Spring 2012 • Issue 43, page 16

Can a Broker Receiver Sell the Property in his or her Receivership Estate and Earn a Commission

By Davidson, Peter*

Q: I am a real estate broker and just secured my first receivership appointment. Instead of listing the property in receivership with another broker for sale, can I sell the property myself and get the commission?

A: Probably not. The compensation that is paid to a receiver is left to the court’s discretion. People v. Riverside University, 35 Cal.App. 3d 572 (1973). Compensation is usually measured by the reasonable value and necessity of the services rendered. In California, courts generally set an hourly rate for the receiver’s services or, in certain cases, a fixed percentage of the receiver’s receipts or disbursements. Some states have statutes that set statutory commissions. While there is no statutory prohibition in California on your listing and selling the property, you would not be entitled to a real estate commission unless the court authorized it in your order of appointment, by a subsequent order prior to your listing the property, or by stipulation of all parties to the action and the court’s approval of the stipulation. Receivers generally are not entitled to additional compensation for acts that are nothing more than performing the duties he or she was appointed to perform. That is not to say that in extraordinary cases additional compensation cannot be awarded by the court, but listing and selling property probably does not fall into that category. If you want to be paid real estate commissions, you should not expect to get them from acting as a receiver and you should stick to pursing your career as a broker. You should also be aware of California Rule of Court 3.1179 (b), which prohibits parties seeking a receiver’s appointment and receivers from entering into any contract or arrangement concerning how the receiver will administer the receivership, how much the receiver will charge, or the role of the receiver with respect to the property after a trustee’s sale or the termination of the receivership. In other words, you cannot make a deal with the plaintiff that you will be the broker to sell the property when the receivership ends.

*Peter A. Davidson is a Partner of Ervin Cohen & Jessup LLP a Beverly Hills Law Firm. His practice includes representing Receivers and acting as a Receiver in State and Federal Court.