Under the AGO model, the most successful projects have been those in which the receiver is a local organization, individual, company (profit or nonprofit) or group with ties to the community. The receiver should have some construction and/or renovation expertise (and/or property management experience if the housing is, or will be, occupied). The appointed receiver serves as a general contractor for the renovation project and should utilize local contractors, craftsmen, workers and suppliers whenever possible as part of a diversified work force.
The courts, and not the AGO, appoint receivers. Some, individual housing courts maintain lists of qualified and approved receivers for judges to use. Where there is no court-maintained list, judges will look to the petitioner to suggest an individual or organization to serve as a receiver. As the petitioner, the AGO looks to our municipal partners for recommendations, but we also invite potential receivers to contact the AGO directly. If you believe that you are qualified to serve as a receiver and are interested in being considered as a potential receiver, you may contact your local Housing Court, the community development office in your city or town, or you can contact the AGO's Abandoned Housing Initiative Program Director. To be considered, please complete the brief questionnaire and submit it to the AHI Program Director.
Funding a Receivership
The Receivership Statute provides that the receiver may borrow funds to undertake the repairs, to grant mortgages on the property, and/or assign the priority lien to its creditor(s). Appropriate funding sources to finance a receivership might include: rental income (the receiver may rent the property to new tenants to offset the receiver's expenses once the code violations have been eliminated); foundation grants; public, federal, state or municipal programs; and/or private investments. For more information on funding for receiverships, contact the Massachusetts Housing Partnership at 1-877-MHP-FUND.
Upon completion of the renovations, the receiver has what is known as a "super lien" which empowers him or her to receive repayment of all outstanding expenses and charges from the absentee owner and all pre-existing creditors of record. If payment is not made, the receiver can foreclose on the property in order to pay off its own debts.
Conclusion of Receivership
Because of the legal nature of a receivership, the property must be disposed of by a public auction. The owner of record, a creditor, or any other prospective purchaser may tender an offer. If it is preferable to the owner of record that he or she retains the property interest after the foreclosure, it is possible to provide incentives to owner-occupiers to bid on a property. For example, a nonprofit receiver could agree to waive the fees, over and above out-of-pocket expenses, in the event that the property is purchased at auction by an owner-occupier. Similarly, the municipality might agree to a reasonable repayment schedule for its outstanding tax lien if the successful bidder at the foreclosure sale turns out to be a bona fide owner-occupier. Note, however that the DOR may require that the municipality foreclose on the tax lien or demand full payment. The options are dependent upon how each municipality lists assets and liabilities.
No matter whom ends up owning the property, at a minimum, the hazards associated with the abandoned housing will have been eliminated and the cost of repair recovered.