Certified Apartment Portfolio Supervisor (CAPS) Practice Exam - Module 2

What does receivership entail in real estate?

1. A voluntary agreement between buyer and seller

2. A court order placing property under the control of a receiver due to non-payment

3. A private sale of contested property

4. A financial audit of the property

The correct answer is: A court order placing property under the control of a receiver due to non-payment

Receivership in real estate involves a court-ordered process where a receiver is appointed to take control of a property, typically due to situations such as non-payment of debts or significant mismanagement. This legal intervention is meant to protect the asset and manage it in the best interest of its owners and creditors. When a property is placed under receivership, the receiver acts as a neutral third party who oversees the operation, maintenance, and potential liquidation of the property. This can happen in various scenarios, particularly when a landlord is facing financial distress, and it is essential to ensure the property is being managed properly while addressing the financial issues at hand. The other options do not accurately describe receivership. A voluntary agreement between buyer and seller refers to a standard real estate transaction, a private sale of contested property involves negotiations outside of court, and a financial audit focuses on reviewing the financials rather than the control or management of the property itself. Thus, the court-order nature and controlling aspect of receivership are paramount, which makes the correct answer fitting and illustrative of the concept.