Florida Adopts UCRERA; Big Win for Commercial Lenders
In July, Florida adopted the Uniform Commercial Real Estate Receivership Act (UCRERA), creating Chapter 714 of the Florida Statutes, and providing Florida courts with a standard set of rules to follow in commercial real estate defaults and foreclosures. Prior to the adoption of UCRERA, Florida courts relied on a hodgepodge of past trial and appellate court decisions to guide them through the foreclosure process. As the real estate industry continues to reel from the effects of the COVID-19 pandemic, a new wave of commercial real estate foreclosures could be forthcoming, making UCRERA’s recent enactment a big win for commercial lenders.
A critical step in the foreclosure process is the appointment of a court-appointed, independent third party known as a receiver. Receivership is intended to be an equitable remedy to allow the court to oversee the orderly management and disposition of a property that is subject to a lawsuit. The presence of a receiver often protects the lender from the risk of borrower mismanagement or misappropriation during the legal process.
There are six facts and circumstances outlined in Section 6 of Chapter 714 of the Florida Statutes that the court will consider in the appointment of a receiver. According to Bloomberg Tax, 2(b) and (c) of Section 6 represent a “significant modification [from] the previous standard.”
- 2(b): The mortgagor agreed in a signed record to the appointment of a receiver on default
- 2(c): The owner agreed, after default and in a signed record, to appointment of a receiver
Florida is now the ninth state to adopt UCRERA. The others were North Carolina (2020), Arizona (2019), Maryland (2019), Michigan (2018), Tennessee (2018), Nevada (2017), Oregon (2017) and Utah (2017). Connecticut introduced legislation in 2020, but is yet to adopt UCRERA.
Sources: Uniform Law Commission, The Florida Bar, Bloomberg Tax, JD Supra, LLC
Additional Byline: Jenny Oh, JD, CPA
- Carey M. Heyman, CPA
- Managing Principal of Industry - Real Estate
- CliftonLarsonAllen LLP
- Century City (Los Angeles)
Carey is the Managing Principal of the Real Estate Industry at CLA. He is a trusted advisor with close to 20 years of experience providing accounting, assurance, tax, and consulting services to real estate industry owners, operators, family offices, developers and syndicators. Carey has a strong track record of helping clients build and retain capital by leveraging tax- and cost-saving strategies and employing tax credits and incentives. He also consults with high net worth individuals, large family groups, and owners of closely-held businesses on all aspects of tax planning, estate planning, and retirement planning.
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