The Arizone Banker - Issue 2 2019

20 www.azbankers.org Arizona Adopts the Uniform Commercial Real Estate Receivership Act By Benjamin Reeves 1 O N JUNE 6, 2019, GOVERNOR DUCEY SIGNED THE UNIFORM COMMERCIAL REAL ESTATE RECEIVERSHIP ACT (THE “ACT”) INTO LAW. THE ACT IS DESIGNED TO ADDRESS COMMON ISSUES THAT ARISE IN RECEIVERSHIP CASES WITH THE AIM OF MAKING THE APPOINTMENT OF A RECEIVER OVER COMMERCIAL REAL ESTATE A MORE EFFICIENT AND PREDICTABLE REMEDY FOR SECURED CREDITORS. Prior to the Act becoming law, Arizona’s statutes provided very lit- tle guidance on the rights, powers, and duties of receivers. 2 Accord- ingly, creditors relied primarily on the common law and the courts’ equitable jurisdiction to determine what a receiver could or could not do. With the passing of the Act, however, the legislature has codified a significant portion of this receivership jurisprudence. The Act is based on draft legislation initially prepared by the Uniform Law Commission (the “ULC”). 3 The ULC spent years de- veloping the Act, because it observed not only a dearth of statutory authority governing receiverships, but also the development of case law that hindered the effectiveness of real estate receiverships. 4 The ULC believed that states would benefit from legislation that clearly set out what a receiver can do, and make the appointment of a re- ceiver a more certain remedy for secured creditors. Six other states – including neighboring Utah and Nevada – have already adopted the Act. The Act, codified at A.R.S. § 33-2601 et seq., applies only to receiv- erships involving commercial real property, 5 and it does not displace existing Arizona law governing the appointment of a receiver. 6 Rather, it merely supplements current law. Generally speaking, the Act codifies a number of receivership concepts that developed over time in the common law. For example, the Act builds in the concepts of the receivership litigation stay and quasi-judicial immunity for a receiver. 7 Arizona courts have applied these same concepts to receivership cases before the Act. 8 Accord- ingly, it is unlikely that the Act will significantly change how real

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