Receiver Mark Adams Answers Questions California Receivership Group is Frequently Asked
When a nuisance property has languished for a long period of time, enforcement agencies–including a municipality, county, or fire protection district–may be at a loss for how to proceed. Learning about the health and safety receivership remedy can bring about a lot of good questions, which I’ll answer in this article.
“Who can be a health and safety receiver and what do they provide to help enforce local and statewide building codes?”
The concept of a receiver derives from English common law, where a third party is appointed by a court to manage assets. Receivership is often used in dire financial situations such as bankruptcy. Yet, many states, including my home state of California have enacted statutes to provide this remedy for use in nuisance abatement and code enforcement matters.
Thus, a health and safety receiver is a person who is appointed to remedy any issues at a property that are causing a nuisance and potentially endangering occupants and the surrounding community. Some states have standards for who can be nominated as a receiver. At a minimum, a health and safety receiver should be a third party with relevant experience in the fields of real estate and nuisance abatement to the extent that they are able to demonstrate to a judge that they are a suitable candidate for this position.
The health and safety receivership remedy is useful to enforcement agencies because the receiver can be given the power to start nuisance abatement work immediately after a judge signs an appointment order. This makes receivership a quick and effective way to handle emergency situations or chronic issues that have previously been unsolvable using traditional code enforcement strategies. Moreover, the work done to abate the nuisances is paid for by the property itself, meaning that an enforcement agency does not have to use taxpayer funds to pay for any renovation work needed.
“What type of property can the health and safety receivership remedy be applied to?”
Health and safety receivership is primarily used for vacant and abandoned properties as well as occupied substandard properties. The remedy can be applied if the owner is onsite, if there are unlawful occupants, and even if an owner’s location is unclear, they are deceased, or incarcerated. This is because receivership is an in rem proceeding. It is appropriate for cases with serious issues that threaten occupants and the surrounding public. It is a good last resort if an owner has a history of non-compliance with local enforcement agency orders to abate, or there are immediate dangers onsite.
Receivership can be applied to all types of private properties including single-family homes, commercial buildings, vacant lots, motels, hotels, and multi-family buildings, as well as apartment buildings.
“What happens after a health and safety receiver is appointed to abate dangers at a nuisance property?”
As demonstrated in the above video, once a receivership has been initiated by a judge signing an appointment order, the bulk of the work lies with the receiver. The enforcement agency can comment and be active in the case if they wish to, but the control over what happens to the property is with the court.
A good receiver should be onsite immediately following the signing of an appointment order to inspect the property and determine the rehabilitation plan. The receiver submits that plan to the court for review and the judge determines if it is appropriate. Throughout the receivership, the receiver must file reports to update the court and parties of the status of the abatement work. All money spent by the receiver is also reported to the court and parties through monthly accountings. The receivership ends when the violations are abated. At the receivership discharge, all parties weigh in on the receiver’s conduct and accomplishments.
“How is a health and safety receivership funded?”
While an enforcement agency may expend its resources trying to gain compliance from a property owner to bring their building up to code, a receivership is funded by the property itself and those costs are not the responsibility of the enforcement agency.
In the majority of C.R.G.’s cases, with the authority and supervision of the appointing court, the receiver is given the power to borrow against the property and uses those funds to pay for emergency owner/occupant relocation, property rehabilitation, demolition, or other work as authorized by the court in order to bring the property into compliance with local and state regulations. This then becomes a lien on the property that, at the court’s discretion, may have priority status for reimbursement.
