What Happens After Receivership in Divorce Cases in Texas?

By Beverly Bird

Texas is among a handful of states with statutory provisions to address circumstances when a divorce turns particularly ugly. Called receivership, it’s not a standard part of every divorce action. It only comes into play under dire and extreme circumstances, such as when spouses have money tied up in real estate and the property is about to be lost to foreclosure because they can’t cooperate to save it.

Appointment of a Receiver

After you file for divorce in Texas, the court can appoint a receiver to step in and take control of your finances or property if serious snags occur due to actions taken or not taken by you or your spouse. This might be the case if the mortgage is going unpaid, if you’re supposed to be paying temporary alimony or support and you refuse to do so despite having ample funds, or if you do anything else that seriously mismanages your assets, incomes or debts. The idea is to preserve whatever is at risk during the divorce proceedings. If the judge doesn’t order receivership on his own, either you or your spouse can file a motion with the court to bring a problem to his attention, asking that he appoint a receiver. Receivership can be ordered at any time during the divorce proceedings, but the court typically needs some evidence that something dire is about to occur if the judge doesn’t take immediate action. Therefore, a receiver may not be appointed as soon as you file for divorce.

Who Can Serve

When a receiver takes over, he assumes control of your property or accounts on behalf of the court. The legal term for this is “in custodia legis,” which means “in the custody of the law.” This vests a great deal of responsibility in the receiver, so he must typically post bond to insure against any wrongdoing. He must be a legal resident of the state, eligible to vote, and a neutral third party – the court won’t appoint someone who has any interest in the litigation or a relationship with you or your spouse.

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The Receiver’s Duties

The receiver won’t necessarily be placed in charge of all your finances or property. He usually takes control of only those assets that the court feels may be in jeopardy or a situation that’s causing problems. If your home is being foreclosed on, he may be charged with negotiating with the lender for the best possible outcome or catching up with the mortgage payments to avert catastrophe, such as if you have ample resources with which to make the payments but no one is doing so. In this case, the receiver might take control of both the property and bank accounts. He must give notice of his appointment to all lienholders within 30 days when encumbered property is involved. He can also take over bank accounts to ensure that other bills are paid, including support obligations.

What Happens Next

Receivership can last as long as is necessary to safeguard marital finances or assets while your divorce progresses. It doesn’t last beyond your divorce but terminates when a distribution of marital property is made in a final decree. The appointment of a receiver doesn’t affect or slow down the litigation in any respect – all other aspects of your divorce proceed as though a receiver weren’t in place. You or your spouse can ask for the receiver to be removed if the situation stabilizes, or the court might do so if the judge feels that whatever situation gave rise to the appointment has been resolved. If your divorce is particularly contentious, however, receivership may continue until your final decree is issued.

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References

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