Define: Mortgagees Power To Appoint A Receiver

A mortgagee’s power to appoint a receiver is a legal right that allows a lender (mortgagee) to appoint a third-party receiver to manage and potentially sell a property securing a mortgage loan if the borrower (mortgagor) defaults on the loan agreement. The receiver acts as a neutral party appointed by the court or as stipulated in the mortgage contract. The receiver’s duties typically include collecting rents, managing the property, and ensuring that the mortgagee’s interests are protected. This power provides the mortgagee with a means to protect its investment and recover outstanding debts in the event of default by the mortgagor.

A Mortgagee is entitled by s.101 of LPA1925 to appoint a receiver of any income generated by the mortgaged land. This power is most likely to be exercised over commercial, rather than domestic, property. The advantage for the mortgagee over taking possession of the mortgaged property is that it is the receiver who will be accountable to the Mortgagor for any inadequate management of the property, not the mortgagee. See Mortgagees power of sale, Powers of mortgagee.

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This glossary post was last updated: 29th March, 2024.