§ 9-8-6.Lienholders made parties; divestment by receiver’s sale

This section addresses lienholders — mortgage holders, judgment creditors, and others with a security interest in property that has landed in a receiver’s hands. Unlike the general intervention rule for equitable claims, lienholders get an open-ended right to join the case at any time, recognizing that liens can surface at different points in a receivership.

The more consequential piece of this section deals with what happens when the receiver sells the property. Unless the court’s order says otherwise, that sale dissolves liens held by parties of record, meaning the buyer takes the property free of those claims. The lienholders don’t lose their stake, though — their claims move from the property to the money the sale produces, so they get paid out of the proceeds instead of holding a claim against the physical asset.

This arrangement lets receivership sales produce clean title, which makes the property more valuable and easier to sell, while still preserving lienholders’ priority claims against the fund the sale creates.