Funds in the hands of a receiver may be deposited in one or more interest bearing accounts in the name and for the benefit of the receivership estate with one or more financial institutions, provided that all of the following conditions are satisfied:
§ 569.Deposit of Funds In Interest Bearing Accounts
Title 7. Other Provisional Remedies In Civil Actions · Chapter 5. Receivers · Last amended 1999 · Last verified July 28, 2026
In one sentenceSection 569 permits a receiver to deposit estate funds in interest-bearing accounts at one or more financial institutions, so long as the deposits are federally insured, the institution isn't a party to the case, and the receiver has no significant ownership or family connection to the institution.
Full Text of § 569
(a) The deposits are fully guaranteed or insured under federal law.
(b) The financial institution in which the funds are deposited is not a party to the action in which the receiver was appointed.
(c) The receiver does not own 1 percent or more in value of the outstanding stock of the financial institution, is not an officer, director, or employee of the financial institution, and is not a sibling, whether by the whole or half-blood, spouse, aunt, uncle, nephew, niece, ancestor, or lineal descendant of an owner, officer, employee, or director.
Plain-English Summary
Holding cash idle helps no one, so § 569 lets a receiver put estate funds to work in interest-bearing accounts rather than leaving them uninvested. The account has to be in the name of, and for the benefit of, the receivership estate -- not the receiver personally.
Three conditions keep the arrangement honest. The deposits must be fully guaranteed or insured under federal law, so the estate doesn't take on bank-failure risk. The financial institution can't be a party to the underlying action, avoiding an obvious conflict. And the receiver can't have a financial or family stake in that institution -- no ownership of 1 percent or more of its outstanding stock, no job as an officer, director, or employee, and no close relationship by blood or marriage to anyone who does hold those positions.
Read together, these conditions make sure the receiver's choice of bank serves the estate's interest in earning a return, not the receiver's own interest in steering business to a friendly institution.
Frequently Asked Questions
Can a receiver earn interest on estate funds?
Yes, § 569 lets a receiver deposit receivership funds in one or more interest-bearing accounts.
What insurance requirement applies to these deposits?
The deposits must be fully guaranteed or insured under federal law.
Can a receiver deposit funds with a bank that is a party to the lawsuit?
No, § 569(b) bars using a financial institution that is a party to the action in which the receiver was appointed.
Can a receiver use a bank in which the receiver owns stock?
Not if the receiver owns 1 percent or more in value of the institution's outstanding stock, or is an officer, director, or employee, or a close relative of one who is.
Amendment History
Amended by Stats. 1998, Ch. 932, Sec. 16. Effective January 1, 1999.
Source & verification. Section text is reproduced verbatim from
the Deering's California Codes Annotated / vLex. Enacted by the California Legislature.
Last verified July 28, 2026.
· Official source
Also known as: receiver interest bearing account californiareceiver deposit funds conflict of interest california