Ohio Appellate Court Upholds Authority Of Receiver To Sell Property In Private Sale
Recently, some question has arisen under Ohio law regarding the authority of a receiver to sell property, thus avoiding a traditional foreclosure sale. While there is some authority for the position that a receiver may not sell property that is subject to a foreclosure proceeding, a growing number of courts have permitted a receiver to sell property at a private or public sale free and clear of all liens and encumbrances.
In Park National Bank v. Cattani, Inc.,1 the Twelfth District Court of Appeals joined this growing trend. In that case, the bank sought foreclosure of property consisting of a gas station, a convenience store, and a fast-food restaurant. During the course of the proceedings, at the request of the bank and a junior creditor, the trial court appointed a receiver to preserve and protect the property. Later in the proceedings, the bank sought authority for the receiver to sell the property to a prospective purchaser by private sale free and clear of all liens and encumbrances. Over the objection of the junior creditor, the trial court approved the bank’s request, authorizing the receiver to sell the property. The junior creditor appealed to the Twelfth District Court of Appeals.
On appeal, the Court of Appeals upheld the trial court’s decision, explaining that R.C. 2735.04 provides courts with broad authority to determine the powers of a receiver. Specifically, the court held that the trial court’s broad discretion in this area included the power to authorize a receiver to sell property in appropriate circumstances. The court further noted that a receivership sale may be particularly appropriate where the prompt sale of the property by the receiver will maintain the property’s value and assure the creditors the greatest return on their claims.
This decision reinforces the value of a receivership in appropriate cases. As courts continue to uphold and expand the authority of receivers to preserve, protect, and even sell property, it is likely that creditors will continue to view receiverships as a valuable tool in protecting their interests.
1 Case No. CA2009-09-128 (Mar. 29, 2010).
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William T. Repasky practices with the Litigation Department at Frost Brown Todd. He focuses on lending and commercial services; banking litigation and financial institutions.