California State Court Receivers’ Oath & Disclosure Requirements
In California, pursuant to CCP Section 567(a), a receiver is required to file an oath with the appointing court “before entering upon the duties of a receiver”. This means that a receiver may not perform any duties as receiver prior filing of the oath. There have been many instances where inexperienced receivers have not complied with this requirement; courts have ruled that all of their acts were prohibited. This gives defendants in cases ample ammunition to try and defeat the receivership and all acts of the receiver. The receiver may find that he/she may have personal liability in this instance.
CCP Section 566 mandates that a receiver may not be a party, attorney or a party or person interested in action or related to any judge of the court by consanguinity or affinity within the third degree, unless consent is obtained by the parties. CRC Rule 3.1179 prohibits contracts, agreements, arrangements, and understandings by and between the receiver and the parties. A receiver is a neutral and he/she may not be seen as being an advocate for a party. The facts of the case may result in benefits being conferred upon one party over another based on the work of the receiver, but such result must not be by design from the inception of the case. In addition, some courts require receivers to disclose whether he/she has any financial relationship with any management companies that will be retained in the case.
All experienced receivers must remain mindful of the steps needed to qualify to act as receiver including the filing of a receiver’s oath (and bond if required) as well as ensuring that prohibited agreements are not in existence prior to or during the period of time when the receivership estate is active.