Receivership

Produced by Susan Hegel
Last Updated May 2017

As part of the tenant petition, emergency injunction, or civil complaint, a tenant may ask the court to appoint a receiver.

1. What is a Receiver?

A receiver is a person or organization appointed by a court to temporarily manage a property in order to enforce the state Sanitary Code and respond to an irresponsible or absentee landlord. Tenants can use receivership as a strategy to accomplish needed repairs and prevent a building from deteriorating.

Tenants get a receiver by asking a court to appoint one.73 If a court appoints a receiver, the receiver usually is empowered by a court to:

  • Make repairs and improve the conditions.
  • Manage the building.
  • Collect the rents.
  • Pay expenses, including taxes and insurance.

Additional duties of a receiver vary depending upon what tenants request and what a judge eventually puts in a written receivership order.

2. How to Get the Court to Appoint a Receiver

a. Filing a Tenant Petition or Civil Complaint

If you decide that you want a receiver, you need to go to court. If there is a housing court in your area, go there. Housing courts have more experience in dealing with receiverships than other courts do. If there is no housing court, you must go to the local district or superior court. For more about different courts see the Chapter 14: Using the Court System - Massachusetts Court System.

When you go to court, it is best to bring as many other tenants from your building as possible. You can complete the Tenant Petition for Enforcement of the State Sanitary Code (Form 14)75 or your attorney can draft a complaint for you which could include claims for money damages due to bad conditions.

In the petition or complaint you must specifically request the court to appoint a receiver. You must also describe the bad conditions. Attach copies of the Board of Health reports or, if an inspection has not been made yet, the date you requested an inspection. It is best to get an inspection before you file a petition or complaint.76

b. Getting an Order of Notice

When you file the tenant petition or complaint with the court and request a receiver, the clerk's office must issue a document called an "Order of Notice."77 This document requires the landlord to:

  • Appear in court for a hearing at a designated date and time within 14 days of when the court issues the Order of Notice; and
  • File an answer to the petition and include the names and addresses of any mortgagees or lienors of record.

c. Serving the Petition or Complaint and Order of Notice

You must then take a copy of your tenant petition or complaint and the original Order of Notice to a sheriff or a constable. The sheriff or constable must deliver (serve) these documents on your landlord at least 7 days before the hearing date in the Order of Notice. The sheriff or constable then fills out on the original Order of Notice how they delivered the Order of Notice and either you or the sheriff or constable file this original with the court.

If your tenant petition asks for the appointment of a receiver, then the landlord must (within 3 days) provide you with a written list of all the mortgagees and lienors of record. You must then send a copy of your tenant petition and notice of the hearing date, time, and place to each of the mortgagees and lienors by certified mail at least 14 days before the hearing (or less than 14 days if the court so orders).78

d. Payment or Waiver of Fees

There is a court fee to pay for filing a tenant petition or complaint and a fee for serving the petition or complaint on your landlord.79 If you are a low-income person, you can file a form asking the court to waive or eliminate the filing fee and to pay for the cost of service on your landlord.80 This form is called an Affidavit of Indigency. To see a copy, go to Affidavit of Indigency (Booklet 9).

e. Preparing for the Hearing

As soon as you file a tenant petition, you should begin researching who might be a good receiver, so that when you go back to court, you are prepared to give the judge your recommendation. (See How to Get a Good Receiver in this chapter.) It is also important to take to court any evidence showing the conditions of the building and any evidence that shows tenants' efforts to get the landlord to make repairs in order to show to the court that a receiver is necessary.

f. The Hearing

When you go to court for the hearing, be prepared to tell a judge how bad the conditions are and why you need a receiver. Read Chapter 14: Using the Court System for information about how to prepare for court. On the day that you go to court, bring any information or pictures that will help the judge understand how your landlord has not properly managed the building. Make sure the pictures have a date on the back of them so that the court will know when the pictures were taken.

Since receivership is a remedy of last resort, you may want to first ask the judge to order you to pay your rent (or a percentage of your rent) to the court81 and give the landlord another chance to make the repairs herself according to a written repair schedule approved by the court. If your rent is subsidized by a housing authority or other entity, you could also ask the court to order the subsidy provider to pay the subsidy into court until the landlords has made the repairs.82

3. The Receivership Order

If the court decides to appoint a receiver, a judge must prepare a receivership order. This order says: 1) who the receiver is, and 2) what powers and duties the receiver will have.83

It is important for tenants to work together, and if possible with a lawyer, to develop a proposed order to give to the court. Your proposed order should outline what specific powers and duties you want a judge to include in a receivership order. For example, a receivership order can:

  • Require that all funds received by a receiver first be used to make emergency repairs.84
  • Require the receiver to install a security system for vacant units.85
  • Order the receiver to make reasonable efforts to keep rents affordable.86
  • Lower tenants' rents by 50% until repairs are made and the court orders tenants to pay more rent.87
  • Require the receiver to submit monthly project reports to the tenants and the court, showing what money has been received and how money is being spent.
  • Authorize the receiver to seek and obtain rental subsidies for some of the apartments.88

4. How to Get a Good Receiver

a. Possible Receivers

When you go to court to request a receiver, you will have the most control over who the receiver is—and you may have a quicker result—if you suggest to the court possible people, organizations, or companies that are available to be a receiver. But remember— while you may suggest or recommend possible receivers, it is the court that ultimately has the power to appoint a receiver.

It is a good idea to find out before you go to court about a judge's track record in appointing receivers. Who has the judge appointed as receivers? Did the judge take the tenant's recommendations? What kind of job did that person do? Network with other groups to find out who would be qualified. The following sections suggest a few places to look for possible receivers.

b. Local Nonprofit Organization

A local community development corporation (CDC), local nonprofit housing organization, or housing authority may be a good place to start. Nonprofit housing organizations have experience operating and developing housing and keeping rents low. Because an organization is nonprofit, it may be less likely to charge a fee above its own expenses for its services as receiver.89 Also, if your goal is to keep your housing affordable for the long term, this goal may best be realized through a nonprofit's involvement. A nonprofit might in the future purchase the property or help you and a group of tenants buy it. A list of nonprofit housing organizations is in the Directory.

c. Private Management Company

If a nonprofit organization is not available, you may also consider a private management company. The drawback of a private company is that its decision to become receiver will be driven in part by its desire to make money. For this reason, it is more likely that a for profit company will charge a higher fee for its services than a nonprofit organization.90 In order to maximize profits, a for profit management company may not be as aggressive in making necessary repairs. It may also be more aggressive in collecting rents and evicting tenants. On the plus side, a management company is in the business of managing properties. It has expertise in operating and running residential property.

d. Experienced Individuals

Individuals can also be receivers. For example, experienced contractors have acted as receivers. Attorneys who have experience in nonprofit housing development have also acted as receivers. The Boston and Western Housing Courts have a list of receivers which you may want to review (if you live in or near the area served by these courts).

5. Getting More Money for Repairs

As a practical matter, in many cases, even if every tenant paid the full rent, a receiver may not have enough money to make the necessary repairs. Here are some ways to get more money for the receivership.

  • Get banks or organizations that lend groups money, such as local revolving loan funds, to lend money to the receiver by offering them what's called a "priority lien" or "super lien." This means that when the building is sold, the bank or organization that gave the loan can get back the money they lent before any other bank or person recovers what they are owed.91 They have first priority. In some cases, tenant groups and local nonprofit development groups have used specific projects as the motivation to actually create local revolving loan pools.92
  • Negotiate with the bank that holds the mortgage on the property to give the receiver money for repairs. Since the bank has an interest in preserving the value of the property, it has a reason to pay for repairs. Because banks do not want to be held legally responsible for the condition of the property, if you propose that a bank take steps that make it look like it is legally responsible, such as paying for repairs, it may not cooperate. You may relieve a bank of these fears by having a judge indicate in an order that the bank's money for repairs will not make it legally responsible for the property.93
  • Investigate other possible sources of funds, such as local Community Development Block Grant (CDBG) funds; funds from a local affordable housing trust fund; local rehabilitation, energy conservation, and deleading funds; or state funds.
  • Ask the court to order the landlord to provide funds from other property that she owns.

6. Options After the Receivership

A receivership, while it may be needed to repair bad conditions, can be one of those bad things that can turn into something good. When a landlord abandons a building or files for bankruptcy, tenants can organize, grab onto all the uncertainty in their situation, and make their homes better places to live.94

As a tenant, you may be able to work with your receiver to help motivate a bank to sell to a nonprofit organization at a below market price. Under both federal and state laws called the Community Reinvestment Act (CRA), the government requires banks to meet the credit and banking needs of low- and moderate-income people in the bank's "designated lending area."95 Tenants have used CRA to negotiate below market loans in order to buy their buildings

A tenant group can also become a nonprofit organization and try to purchase the building itself. There are resources to provide tenants with legal help and groups that help tenants develop strong, democratic, and effective organizations. For information about where to get legal services and tenant-organizing assistance, see the Directory.

You can also seek out local city officials from the Board of Health or the community development department to get their help in moving the banks to act responsibly in terms of providing financing on good terms.96 Local governments may have Community Development Block Grant funds which tenants can use to hire organizers, staff, and experts to help them purchase their building.

Endnotes

73 . G.L. c. 111, §§127B-127O sets forth the relevant provisions regarding receivership. See also Mass. R. Civ. P. Rule 66. For additional information on receiverships, see the Mass. Attorney General's Abandoned Housing Training Manual and "How to Take the Distress Out of Abandoned Housing (Mass. Continuing Legal Education, 1998).

74 . G.L. c. 111, §127C; G.L. c. 218, §19C provides that district courts have the power to appoint receivers. Receivers can also be appointed under G.L. c. 186, §14. See also G.L. c. 223, §130 for law on dissolution of certain attachments by a receiver.

75 . See G.L. c. 111, §127C for the required content of the petition.

76 . Because receiverships are a remedy of last resort, it is best to have as much documentation as possible so that when you present a petition to the court, a judge will see what steps you have already taken to get repairs made.

77 . See G.L. c. 111, §127D.

78 . See G.L. c. 111, §127I(¶2).

79 . The filing fee for a tenant petition is $2 (G.L. c. 111, §127D.), plus the $15 surcharge (G.L. c. 262, §4C). The filing fee for a "regular" civil complaint in housing court is $135, district court is $195, and superior court is $240 (including the surcharge). Service costs vary, but are generally around $30-40 per defendant.

80 . G.L. c. 261, §27A-G.

81 . If a tenant paid rent into court under G.L. c. 111, §127F (even where no receiver was appointed), then the tenant cannot be evicted except for tenant fault for the nine months after the court order has ended. See the uncodified statute at Chapter 404 of the Acts of 1968 (approved June 18, 1968), and Olde Holyoke Development Corporation v. Morales, Hampden Housing Court, 90-SP-01291-H (Abrashkin, J., July 3, 1990).

82 . In Belizaire v. Hsu and Chen, Cambridge District Court, Civil Action 0152-CV-0629 (Sprague, J., April 10, 2001), the court allowed the tenant's motion to authorize the tenant and the Cambridge Housing Authority to pay the last agreed-upon rent into court.

83 . See G.L. c. 111, §127I.

84 . Rogers v. Smith, Boston Housing Court, CA-27890, CA-27891, CA-27892, CA-27893, Order for Appointment of Receiver (December 8, 1989).

85 . Mena v. Shapiro, Hampden Housing Court, LE-3696-89 (Order of November 16, 1989).

86 . Rogers v. Smith, Boston Housing Court, CA-27890, CA-27891, CA-27892, CA-27893, Order for Appointment of Receiver (December 8, 1989).

87 . Mena v. Shapiro, Hampden Housing Court, LE-3696-89 (Order of November 16, 1989).

88 . See paragraph 7 of the undated Order (issued in June 1987) in Pires et al. v. Ribeiro, Cambridge District Court, 2530/06 (Menton, J.), where the court authorized the receiver to obtain rental subsidies for all the units for a 10-year period. The receiver then obtained project-based Massachusetts Rental Voucher Program (MRVP) subsidies for most of the rental units. Although such subsidies are no longer available, there are Section 8 subsidies which could be attached to rental units.

89 . In Harris v. Houde, Worcester Housing Court, CA-90-CV-0052 (Order of February 28, 1990), the Fitchburg Community Development Corporation volunteered to become receiver of eight properties without requesting any additional fees for its services.

90 . See, e.g., Garcia v. Shea, Hampden Housing Court, CA-90-CV-0022-H (Order of March 8, 1990), where the receiver, V.P.M., Inc., was paid 6% of the collected rents over and above its out-of-pocket expenses, but only after securing vacant units and making emergency repairs.

91 . Pursuant to G.L. C. 111, §127I, receivers can have a lien with priority over all other liens except municipal liens. Such liens may be assigned to lenders for purposes of securing loans for repairs, operations, maintenance, and management of priority. See also Turner v. State Wharf and Storage Co., 263 Mass. 92 (1928).

92 . In Lowell, the Coalition for a Better Acre, a nonprofit community development corporation, when seeking financing for the redevelopment of a 267 unit subsidized apartment complex, was instrumental in creating the Lowell Development Financial Corporation (LDFC), which set up a special loan pool to increase affordable housing development in Lowell. Start up funds for LDFC came from nine local banks. For information about how the loan pool was set up, see Everybody in the Pool, HOUSING MATTERS, Vol. 4, #3 (December 1990), published by the Massachusetts Law Reform Institute.

93 . In Garcia v. Shea (endnote 90), Mena v. Shapiro (endnote 87), and Cardona v. Sheedy, Hampden Housing Court, CA-91-CV 0181 (September 10, 1991), mortgagees of the properties involved agreed to advance to the receivership money for repairs to the extent rent money collected was insufficient. Depending upon the language of the bank's mortgage agreement with the landlord, money given by the bank to the receiver may be added to the landlord's mortgage and may have the same priority as the bank's original mortgage.

94 . In Olde Holyoke Dev. Corp. v. Morales, Hampden Housing Court 90 SP 01291 H (July 3, 1990), the court held that, pursuant to Chapter 898 of the Acts of 1965, Section 4, as amended by Chapter 404 of the Acts of 1968, Section 1 (approved June 18, 1968) after a receivership ends, for nine months following the receivership, the new owner was prohibited from terminating the tenancy without a reason. The reasoning of this decision would presumably also prohibit rent increases during this nine-month period.

95 . Community Reinvestment Act of 1977, as amended, 12 U.S.C. §§2901 et seq. The state community reinvestment law is found at G.L. c. 167, §14. For more about federal CRA history, regulations, and how to access CRA lending information, see the Federal Financial Institutions Examination Council website at http://www.ffiec.gov/cra/default.htm.

You may want to call the bank and ask to speak with its Community Reinvestment Act (CRA) officer. Every bank appoints an officer to monitor compliance with the CRA. If a bank has been unresponsive to your requests for assistance, you may want to write a letter to the bank, outlining all of the relevant facts and specifically stating what you would like the bank to do. At the end of the letter, ask the bank to "include your letter in their Community Reinvestment Act Public Comment File." As a result of making this request, the bank will be required to show your letter to government officials who monitor the bank's compliance with this law. You may also want to send a copy of your letter to the monitoring agency. Remember to keep a copy of the letter for future reference.

96 . In Fitchburg, tenants of the Harris receivership, [Harris v. Houde, Worcester Housing Court, CA-90-CV-0052-H (Order of February 28, 1990)], worked closely with city officials in their efforts to get the bank to deal with three properties for which it held mortgages; the Fitchburg Board of Health pursued the bank by issuing correction orders regarding the properties; the Planning Department pursued contacts with bank officials in the unrealized hopes of negotiating the properties' sale to the CDC; and the mayor wrote a letter to the bank, attaching a local paper's editorial condemning the bank's inaction.

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