Receivers are appointed in Ireland without the involvement of a Court.
When somebody enters into a mortgage type agreement with a lender, and where the secured property is not a family home, the borrower gives the lender a right to appoint a receiver when the borrower has defaulted on the loan.
The bank will first call in the loan which involves making a demand for full payment within a period of time. Often this can be a very short period – in some cases even hours. If payment is not made within the time allowed the lender will appoint a receiver. The receiver can then take over the property, change the locks, and any tenant will then be required to make any rental payments to the receiver.
The receiver will be responsible for the property and the borrower is effectively shut out. In cases where the borrower resists or impedes the receiver an application will be made to the High Court for an order restraining such conduct and if the borrower does not comply he will find himself in contempt of court and facing severe penalty.
In most cases the receiver will sell the property at a time of his choosing. The proceeds of sale will be used to pay the receiver’s costs and any other charges on the property such as property taxes or management changes and the balance will be remitted to the bank. Receiver’s costs can be substantial and often receivers will fire sell, meaning that the borrower loses out. This is because any remaining debt after the sale has been complete and all the costs have been paid will be borne by the borrower.
Borrowers often bitterly complain abut the conduct of receivers and while their complaint carries much moral weight, the legal position is very much set against the borrower.
In some cases receivers have been discharged by the Court for procedural or other irregularities but this is very much the exception. The best advice for borrowers is to avoid the appointment of a receiver at all costs.
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