How to Get a Good Receiver

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. Good starting places are the Community Economic Development Assistance Corporation (617‑727‑5944) and your local nonprofit housing developer. The following sections suggest a few other places to look for possible receivers.

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 in 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.²⁹ 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.

Private Management Company

If the 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.³⁰ 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. If you do not know of any management companies that may act as receivers, a court may be able to assist you in finding one.³¹

Trustee in Bankruptcy

If your landlord has filed for bankruptcy, you may ask the bankruptcy court judge to order the Trustee in Bankruptcy to manage the property.³² Before you do this, make sure that the trustee is qualified or agrees to hire someone who is qualified. In this case, you are not asking the judge to appoint a receiver. Instead, you are asking a judge to recognize that the trustee should operate as a receiver. Because of the complexity of bankruptcy court, this strategy usually requires the assistance of an attorney.

Experienced Individuals

Individuals can also be receivers. For example, attorneys who have experience in nonprofit housing development have acted as receivers. Experienced contractors have also acted as receivers.

Defining the Receiver's Role

Part of the challenge of getting a good receiver is finding a person or an organization that has the skills, desire, and time to do the job. There are several ways to define the receiver's job so that someone may be more willing to take on the task.

First, in most cases, receivers require that they be reimbursed from rent payments for all of their out‑of‑pocket costs of running the receivership.³³ These costs may include hiring a manager, transportation to the building, legal fees, and other costs associated with managing the property. Second, receivers can be paid a fee for their services above and beyond out‑of‑pocket expenses.³⁴ Finally, receivers may be concerned about being vulnerable to tenant lawsuits for bad conditions and other violations of law that they did not cause. By law, a receiver's liability is limited.³⁵ A court can also protect a receiver from legal liability for bad conditions in the building or for any of their actions as receiver.³⁶ Courts may require the receiver to have or obtain liability insurance, the cost of which is also reimbursable from the rents.³⁷

Selecting a Receiver

Networking to Find a Receiver

In evaluating possible receivers, it is important that you find someone who is qualified to take your building out of its current bad condition and who will deal with issues that are of concern to you. Use the tenant and housing development network to help you narrow your search (see the Directory).

Interviewing Candidates

After you get the names of possible receivers and narrow down your list, you should conduct interviews with each candidate. Clarify your goals and then develop a series of questions that you can ask potential receivers. Here are some questions you can ask these candidates.

Have you ever been a receiver? If so, describe the circumstances, including the size of the building, the powers and duties you had, and the final outcome.
Have you ever owned or managed rental property? If so, how many properties, what size are they, and what condition are they in?
What kind of experience have you had in terms of getting repairs made? Have you had to hire and supervise people to make repairs? Have you had to deal with emergency repairs and, if so, what kinds of emergencies?
Have you ever evicted tenants? What were the reasons? Did you go to court? Were the tenants awarded any money by the court for bad conditions or other violations of law?
Have you had experience negotiating loans with banks for rehabilitation work or applying for government funding to do repairs? If so, describe.
Have you worked with a tenants group? If so, what did you learn from that experience?
Do you have the time and resources to manage our building(s)?
Do you have references we can call, including tenants in buildings you have managed?

It is very important to check a possible receiver's references and to contact people who may be familiar with a person's or company's reputation.

Possible Conflicts Between You and Your Receiver

There are a number of situations where the interest of tenants or an individual tenant may conflict with the responsibilities of a receiver. The most common conflicts arise around withholding rent and evictions.

Rent Withholding

Your receiver needs your rent money to make repairs to your home. You, however, may rightfully feel that you should not have to pay the full rent for living in bad conditions. The problem is if all the tenants withhold 100% of their rent, there may be no money to make repairs. Fortunately, there are some solutions:

You can ask a judge to allow all tenants to pay only a percentage of the rent until sufficient repairs have been made to justify an increase. For example, a judge may temporarily lower everyone's rent by 50%.³⁸
Each tenant may work out with the receiver an individual payment schedule that lowers future rent for a period of time based on the conditions in an apartment. For example, a tenant who has endured cockroaches, broken windows, and a leaking ceiling for six months may feel that her rent for those six months should have been $100 less. The receiver, in turn, may agree that the tenant should be credited for $600 and then spread this credit out so that the tenant's rent would be lowered by $50 a month over the next 12 months.³⁹

Evictions

A receiver may decide that in order to increase the income for the building, she must raise rents and evict lower-income tenants and tenants who are not paying their rent. Tenants can protect themselves against this possibility by asking a judge to include in a receivership order two specific provisions:

In the event the receiver tries to evict a tenant for non-payment of rent, a tenant has the right to argue that her apartment is worth less than what she agreed to pay the receiver.
In the event the receiver wants to evict for reasons other than non-payment, the receiver must have "good cause" to evict. A tenant can be evicted for good cause if she is using the apartment for unlawful purposes or interfering with the health, safety, and well‑being of other tenants in the building.⁴⁰ Tenants have the right to defend themselves against eviction.⁴¹

Endnotes

²⁹ . 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.

³⁰ . See, e.g., Garcia v. Shea, Hampden Housing Court, CA-90-CV-0022-H (Order of March 23, 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.

³¹ . See, e.g., Gonzales v. Cohen, Worcester Housing Court, CA-88-CV-0350, 88-CV-0401, CV-0402, CV-0403, CV-0404, CV-0405 (Order of November 29, 1988), where Judge Martin drew from the court's list of potential receivers to assist pro se tenants and appointed D&H Realty, Inc. as receiver for seriously deteriorated properties.

³² . Prior to obtaining receivership in Mena v. Shapiro, Hampden Housing Court, LE-3696-89 (Order of November 16, 1989), the tenants' motion in bankruptcy court to prevent the Trustee in Bankruptcy from abandoning the properties was denied. On a more optimistic note, however, tenants in West Virginia obtained an order from the bankruptcy court requiring the trustee to collect rents from the tenants and pay the utility bills so that service would be restored. See also In re Bush v. Standish, U.S. Bankruptcy Court, S.D. W.Va. 89-20949 (Order of February 7, 1990). See generally Midlantic National Bank v. New Jersey Dept. of Environmental Protection, 474 U.S. 494, 106 S. Ct. 755, 88 L.E.2d 859 (1986), reh. den. 475 U.S. 1090, 106 S. Ct. 1482, L.E.2d 736 (1986) (trustee may not abandon property in contravention of state public health or safety statutes or regulations).

³³ . See, e.g., Garcia v. Shea, endnote 30; Harris v. Houde, endnote 29.

³⁴ . See, e.g., Garcia v. Shea, endnote 30; Mena v. Shapiro, endnote 23; Cardona v. Sheedy, endnote 36. These orders are orders which include fees.

³⁵ . G.L. C. 111, §127I, ¶7.

³⁶ . See, e.g., Garcia v. Shea, endnote 30; Mena v. Shapiro, endnote 23. In Cardona v. Sheedy, Hampden Housing Court, CA-91-CV-0181, Findings and Rulings on Tenants' Petition to Enforce the State Sanitary Code (September 10, 1991), the court concludes that receivers are generally held to the same legal requirements of owners, including the obligation to delead apartments and make other repairs. However, tenants, code enforcement agencies, or others can require only that receivers make repairs or pay damages out of the funds of the receivership, and not out of their own personal assets. See also Department of Public Health Opinion Letter, attached to the finding and rulings in Cardona v. Sheedy. Limited immunity of the receiver, however, should not apply to your right to seek damages against parties other than the receiver, including the owner. You should have the judge make that explicit in her order. See Mena v. Shapiro, endnote 23.

³⁷ . See endnote 34. See also Harris v. Houde, endnote 29.

³⁸ . See, e.g., Rodgers v. Smith, Boston Housing Court, CA ‑27890, CA‑27891, CA‑27892, CA‑27893 (Order of December 8, 1989); Mena v. Shapiro, endnote 23; and Garcia v. Shea, endnote 30, where increases or decreases in the rent occurred by way of the court's housing specialist, who, upon request by either the tenant or receiver, inspected the premises and determined the appropriate rent. The determination was binding unless modified by the court after a hearing which could be requested by either party.

³⁹ . See Harris v. Houde, endnote 29. In the event of a dispute between the tenant and the receiver regarding the appropriate abatement, either party could request a hearing to allow the court to decide.

⁴⁰ . See, e.g., Garcia v. Shea, endnote 30; Harris v. Houde, endnote 29.

⁴¹ . Many of the receivership orders cited in these endnotes contain this provision. See Chapter 13: Evictions for further explanation of your defenses and counterclaims under G.L. c. 239, §8A.

Produced by Susan Hegel
Created July 2008