In the vast majority of real estate transactions, the buyer of the property finances their purchase by taking out a loan and using the real estate as collateral. If that buyer defaults on their loan, the lender will take possession of the real estate. However, lenders—especially if it’s a traditional bank—are not in the business of managing, leasing, and selling the property, so they need help. And that’s where a real estate receiver comes in.
While it’s true that the exact role and responsibilities of Chicago real estate receivers may vary, they’re generally brought in to manage a property that has been foreclosed on. But to make sure you completely understand what a Chicago real estate receiver is, we’ll review all their roles and responsibilities.
Taking Over the Property
A real estate receiver takes control of a property from the borrower who has been foreclosed on. It’s important for the receiver to act quickly to mitigate the chances that the borrower does any damage to the property since the receiver has a responsibility to both the borrower and the lender to maintain as much of the property’s value as possible.
By maintaining the value of the property by protecting it from damage, making repairs, and collecting rent, a Chicago real estate receiver makes sure that, when it’s time to sell the property, the property sells for the highest possible price. Selling for a high price is important because the lender wants to recoup as much of their loss as possible. It’s also important for the borrower because the more the lender can recoup through the sale of the property, the less liability the borrower will have.
Acting as a Fiduciary
Chicago real estate receivers have a fiduciary duty to both the lender and the borrower. What that means is the real estate receiver must act in the best interest of both parties and not act in their own interest. This fiduciary duty is enforced by law so that people who need receivers don’t get taken advantage of.
Example of a Chicago Real Estate Receiver
At Frontline Real Estate, we bring a unique and varied set of competitive advantages to our role as Receiver for our clients. As should be the goal of every receiver, we’re committed to preserving the value of your asset by maximizing cash flow, ensuring the asset is well-maintained and secure. Give us a call at (847)780-8065 to learn more.
