The Benefits of a Uniform Commercial Real Estate Receivership Act for Illinois: Is the Land of Lincoln Ready for Change?

If you’re an Illinois commercial real estate professional or legal expert, you may have already found yourself pondering a question that could reshape the landscape of your industry: Should Illinois adopt a Receivership Act? And if so, how would it benefit the state’s property market, legal processes, and economic health?

As someone who has been deeply involved in receiverships across several states, and with direct experience as a court-appointed receiver, I’m thrilled to delve into this topic. First, let’s give a little background. Following the Global Financial Crisis of 2008, I had the opportunity to work as a receiver not only in Illinois but also in Detroit, Michigan, within the Circuit Court of Wayne County. It was there that I first became aware of the adoption of the Michigan Receivership Act. I often joke that I earned a “PhD in Receiverships” during my time working in Detroit, given the invaluable hands-on experience I gained. A few years later, I watched with great anticipation and optimism as Florida passed its own version of the Uniform Commercial Real Estate Receivership Act. It was an exciting and pivotal moment in the evolution of receivership law.

In May 2024, Alabama became the 13th state to pass its version of the Uniform Commercial Real Estate Receivership Act (UCREA), following a trend of other states making their receivership laws clearer, more efficient, and uniform. With Illinois—an economic powerhouse and a state deeply entwined with commercial real estate—lagging behind, now is the perfect time to explore whether such an act would be a boon for the state.

Receivership in a Nutshell

Before we dive into the benefits of a uniform law, let’s break down the concept of receivership. A receiver is a court-appointed neutral party who takes control of property involved in a legal dispute. The receiver’s goal is to preserve the property’s value until the legal case is resolved, with the potential for the receiver to manage, sell, or even transfer the property as necessary. In other words, a receivership is an equitable remedy that ensures orderly property management during litigation—typically in cases such as foreclosure or disputes over property ownership.

While receivership itself is not a new concept, the rules governing it are often a bit of a legal wild west. Each state has its own set of standards and procedures, making it difficult for professionals, particularly those operating in multiple jurisdictions, to know exactly what to expect. This is where a uniform receivership law—like the one proposed by the Uniform Law Commission (ULC)—comes into play. By establishing consistent rules across states, the UCREA promotes fairness, efficiency, and clarity.

Why Uniformity Matters

Consider this: You’re a receiver in Illinois, but your next case takes you to Florida. Without a uniform set of rules, you’re left to navigate unfamiliar statutes, procedures, and court interpretations. This disparity can be costly, confusing, and time-consuming. As receivership law evolves, having clarity and standardization across states would save significant resources, reduce risks, and ultimately lead to more effective outcomes.

Illinois is one of the largest and most significant real estate markets in the country, and it plays a central role in national and international commerce. The importance of real estate law cannot be overstated. For the sake of investors, lenders, developers, and property owners, Illinois could benefit tremendously from the adoption of the UCREA.

The State of Receivership Law in Illinois

Let’s not forget that Illinois already has well-established commercial mortgage foreclosure laws. The Illinois statute, 735 ILCS 5/15-1704, provides clear guidelines for appointing a receiver in commercial mortgage foreclosure cases, and Illinois courts have a long history of working with receiverships. However, while this is a good foundation, Illinois lacks a comprehensive and uniform receivership law that can address the full range of receivership matters in a more standardized, predictable manner.

Additionally, Illinois’ receivership process isn’t as widely understood by the public or the broader real estate and legal community. Although some legal professionals may be familiar with the concept, it’s fair to say that receiverships aren’t as well known or appreciated by the general public. A uniform act would not only bring legal clarity but also greater public awareness, helping to demystify the process.

The Chicago Bar Association’s Role in Advancing Receivership Law

Illinois’ push for a more uniform receivership system is gaining momentum, and much of that is thanks to the Chicago Bar Association’s (CBA) Bankruptcy and Reorganization Committee. This group has been quietly working behind the scenes for years to develop an Illinois Receivership Act. The committee has been collaborating with stakeholders from a variety of legal fields to ensure that the proposed law aligns with existing legal structures while introducing the benefits of uniformity.

The Illinois House Bill 5311, which was introduced in February 2024 by Representative Daniel Didech (D), creates the Illinois Receivership Act, which establishes a process for a court to appoint a receiver as the court’s agent to take possession of, manage, and potentially transfer, sell, lease, or dispose of receivership property. The bill defines key terms, outlines the scope and exclusions of the act, and provides details on the appointment, powers, and duties of the receiver, as well as the duties of the property owner. The bill also addresses the stay of certain actions, the use and transfer of receivership property, executory contracts, the claims process, fees and expenses, and the termination of the receivership. The act is meant to promote uniformity with other states that have enacted similar receivership laws..

The bill would address many critical issues, bring Illinois in line with the 13 states that have already embraced this approach.

Acknowledging Key Contributors

As the proposed Illinois Receivership Act gains traction, it’s important to recognize the efforts of those who have helped shape the discussion and draft the bill. The Chicago Bar Association’s (CBA) Bankruptcy and Reorganization Committee has been instrumental in advancing the discussion of a potential Illinois Receivership Act. This group, led by Jason Shimotake, Nathan E. Delman, Alexander Franklin Brougham, and Rigoberto Garcia, has worked tirelessly to ensure that the proposed bill—HB 5311—reflects the needs of various stakeholders and aligns with best practices from other states. The leadership and commitment of these professionals underscore the dedication behind this legislative push.

Additionally, I would also like to recognize Hon. Darryl B. Simko, an Associate Judge of the Illinois Circuit Court of Cook County, whose expertise in commercial mortgage foreclosure law and receiverships has played a crucial role in shaping the current landscape of commercial mortgage foreclosure and receivership law in Illinois.

What Would Illinois Gain from the UCREA?

Clarity and Consistency for All Parties One of the major benefits of the UCREA would be the consistency and predictability it offers. With standardized receivership laws, investors and property owners can better anticipate outcomes in legal disputes. Lenders can feel confident that their interests will be protected across different jurisdictions, and receivers will have clear guidelines to follow.
A More Efficient Legal Process Receivership law is often complicated, and navigating it can take significant time and resources. With more uniformity, courts, attorneys, and receivers can avoid redundant legal battles over procedural issues. This efficiency helps speed up the resolution of cases, reducing the burden on an already overloaded court system.
Attracting Investment Investors are always on the lookout for predictability. A uniform receivership law could make Illinois a more attractive place to invest in commercial real estate, as it provides the legal assurance that disputes will be handled fairly and quickly. This certainty could lead to more investment and, ultimately, economic growth.
Reduced Risk for Lenders Lenders are particularly impacted by receiverships, especially when it comes to distressed properties. A uniform set of laws would make it easier for banks and other financial institutions to manage the risks associated with lending in Illinois. Clearer procedures mean fewer legal obstacles and faster resolution of disputes.
Economic Stability and Growth A strong receivership law can contribute to broader economic health. By maintaining order and preventing the chaotic collapse of distressed real estate, Illinois could minimize market volatility. Furthermore, the ability to swiftly resolve property disputes would help businesses maintain operational stability, ensuring they don’t get caught in lengthy legal battles.
Improved Public Understanding Often, receiverships are seen as mysterious and overly complicated processes. With a more uniform approach, public awareness would likely increase, helping people understand why receiverships exist, how they work, and how they protect property rights.

What’s the Status of HB 5311?

Currently, HB 5311 is under committee review, but passage is far from guaranteed. As anyone who’s been involved in the legislative process knows, committees can sometimes become the graveyard for even the most well-intentioned bills. However, the true test of this bill’s success will lie in the support it garners from industry professionals, interest groups, and the public.

If HB 5311 doesn’t advance, the proponents of the bill will need to go back to the drawing board. They’ll need to expand their coalition, reach out to more stakeholders, and work hard to gain public support. The task isn’t just about drafting a law—it’s about ensuring that the law is backed by a strong network of advocates.

13 States that Adopted Their Versions of the Uniform Commercial Real Estate Receivership Act:

· Utah, 2017, Bill Number: SB 208

· Oregon, 2017, Bill Number: SB 899

· Nevada, 2017, Bill Number: AB 235

· Tennessee, 2018, Bill Number: SB 1921

· Michigan, 2018, Bill Number: HB 4471

· Maryland, 2019, Bill Number: HB 1065

· Arizona, 2019, Bill Number: SB 1216

· North Carolina, 2020, Bill Number: SB 364

· Florida, 2020, Bill Number: HB 235

· Connecticut, 2021, Bill Number: HB 6356

· West Virginia, 2022, Bill Number: SB 440

· Rhode Island, 2022, Bill Number: SB 2093/ HB 7895

· Alabama, 2024, Bill Number: HB 350/ SB 78

District of Columbia, 2025, having it’s Bill No. 25-485 just introduced may potentially becoming a 14th jurisdiction to adopt its version of the Uniform Commercial Real Estate Receivership Act.

Final Thoughts: Is Illinois Ready for a Change?

In the grand scheme of commercial real estate law, Illinois is in a good position. The state has a solid foundation with its current receivership law, and there’s no question that its real estate market is one of the most influential in the country. However, the lack of uniformity in receivership laws across states leaves room for improvement.

A Receivership Receivership Act would benefit Illinois by bringing clarity, efficiency, and consistency to receivership cases. It would help protect investors, lenders, and property owners, making Illinois a more attractive destination for commercial real estate transactions. But before that can happen, there’s a need for collaboration, support, and an ongoing commitment to drafting legislation that works for all stakeholders.

So, Illinois—are we there yet? Not quite. But we’re getting closer, and if HB 5311 passes, it could be the start of a new chapter in Illinois receivership law. Time will tell, but one thing’s for sure: the journey towards a more unified, streamlined receivership process is worth every step.

By: Arthur R. van der Vant, Illinois Receiver