Managing a receivership requires rigour and method. Its effectiveness depends on clear procedures and diligent administration. These practical aspects determine the real protection of the assets concerned.
Setting up the escrow
Acceptance of the assignment
Receivership is not compulsory. The appointed third party may refuse it.
In the case of conventional receivership, acceptance is presumed. The parties choose the custodian together and define its mission.
In the case of a court-appointed receiver, the person appointed may decline the appointment. Certain professionals cannot refuse without a legitimate reason:
- Bailiffs
- Notaries
- Auctioneers
These officers of the court may invoke:
- A family link with a party
- Friendships or business relationships
- Shared interests with a protagonist
Some professionals frequently refuse escrow assignments:
- Judicial administrators
- Creditors' representatives
- Liquidators
Their involvement in debt collection creates a potential conflict of interest (Com. 13 March 1973).
Lawyers may decline these assignments because of their status. Experts also avoid acting as trustees or agents for the parties.
Replacing receivers
The replacement follows the same procedure as the initial appointment. It takes place in the event of:
- Death of the receiver
- Prolonged unavailability
- Resignation
- Justified request from the parties
- Embezzlement or misappropriation
Release of the sequestered goods
The holder must hand over the property to the receiver. In the event of resistance, the court-appointed receiver has the right to take enforcement action. The judge may:
- Order a penalty payment against the holder
- Ordering the eviction of occupants of a building
The receiver takes precautions when taking possession:
- Drawing up an inventory of fixtures
- Detailed inventory of assets
- Sealing if necessary
For such things, the contract transfers ownership to the receiver. This is the case for the Caisse des dépôts et consignations and the CARPA funds receiving lawyers' deposits (Civ. 1re, 30 September 2015).
Organisation and day-to-day operations
Duty of care
Custody is the receiver's primary obligation. He must keep the property intact until the dispute has been resolved.
Funds and securities are deposited with the Caisse des dépôts et consignations or a bank.
The free receiver follows the rules of the deposit contract (Article 1958 of the Civil Code). Since the law of 4 August 2014, he must provide "reasonable care" and no longer that of a "good father of the family".
Paid receivers have stricter obligations (article 1928 of the Civil Code). He must prove that he is not at fault. This obligation of means comes close to an obligation of result.
Case law has confirmed this heightened responsibility for the care of a filly (Civ. 1re, 10 January 1990).
Management and administrative powers
The mission defines the scope of the receiver's powers. In the case of real estate, it often includes:
- Rent collection
- Payment of charges
- Voting at co-ownership meetings
- Carrying out maintenance repairs
In an emergency, the receiver must request an extension of his mission. This precaution prevents him from being accused of damaging the property.
Jurisprudence assesses liability "to the extent dictated by the nature of the property and the scope of its mission" (Civ. 1re, 21 February 1995).
Keeping the receiver's accounts
If the assignment includes management and administration, the receiver must keep rigorous accounts. This document will serve as the basis for the final rendering of accounts.
The accounts department takes stock:
- Revenue received
- Expenditure
- Investments made
- Expenses paid
- Recorded depreciation
This transparency protects the receiver and the parties to the dispute.
Remuneration and expenses of the receiver
Methods of determination
Remuneration depends on the nature of the receivership:
- Conventional receivership is free by default (article 1957 of the Civil Code)
- Judicial receivers are generally remunerated
The court order or the contract is fixed:
- The amount of the fee
- Calculation method (flat rate or percentage)
- Payment deadlines
- Authorised provisions
Tax and collection
The receiver may apply for a tax on his costs in order to obtain a writ of execution (Civ. 1re, 9 February 1988).
This procedure follows the rules applicable to court officers (articles 704 et seq. of the Code of Civil Procedure).
There are a number of guarantees for recovery:
- Right of retention on sequestrated property (article 1948 of the Civil Code)
- Preferential right to legal costs (article 2101-1° of the Civil Code)
- Movable lien for conservation costs (article 2102-3° of the French Civil Code)
Associated privileges
The privilege of legal costs applies to work necessary for the conservation of a building (Civ. 15 February 1938).
This lien takes precedence even over mortgage claims. It ensures that the receiver receives priority payment when the funds are distributed.
The right of retention is an effective guarantee. It allows the receiver to retain the property until his fees and expenses have been paid in full.
Managing a receivership requires expertise and method. Its success depends on the technical aspects of setting it up and administering it. Our team of lawyers will help you to organise your receivership operations rigorously so as to safeguard your rights.
Sources
- Civil Code, articles 1928, 1948, 1957, 1958
- Code of Civil Procedure, articles 704 et seq.
- Civil Code, articles 2101-1° and 2102-3° (liens)
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