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Blighted properties, abandoned by their owners in residential areas, create safety hazards, attract crime and lower property values. The AGO’s Abandoned Housing Initiative uses the enforcement authority of the State Sanitary Code to turn these properties around. Working in close partnership with cities and towns, the AGO seeks out delinquent owners of abandoned residential property and encourages them to voluntarily repair their properties and make them secure. If owners refuse, then AGO attorneys will petition the relevant court to appoint a receiver to bring the property up to code.
The process starts with interested municipalities sharing the addresses of abandoned residential properties with the AGO. The AGO then uses its investigatory tools to identify the delinquent owner. Once identified, the AGO attempts to contact the owner and any party with a legal interest in an attempt to reach an agreement under which the owner will complete the necessary repairs. Generally, we ask the owner to show proof that he or she can finance the necessary repairs and will use a licensed contractor for the work. If these negotiations fail, the State Sanitary Code contains a receivership provision which can be used to cure code violations.
Receivership petitions can be brought by either the AGO or the municipality, usually working in partnership. The process begins with the filing of a petition, asking the appropriate court to appoint a receiver to bring the property back up to code. When the AGO is the petitioner, we work with the community to identify appropriate receivers for court appointment, a position that is generally filled by someone with property management or restoration experience. Receivers can be individuals, for profit or non-profit organizations. Receivers do not work for the AGO or the municipality. Instead, they are agents of the appointing court.
The Sanitary Code allows the receiver to place a lien against the property for all costs incurred during the project. That lien is given a priority over all existing liens, except municipal liens. Once the receivership is granted, the petitioner monitors the monthly cost reports submitted by the receiver to the court for approval. This assures that there is no dispute about the validity of the receiver’s lien at the end of the project when the owner is presented with the final bill or the receiver forecloses on his or her lien.
At the conclusion of the receivership, which is generally six months to one year depending upon the scope of work needed, the owner of the property may reimburse the receiver for costs and clear the lien. If the owner cannot or will not pay the costs, then the receiver can foreclose on that lien. The foreclosure will be conducted in a manner approved by the court and may include a public auction, although other mechanisms of foreclosure may be approved. The receiver is responsible for the foreclosure. The petitioner has no role in this step.
While the receivership process is a code enforcement tool, the AHI program strikes a balance between private property owner’s rights and the public’s right to be free from dangers posed by health, safety and building code violations. The owner never loses legal title to the property during the receivership. The receiver takes only an equitable ownership interest during the receivership, which grants him or her authority to manage the property and make the necessary repairs. The only time the owner loses title is if the owner fails to pay the receiver’s lien or is not the successful purchaser through the foreclosure. In addition, the owner is always given the opportunity to step in and take responsibility for the property at any time during the receivership, but must complete the required work to the court’s satisfaction.
Moreover, the AHI program is intended to work as a partnership between the AGO and interested communities. While the AGO may take the formal role of petitioner in court, our role is really to help communities achieve their goals for the relevant properties and neighborhoods. The program is available to all communities: those that may have a significant number of abandoned properties, as well as those that may only be dealing with one abandoned home.
While the AHI involves a highly collaborative effort, it is important to remember that a receiver works at the behest of the courts and not for the municipality or AGO. Some housing courts maintain lists of qualified and approved receivers for judges to use. However, where there is no court-maintained list, judges often look to the petitioner to propose an individual or organization to serve as a receiver.
As the petitioner, the AGO will work with the municipalities to determine appropriate receivers to be appointed by the court. We also encourage 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, please complete the brief questionnaire and submit it to the AHI Team.