Big Shot Developer, LLC (Big Shot) obtained a mortgage loan in the amount of $2,500,000 from Bank of America (BOA) secured by a first mortgage on Big Shots mixed-use apartment project (the project contains both residential apartment and retail on the ground floor), known as Incredible Towers. Big Shot executed all normal mortgage documents in favor of BOA, including an Assignment of Leases and Rents. Thereafter, Big Shot gave a second mortgage in the amount of $600,000 to Frugal Bank. Incredible Towers was not successful and both loans went into default and each lender has filed a judicial foreclosure. The fair market value of Incredible Towers is $3,500,000, and the annual rents are $400,000, although the building is not bringing in enough rents to cover all expenses and debt service. After default, Big Shot paid no bills related to Incredible Towers but did its best to collect and keep all rental payments for the company. The property is partially leased up with both residential and commercial tenants.

a) Your client is BOA. They request your counsel as to whether to exercise its right to become a mortgagee-in-possession, what is your advice? b) BOAs mortgage provides that mortgagee has the right to request the appointment of a receiver. What is the purpose of a receiver? What must you show the court to obtain the appointment of a receiver? Would BOA be benefited? c) Suppose BOA is close to getting a final judgment of foreclosure, and BOA tells you that if they are the successful bidder at the foreclosure sale, they want to get rid of some, but not all of the tenants, what is your advice? Specifically, what governs whether or not BOA can terminate any of the tenancies? Are there any specific laws that BOA should be aware of?