Although the appointment of a Receiver does not cost anything and actually results in the City or County recovering funds it still requires a lot of work on behalf of the City or County to appoint a Receiver through a motion for appointment of receiver in California. This section will provide a step by step process on how to appoint a Receiver and provide templates, which a City or County may use to initiate its Receivership program.
Step 1 Request for Qualifications:
A City or County may want to initiate their Receivership Program by creating a Request for Qualifications, which allows the City or County to vet Receiver’s before starting the process of seeking an appointment. Here is a link to the Request for Qualifications created by Ryan Griffith when he worked for the City of Vallejo. There is no requirement to create an RFQ prior to seeking Court approval to appoint a Receiver, but it can be an effective way for Cities and Counties to screen potential receivers before seeking their appointment.
Step 2 Selecting a Property:
If a City or County chooses to do an RFQ or simply proceed with the Receivership remedy it needs to identify a property that is appropriate for receivership. Typically, properties that are appropriate for receivership are those the City or County has been attempting to abate for a substantial amount of time. Excellent evidence to use when seeking the appointing of a Receiver include Code Enforcement fines, Police Calls for Service, Fire Department calls for service, building inspections, and inspection warrants. The more work that has gone into abating the dangerous conditions the more likely a judge is to appoint a Receiver.
Step 3 California Health and Safety Code section 17980.6 Notice:
Once a Receiver and Property are selected, the first legal step in the process is for the City or County to draft a California Health and Safety Code section 17980.6 notice. The 17980.6 Notice outlines the violations at the Property and provides a set amount of time for the Owner to make repairs, but there is no exact set time typically the timeframe ranges from seven to thirty days. Once the 17980.6 Notice is created it must be posted conspicuously on the Property and mailed to each affected Residential Unit. The specific requirements are outlined here (“California Health and Safety Code section 17980.6”). Additionally, this is a link to California Health and Safety Code section 17980.6 Notice used by the City of Vallejo.
Step 4 Ordering a Title Report or a Litigation Guarantee:
Once the 17980.6 Notice is posted the enforcement agency must identify all parties with a recorded interest. Therefore, either the City, County or Receiver must obtain a title Report or Litigation Guarantee to identify all parties with a recorded interest in the Property. Once all parties with a recorded interest are identified the City or County must provide notice to all parties with a recorded interest.
Step 5 Serving Three Day Notice Pursuant to California Health and Safety Code Section 17980.7(c):
Once the 17980.6 Notice has been posted and the parties with a recorded interest are identified, each party with a recorded interest must be served with a three-day notice prior to the filing of the petition. This is somewhat backwards, because you must serve the Notice of hearing before a case number or court date has even been assigned. However, the law is the law see (“California Health and Safety Code section 17980.7(c)”). For further reference this is a California Health and Safety Code section 17980.7(c) notice used by the City of Vallejo.
Step 6 Drafting the Petition and Supporting Declarations:
Once the 17980.6 Notice has been served and all parties with a recorded interest have been served with the California Health and Safety Code section 17980.7(c) Notice the City Attorney’s office must draft a Petition and provide evidence to show the Property is dangerous. Typically, the City Attorney’s Office must draft a Petition, Memorandum of Points and Authorities, Attorney Declaration, Code Enforcement Officer Declaration, and Proposed Order. In these documents the City Attorney should include evidence such as photographs, code enforcement history, and other evidence showing that the problem substantially endangers public health and safety. Furthermore, the Petition must show the 17980.6 Notice and 17980.7 were properly served. (A filed Petition with various Exhibits can be viewed here.)
Step 7 Filing the Petition and SUM-145:
Once the Petition, MPA, Attorney Declaration, Code Enforcement Officer Declaration and Proposed Order are ready it is time to file the Petition with the Court. It is worth noting you must also have a Summons and for Health and Safety Receivership cases the Judicial Council created a special summons Sum-145, which pursuant to California Health and Safety Code section 17990 allows the Enforcement Agency to enter a default in 10 days instead of the typical 30 days. Once these documents are filed with the Court a hearing date will be assigned where the Judge will decide if the appointment of a Receiver is necessary.
Step 8 Recording a Lis Pendens:
Once the Petition and supporting documents are filed pursuant to California Health and Safety Code section 17985(a) the City or County must record a Lis Pendens against the Property. Once the document is recorded it is wise to file the Lis Pendens with the Court to show compliance with California Health and Safety Code section 17985(a).
Step 9 Court Hearing:
Once the Petition has been filed and the Lis Pendens has been recorded the next step is to attend the Court hearing. Often receivership petitions go unopposed, so they are granted on the tentative ruling, but if the appointment is not granted in the tentative ruling you must attend the Court hearing and argue that the appointment of a Receiver is necessary. The three elements necessary to prove a receiver is appropriate in court are as follows:
- The property substantially endangers public health and safety.
- All proper notices have been provided and all parties with a recorded interest have had sufficient time to make the necessary repairs, but the parties with a recorded interest failed to do so.
- The proposed Receiver is qualified to handle the case.
Step 10: Record Order
If the Court grants your request to appoint a Receiver pursuant to California Health and Safety Code section 17980.7 the next step is to record the appointment Order pursuant to California Health and Safety Code section 17985(b).
Receiver Takes Over Property
Once these ten steps are completed the Receiver takes over and primarily guides the process. However, the Receiver pursuant to California Rule of Court 3.1182 must file monthly reports with the Court, which the City should review to ensure proper progress is being made. Typically, the Court will also set monthly or bi-monthly Case Management Conferences or Status Conferences, which the City or County should attend.
The Receiver bills for his or her time once they are appointed and they are paid through the equity in the Property. The City or County bears no expense, and in fact recovers all of it’s attorney’s fees and enforcement costs pursuant to California Health and Safety Code section 17980.7(c)(11) and (d)(1).
Step 11 Fee Recovery for the City or County:
The Receivership will typically last anywhere between 3-12 months give or take. During this time the Receiver will abate the dangerous conditions and typically sell the Property to a responsible Owner. Alternatively, the Receiver may decide the Owner is responsible enough to move back into the Property, but this is a rarity.
As the Receivership draws to a close the City or County may seek reimbursement for it’s attorney’s fees and enforcement costs pursuant to California Health and Safety Code section 17980.7(c)(11) & (d)(1). The City may reach a settlement to recover it’s fees and costs with the Owner or file an Attorney Fee and Cost Motion. (Here is a template to an attorney fee motion – Provide Sheena with document.)
Step 12 Close Case:
Once the Receiver has completed repairs, a responsible owner is in place, and the fees have been settled the final step is to close the case. The receiver will seek discharge and if the City wants they can ask the Receiver to stay as a monitor for up to 18 months pursuant to California Health and Safety Code section 17980.7(c)(10). The eighteen month monitoring is discretionary and something to be agreed upon between the City and Receiver. The final step in the process for the City or County after the Receiver is discharged is to release the Lis Pendens and Recorded Order utilizing California Code of Civil Procedure section 405.50. Once all that is done the receivership is complete.
BARG has templates in Word available for any Attorney that wants them click on the contact page or reach out to our In-House Counsel Ryan Griffith at firstname.lastname@example.org or (818) 383-0848