MBE Rules · Remedies
Receivership
Cal. Civ. Proc. Code § 564
The rule
A court may appoint a neutral receiver to preserve property or a business pending litigation where the property risks loss or the judgment would otherwise be ineffectual — a drastic remedy of last resort.
In plain English
Receivership is a legal remedy where a court appoints a neutral third party to manage and preserve property or a business during ongoing litigation. This is typically used when there is a significant risk of loss or when a judgment may not be effective if the property is not protected.
Worked example
In a dispute over a failing restaurant, the owner is accused of mismanagement, and there are concerns that assets will be sold off before the case is resolved. The court appoints a receiver to take control of the restaurant and ensure that it remains operational and its assets protected. As a result, the receiver successfully maintains the business until the litigation concludes.
Memory hook
Receivership: a court's safety net for property at risk.
The trap
Exams may present scenarios where students confuse receivership with other remedies like injunctions or temporary restraining orders, leading to incorrect applications. Students should be cautious about the specific circumstances that warrant receivership.
How examiners test it
Questions often include fact patterns involving distressed businesses or properties at risk of loss, testing the candidate's understanding of when receivership is appropriate as a last resort remedy.
Drill this rule until it can't fail you.
Vrenberg generates unlimited questions on this exact rule, tracks your mastery of it, and brings it back until it sticks.