, a receivership can be a very effective tool for an association to collect against a delinquent homeowner.  If you have additional questions, or think you may be interested in pursuing a receivership in your community, please contact one of our collections attorneys at 303.432.9999 for additional information.

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