A Receiver’s Right to Collect Rent

A receiver validly appointed under a standard mortgage enjoys a right to collect the rent of the property over which he or she is appointed as a matter of law. Absent interference or lack of co-operation from the borrower, a receiver does not need an injunction to do this.

Section 108(3) of the Land and Conveyancing Law Reform Act 2009 provides, insofar as relevant:

“The receiver may—

(a) demand and recover all the income to which the appointment relates, by action or otherwise, in the name either of the mortgagor or mortgagee, to the full extent of the estate or interest which the mortgagor could dispose of,

(b) give effectual receipts accordingly for such income,…”

Section 108(5) protects a tenant paying rent to the receiver:

“A person paying money to the receiver is not required to inquire whether the receiver is authorised to act.”

Equivalent provisions apply to mortgages granted prior to 1 December 2009 under the Conveyancing Act 1881.

Injunctive relief

When receivers seek injunctive relief in relation to the collection of rent it is normally sought as an order to restrain the mortgagor (or another party) from interfering with the collection of rent from the properties over which the receiver is appointed.

An injunction of this form does not grant a right to the receiver, it merely restrains the interference with the underlying legal right to collect the rent.

O’Dwyer v Grogan

In O'Dwyer v Grogan[1], the High Court decided that, because of delay in progressing plenary proceedings, the plaintiff receiver was no longer entitled to the benefit of an interlocutory injunction granted in 2022. That is not, of itself, particularly controversial.

The judge stated, at paragraph 81:

“This is a case in which the Plaintiff was given an interlocutory right to collect rents pending trial, intended to temporarily displace the rights of the Defendants to do so. However, owing to the Plaintiff’s own default and delay, she has had that 'temporary’ right for far longer than the Court intended when granting the Injunction.”

And at paragraph 89:

“…there is a clear benefit to the Defendants by being restored to their position as the collectors of rents unless and until AIB gets an order for possession.”

Comment

While there may have been further orders not apparent from the judgment, the judgment may cause parties to misunderstand their rights. In particular, it could cause a mortgagor to believe that a court order is required by a receiver to collect rent. Simply discharging an injunction restraining a mortgagor from collecting rent does not entitle the mortgagor to collect the rent. A validly appointed receiver remains entitled to collect rent and to sue tenants for non-payment, if the rent is paid to the mortgagor.

The content of this article is provided for information purposes only and does not constitute legal or other advice.

[1] [2024] IEHC 688