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Health & Safety Receiverships are a valuable tool to reestablish abandoned properties. There are countless vacant lots and abandoned structures across California with no apparent useful purpose. There are just as many countless explanations as to why these commercial and residential properties are abandoned. Abandonment can come at the hands of death (tenant or otherwise), a business or personal relationship gone sour, defunct or bankrupt owners, or simply by owner’s choice. Regardless, the deserted property will likely succumb to disrepair, and as a result, leave behind quite the eyesore for the surrounding community. Beyond the displeasing aesthetic, vacant properties also pose a rather significant danger to the health, safety and welfare of the neighborhood as a whole. Unsecured properties intrinsically create dangers ranging from the deteriorating structure itself to the higher crime rates tied to the vacant property. From a crime perspective, vacant properties often welcome trash dumping, graffiti, vandalism and trespassing. Further, threats arise from overgrown vegetation causing fire-hazards and vermin infestation spreading throughout the neighborhood affecting surrounding residents and businesses. Ultimately, conditions such as these result in neighborhood decline and a drop in surrounding property values. A court-appointed Health & Safety Receiver can provide the remedy abandoned properties and their surrounding neighbors truly need.

By Neil Sheaffer

At the time of writing this post, the number of Coronavirus (COVID-19) cases in the United States is rising. The World Health Organization (WHO) officially declared a pandemic. The Governor of California issued a “Stay-at-Home” Order to reduce the spread of the coronavirus by limiting non-essential activity. The courts in California are generally closed to the public. Being engulfed in the receivership industry, we have extensive experience with unsafe and unsanitary living conditions. Griswold Law often deals with properties that pose significant health and safety risks to communities across California. However, the COVID-19 outbreak is the first public health emergency that caused California to quarantine itself. Griswold Law is adapting as quickly as possible to these changing circumstances.

Health and safety receivers have many tools available to them to aid in the rehabilitation of nuisance properties, but arguably nothing is more important than the availability of super-priority funding. Though super-priority liens have been authorized by courts in California since at least 1915 (Title Ins. & Trust Co. v. California Development Co. (1915) 171 Cal. 227), the 2019 case of City of Sierra Madre v. SunTrust Mortgage Inc. is a landmark development, because it brings this authorization into the 21st century by explicitly reiterating the availability of super-priority funding to receivers.

Cannabis businesses are not eligible for bankruptcy protection due to the federal prohibition against cannabis. Therefore, the receivership remedy is an effective path to address the struggles of a cannabis business. Seeking and obtaining a court-appointed receiver to take control of and operate a distressed cannabis business can be initiated by a lender affected by a failing business loan or a partner in the cannabis business alleging financial mismanagement.

A Health and Safety Receivership is an effective legal remedy under California law that facilitates the reestablishment of substandard properties, which include properties that show problems of hoarding, drug/slum activity, fire or water damage, unpermitted construction or habitation, or properties that have been abandoned. There are many substandard properties across California that are clearly neglected and/or vacant with no useful purpose. These properties are an eyesore to the public and can be a danger to the health, safety and welfare of the surrounding community. Health and Safety Receiverships can reduce the number of substandard properties and demonstrates to the community that the city or county is taking steps to rehabilitate problem properties.

We were recently appointed by the San Diego County Superior Court to take control of an abandoned/nuisance strip mall in Lemon Grove, California.

Health and Safety Receiverships can successfully rehabilitate distressed properties within a community. A receivership is a legal and equitable remedy that allows for the possession and control of property by an unbiased third party referred to as a Court Appointed Receiver. A Court Appointed Receiver is a neutral third party appointed by the Court to take temporary control over substandard properties that are subject to a lawsuit. A receiver is not an advocate for any party but instead is an advocate for the court to protect and preserve the property. Once the court appoints a receiver, the property is under the direct control of the court through the receiver. A receiver’s authority is derived directly from the appointing court. The receiver is responsible for the general repairs and maintenance to the property and for ensuring that the property is brought into compliance with State and local codes.