Written by attorneys · grounded in primary & secondary sources — see below
A mortgagee holding a lien with priority over other liens on the same real property. Priority ordinarily follows the order of recording. The senior mortgagee may assert superior rights to rents and receivership when multiple mortgagees seek appointment of a receiver.
Sources & Authorities
How it applies
Common Examples
5
Senior Mortgagee Seeks Receiver After Junior Appointment
Summit Bank holds the first-recorded mortgage on an office building owned by Apex Industrial Park. Meridian Capital Fund later records a junior mortgage that assigns rents and authorizes a receiver. After default, Meridian obtains a receiver. Summit Bank then petitions the court for its own receiver. The court grants Summit Bank's petition because its senior status controls the receivership even though a junior receiver is already in place.
Mortgagees Agree on Single Receivership
Sterling Manufacturing holds the senior mortgage on a factory and Sapphire Holdings holds the junior mortgage. Both mortgages contain rent assignments. After default the two mortgagees jointly petition for one receiver and agree on how rents will be applied. The court appoints the receiver according to their agreement because the parties reached consensus on the receivership terms.
Put it into practice
Test Yourself
10
Practice Questions5
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Select any source to read its text and confirm it supports the definition.
Restatements
Course Outlines
Junior Receiver Keeps Interim Rents
Synergy Systems holds the junior mortgage on a shopping center and obtains a receiver after default. The receiver collects fifty thousand dollars in net rents after paying taxes and maintenance. Summit Bank, the senior mortgagee, then obtains its own receiver. The junior receiver retains the collected rents for the benefit of Synergy Systems because the senior receiver was appointed later.
Senior Mortgage Lacks Rents Clause
Harbor Bank holds the senior mortgage on a resort hotel but its documents contain neither a rent assignment nor a receivership clause. Summit Capital records a junior mortgage that expressly assigns rents and authorizes a receiver. After default both parties petition for a receiver. The court grants Summit Capital's request because the senior mortgage lacks the required provisions while the junior mortgage contains them.
Junior Receiver Must Account for Prepayments
National Oil holds the junior mortgage on a wind-farm operations center and obtains a receiver. The receiver collects fifty thousand dollars in net rents and also receives an unauthorized prepayment of twenty-five thousand dollars covering future periods. Creek Power, the senior mortgagee, later obtains its own receiver. The junior receiver must turn over the unauthorized prepayment to the senior receiver because it covers periods after the senior appointment.
Common questions
Frequently Asked
4
When does a senior mortgagee's receivership request take priority over a junior mortgagee's request?+
A senior mortgagee's request takes priority unless the senior mortgage contains neither a rent assignment nor a receivership authorization and the junior mortgage contains at least one of those provisions. The priority rule applies even if a junior receiver has already been appointed.
Supporting sources
What rights does a junior receiver have to rents collected before a senior receiver is appointed?+
The junior receiver may retain net rents collected before the senior receiver takes over after first paying taxes and reasonable maintenance expenses. The junior receiver must account to the senior receiver for uncollected accrued rents and unauthorized prepayments covering future periods.
Supporting sources
Does a senior mortgagee's broad collateral description reach rents when the document is silent on rents?+
A general description of real property and improvements does not automatically constitute a mortgage on rents for purposes of the receivership priority rule. The senior mortgage must contain an express rent assignment or receivership authorization to avoid the exception that favors a junior mortgage containing those provisions.
Supporting sources
Can mortgagees agree to share a single receiver instead of competing for appointment?+
When multiple mortgagees jointly seek one receiver and agree on the disposition of rents and the receiver's duties, their agreement controls the receivership. Absent such consensus the statutory priority rules determine which mortgagee obtains the receiver.
Supporting sources
Real PropertyRights in real property · FixturesUBEIntermediate