Simon PLC Attorneys & Counselors – March 2026 Memorandum
Contractual Receivership Clauses Do Not Override Judicial Discretion
Troy, MI — On January 9, 2026, the Hon. Curt A. Benson of the Kent County Circuit Court issued an opinion and order granting Independent Bank’s request for the appointment of a Receiver over the controversial Adelaide Pointe properties project in Muskegon. The decision is extremely significant in the State of Michigan because lenders who think that their loan documents provide for the appointment of a Receiver upon a default, could be denied this remedy by the Courts.
In October 2025, Judge Benson denied Independent Bank’s request for no-hearing “emergency” Receiver over the $28 million Adelaide Pointe project, ruling that contractual, pre-default, “as a matter of right” receivership clauses do not override judicial discretion. The Court acknowledged that the loan documents unambiguously authorized the lender to seek a Receiver upon default, and that no traditional equitable defenses to the contracts were apparent. Judge Benson emphasized that receivership is an equitable remedy, not a purely contractual one and that courts shall decide whether to allow the appointment of a Receiver.
Significantly, Judge Benson found that because a Receiver acts as an officer of the Court and places property under judicial control, the Court cannot surrender its discretion merely because the parties agreed in advance to a Receiver upon a default. Judge Benson emphasized that under the 2015 Uniform Commercial Real Estate Receivership Act (UCRERA), which the State of Michigan adopted in 2018, specifically MCL 554.1016, a Receiver is an extraordinary remedy requiring a hearing to resolve factual disputes over default, bad faith allegations, and necessity. Contractual consent is an important factor, Judge Benson held, but it does not eliminate the Court’s duty to evaluate equitable considerations.
Independent Bank argued that the pre-default contractual provision, standing alone, required the Court to appoint a Receiver. Judge Benson disagreed. The Court then analyzed the split in authority under UCRERA as to whether parties may by contract require a judge to perform certain judicial acts and that the Uniform Law Commission presented state legislatures with two options:
Under the first, a mortgagee is entitled to appointment of a receiver in the six circumstances listed in subsection (b). Under the second, these six circumstances would justify appointment of a receiver, but appointment would be subject to the court’s discretion rather than an entitlement.
Judge Benson found that the Michigan Legislature declined to adopt the first alternative that would have entitled mortgagees, like Independent Bank, to Receiver appointments upon a default. Instead, the Michigan Legislature chose the second alternative, vesting the Courts with discretion to grant or deny Receiver appointments despite the existence of a binding contractual provision.
In its supplemental briefing, Independent Bank argued that it was entitled to the appointment of a Receiver based on its status as an assignee under its assignment of leases and rents, which lacked an express provision consenting to the appointment of a Receiver.
Judge Benson then analyzed the Uniform Assignment of Rents Act (MCL § 554.1051-1070), that Michigan adopted in 2022. This statute brings uniformity to commercial real estate transactions and establishes a comprehensive statutory model for the creation, perfection, and enforcement of a security interest in rents. The Assignment of Rents Act enhances both the right to obtain a Receiver and the Receiver’s ability to collect past due rent. Significantly, as assignor is entitled to a Receiver when, “the assignor has agreed in a signed document to the appointment of a Receiver in the event of the assignor’s default.”
Judge Benson found that the assignor was in default and that the first condition was satisfied. The Court then found that “indefinite phrase” “a signed document” is a deliberately broad phrase selected by the Michigan Legislature that encompasses any signed writing in which the assignor consents to a Receiver upon a default. Thus, the mortgage that secures the obligation and contains an express Receiver clause qualifies as “a signed document” within the Uniform Assignment of Rents Act. The assignor agreed to the appointment of a Receiver and the fact that the assignment of rents did not contain an express provision for Receiver consent was not detrimental because the Michigan Legislature allowed Courts, as Judge Benson held, “to look beyond the four corners of the assignment and to consider the broader loan documentation governing the secured transaction.”
The Court further held that it would select a Receiver in accordance with MCR 2.622(B) after reviewing nominations and objections from both parties.
MCR 2.622(B) governs the selection and appointment of Receivers in Michigan courts, requiring the court to appoint a Receiver nominated by a party unless an objection is filed within 14 days or the Court finds the nominee unqualified. It mandates that the Court state its rationale based on specific factors if it appoints a different Receiver. In Michigan, a Receiver is a court-appointed fiduciary, typically required to be an experienced professional with expertise in managing, liquidating, or operating the specific type of asset involved.
Practitioners should take note of this decision and the impact it could have on the appointment of a Receiver.
Frank R. Simon, the Managing Partner of Simon PLC, has nearly thirty years of experience acting as a Court Appointed Receiver in business, civil, family, and criminal cases.
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