Concordia Ventures, LLC, appeals a nonfinal order appointing a receiver in a mortgage foreclosure action. We reverse the order because the movant ARCPE 1, LLC, made no showing that the mortgaged property was at risk such that a receiver was necessary to preserve it.
Background
The property is a single-family home in Bradenton. In 2015, the mortgage holder filed a foreclosure complaint against the homeowners alleging that they defaulted on the mortgage. The complaint also named Concordia as a defendant, alleging that Concordia was now the owner of the property. Evidence of Concordias acquisition of the property is not in the record, but the parties arguments show that Concordia purchased it at a homeowners association (HOA) foreclosure sale after the HOA separately foreclosed on the homeowners for unpaid assessments. Concordia then answered the mortgage holders complaint in 2016 as the property owner. And in 2022, ARCPE moved to substitute in as the plaintiff in the proceedings, alleging that it acquired the note and mortgage through a series of transfers.
Before ARCPEs substitution, a predecessor plaintiff filed a motion to appoint a receiver alleging that Concordia was renting and generating income from the property. The motion asked the trial court to appoint a receiver to collect the rents pursuant to a provision in the mortgage that provided for such relief. After its substitution as plaintiff, ARCPE acknowledged that there was no such provision in the mortgage. But it argued that a receiver was still warranted because, in ARCPEs view, it was inequitable for Concordia—a commercial entity that acquired the property subject to a standard residential mortgage with no receivership or assignment of rents provision—to collect rents while the mortgage remained in default, and while Concordia allegedly was not paying the property taxes and HOA assessments. ARCPE argued that it was paying these expenses instead, but it presented no evidence to support its contention and Concordia disputed it. There also was no evidence or stipulation presented to the trial court showing whether Concordia was actually renting and generating income from the property.
The trial court granted ARCPEs motion nonetheless and it appointed a receiver to “provide [the court] the information that is missing.” The trial court specifically directed the receiver to determine: (1) whether “there is income being generated from this residential property thats currently going to Concordia;” and (2) “who has been paying the [HOA] assessments here, and who is and has been paying the taxes here.” Given the uncertainty on these issues, the trial court deferred ruling on ARCPEs request to have the receiver collect rents. Concordia challenges the receivers appointment
1
and seeks review under Florida Rule of Appellate Procedure 9.130(a)(3)(D). We review the order appointing the receiver for abuse of discretion. U.S. Bank Natl Assn v. Cramer, 113 So. 3d 1020, 1022 (Fla. 2d DCA 2013).
Discussion
The appointment of a receiver “is to a large extent within the sound judicial discretion of the [trial court],” but “there are certain well-established rules that should be observed in exercising such discretion.” Apalachicola N. R.R. Co. v. Sommers, 79 Fla. 816, 85 So. 361, 362 (1920). Pertinent here, courts must exercise their discretion “with great caution and circumspection,” and they “must be satisfied ․ that a receiver is necessary to preserve the property.” Id. Relatedly, “to be entitled to the appointment of a receiver, the movant must show ‘that [the] property is subject to a serious loss.’ ” Cramer, 113 So. 3d at 1023 (alteration in original) (quoting Plaza v. Plaza, 78 So. 3d 4, 6 (Fla. 3d DCA 2011); see also ANJ Future Invs., Inc. v. Alter, 756 So. 2d 153, 154 (Fla. 3d DCA 2000); Alafaya Square Assn v. Great W. Bank, 700 So. 2d 38, 40 (Fla. 5th DCA 1997).
Here, ARCPE made no such showing. It argued that Concordia was renting the property for profit while failing to pay the property taxes and HOA assessments with the collected rents. But ARCPE presented no evidence of this. It did not show that Concordia was collecting rental income, nor did it show that the taxes and assessments were unpaid or being paid by someone else. Indeed, the trial court appointed a receiver to determine these very issues. As weve recognized, however, “a trial court cannot appoint a receiver [prejudgment] without hearing some evidence, either in the form of testimony, affidavits, or some other sworn pleading.” Zahav Refi LLC v. White Hawk Asset Mgmt., Inc., 378 So. 3d 1192, 1196 (Fla. 2d DCA 2023). It was therefore ARCPEs burden—and not the receivers—to gather and present some evidence to the trial court showing that the property was at risk. Because ARCPE did not meet its burden, the trial court abused its discretion in appointing a receiver.
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See Plaza, 78 So. 3d at 6; Atco Constr. & Dev. Corp. v. Beneficial Sav. Bank, F.S.B., 523 So. 2d 747, 750 (Fla. 5th DCA 1988); Boyd v. Banc One Mortg. Corp., 509 So. 2d 966, 967 (Fla. 3d DCA 1987); Colley v. First Fed. Sav. & Loan Assn of Panama City, 516 So. 2d 344, 346 (Fla. 1st DCA 1987).
We acknowledge the trial courts concern with the “innovative procedure” some limited liability companies use to profit from residential properties acquired at HOA foreclosure sales. See Bonafide Props. v. Wells Fargo Bank, N.A., 198 So. 3d 694, 696–97 (Fla. 2d DCA 2016) (Altenbernd, J., concurring). We cannot say on this record whether Concordia is one such entity, nor do we suggest that it is or that there is anything untoward about this procedure. But even so, the appointment of a receiver “is an extraordinary remedy which must be exercised with caution as it is in derogation of the legal owners fundamental right to possession of [the] property.” Alafaya Square Assn, 700 So. 2d at 40. And for this reason, “ ‘there must still be some need to protect the property’ before the court can appoint a receiver in equity.” See Storey Mountain, LLC v. Freestone Enter., LLC, 368 So. 3d 473, 474 (Fla. 1st DCA 2023) (quoting Cramer, 113 So. 3d at 1023–24). The trial court here appointed a receiver to determine if such a need exists—rather than after such a need was shown—so the appointment of a receiver was in error.
Reversed and remanded.
FOOTNOTES
1
. ARCPE argues, as it did below, that Concordia no longer owns the property so it lacks standing to challenge the appointment of a receiver. The trial court did not decide the issue of Concordias standing, finding it was not “necessary to resolve” in order to grant ARCPEs request for a receiver. Without a ruling from the trial court on the issue of Concordias standing, we cannot address it on appeal. See Maynard v. Fla. Bd. of Educ., 998 So. 2d 1201, 1207 (Fla. 2d DCA 2009).
2
. Concordia argues—and we agree—that ARCPE also had to show that it had a clear legal right to the property for it to be entitled to the appointment of a receiver. See Cramer, 113 So. 3d at 1023; see also Apalachicola N. R.R. Co., 85 So. at 362. It is unclear whether the trial court decided this issue in granting ARCPEs motion, but we reiterate this requirement as stated in Cramer.
LABRIT, Judge.
KELLY and LaROSE, JJ., Concur.