The Receivers Oath of Neutrality: What It Means, Why It Matters, and What Happens When It Is Broken

Receivership News
By Richard P. Ormond

“A receiver is not a client’s agent. Not the bank’s agent. Not the broker’s partner, the servicer’s cost-saving tool, nor the borrower’s adversary. The receiver answer’s to the court, and to the court alone. That is not a technicality. It is the underlying premise of the receivership remedy.

California law says so directly, dating back to early common law. Yet, across virtually every receivership proceeding – whether real estate, business, commercial, or agricultural – practitioners often mistakenly consider the neutrality requirement as an informality, to be acknowledged and then set aside when it becomes inconvenient. But, departures from neutrality have serious consequences for the receiver, for the parties that sought or facilitated the appointment, and for the integrity of the receivership proceeding itself.

This article is a reminder of what the law requires, what the court says, and what is at stake when the obligation of neutrality is ignored.”