Receivership Remedy for Run Down Properties Needed Now More Than Ever

As foreclosures continue flowing and banks lose additional control of their REO portfolios, more and more vacant properties in substandard condition will turn up in neighborhoods within San Diego County and the nation at large.  Cities within San Diego County have taken promising steps over the years to beef up code enforcement strategies and neighborhood improvement initiatives, particularly in the City of Chula Vista and the City of San Diego.  Attempts to stave off vacant/substandard/nuisance properties, coupled with an aggressive penalties system, can solve half the problem.

However, once the property has been identified as a "nuisance" and the fines/penalties/charges have been issued, what next?  Who ensures the property will be cleaned up and brought within compliance with the applicable code?  The answer: court-appointed receivership.

A Health & Safety Receivership is an immediate and systematic process that seeks to eliminate slum housing and/or habitually substandard properties at no expense to the referring agency/prevailing party (i.e. city governments, code enforcement agencies).  Receiverships are a mechanism that visibly communicate to the neighbors and surrounding communities that the agency is taking positive steps to clean up residential neighborhoods and protecting tenants who have been subjected to dangerous and unhealthy conditions by absentee or recalcitrant property owners.

Unlike the traditional concept of financial receiverships, a Health & Safety Receivership is a legal process through which title to a piece of real property is temporarily taken from the owner and placed with a court-appointed officer--the receiver.  Authorized pursuant to California Health & Safety Code section 17980 et seq., receiverships are used primarily for abandoned and substandard properties where the owner has a history of non-compliance with local enforcement agency orders to abate or where emergency circumstances are discovered which pose immediate threats to health and safety.

Health & Safety Receiverships are implemented most effectively under three scenarios:

1.  Owners and/or occupants refuse to comply with local enforcement agency's orders to abate substandard conditions;

2.  Owners and/or occupants are unable to comply with local enforcement agency's orders to abate substandard conditions due to financial, physical or psychological limitations;

3.  Owners and/or occupants of substandard property cannot be located.

The receiver, under the authority and supervision of the California Superior Court, borrows against the subject property (using the property's equity) and utilizes 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.

For further reading on this topic, be sure to check out the articles on the hot topics discussed at the 2010 National Vacant Properties Campaign Conference, the benefits of Health & Safety Receiverships and an overview of the role of the Court-Appointed Receiver.