Guest post by Nick J. Oliveri, Summer Law Clerk
In late June, Governor DeSantis approved Florida’s version of the Uniform Commercial Real Estate Receivership Act (“UCRERA”) and the Act became effective July 1, 2020. This law begins its life in a time of great uncertainty for the Florida business community as the Sunshine State’s recently-relaxed business restrictions underwent a near full reversal as COVID-19 cases spiked around the state. This retightening of COVID-19 business restrictions and the uncertainty associated with it will likely mean Florida businesses may continue to struggle. This is where UCRERA comes in.
UCRERA codifies Florida common law around receivership and even expanded it in some cases. Those involved in Florida’s commercial real estate industry, whether on the lending or the borrowing side, would do well to take note of these changes as an increase in foreclosures is predicted as a result of COVID-19’s negative impact on Florida’s businesses.
What do Florida lenders need to look out for?
If you are a commercial lender, this law is definitely in your favor due to the expansive powers it gives receivers to help pay back the commercial lenders who appoint them. Lenders should focus on three things:
- the mandatory receivership duties under UCRERA;
- what actions receivers are allowed to do “in the ordinary course of business” and outside of it; and,
- what actions they need court approval for.
The latter two things often go hand in hand as you will see below.
Impact on Borrowers
Although this sounds bad for borrowers, borrowers should be on the lookout for language like “with court approval” because that means a borrower will likely have the chance to contest whatever the receiver is trying to do.