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Rental Housing Receivership Act of 2000
PR 13-734

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Councilmember Jim Graham

A BILL IN THE COUNCIL OF THE DISTRICT OF COLUMBIA

Councilmember Jim Graham introduced the following bill, which was referred to the Committee on Committee on Government Operations.

To provide that a rental housing accommodation may be placed in receivership when the Department of Consumer and Regulatory Affairs finds that there is a threat to the health, safety, or security of the tenants, and for other purposes.

BE IT ENACTED BY THE COUNCIL OF THE DISTRICT OF COLUMBIA, That this act may be cited as the "Rental Housing Receivership Act of 2000".

Sec. 2. Purpose of the appointment of a receiver. The purpose of the appointment of a receiver under this act shall be to safeguard the health, safety, and security of the tenants of a rental housing accommodation when there exists a violation or violations of District or Federal law which seriously threaten the tenant's health, safety, or security. The receiver shall not take actions inconsistent with these purposes, nor take actions outside of those necessary and proper to the maintenance of the rental housing accommodation. Nothing in this act shall be construed to limit or abrogate any other common law or statutory right to petition for receivership.

Sec. 3. Grounds for appointment of a receiver. A receiver may be appointed on either of the following grounds:

(a) The housing accommodation has been cited by the Department of Consumer and Regulatory Affairs for violations of 14 DCMR chapters 1 through 16, or their equivalents, that pose a serious threat to the health, safety, or security of the tenants, and the owner, agent, lessor, or manager has been notified of these violations and has failed to comply with notices to abate these violations; or

(b) The majority of the tenants of the building have petitioned the owner, agent, lessor, or manager in writing for the abatement of conditions equivalent to those in subsection (a) and the owner, agent, lessor, or manager has failed to abate these conditions within 60 days. A copy of this petition must be provided to the Department of Consumer and Regulatory Affairs within one week of the time the petition is delivered to the owner, agent, lessor, or manager. If the petition is not delivered to the Department of Consumer and Regulatory Affairs within one week of the delivery to the owner, agent, lessor, or manager, the 60 days shall not run until such time as the petition is delivered to the Department of Consumer and Regulatory Affairs.

Sec. 4. Petitions for Receivership.

(a) Notwithstanding the availability of any other remedy, the Mayor or the Mayor's designee may, in the name of the District of Columbia and based on either of the grounds listed in section 3, petition the court for the appointment of a receiver of the rents or payments for use and occupancy for the affected apartment building.

(b) Notwithstanding the availability of any other remedy, any tenant, tenant's representative, or advocate representing the interests of a rental housing accommodation's tenants, may, based on the grounds listed in section 3(1) or 3(2), petition the court for the appointment of a receiver of the rents or payments for use and occupancy for the affected apartment building or submit a written request to the Mayor or the Mayor's designee to petition the court for the appointment of a receiver of the rents or payments for use and occupancy for the affected apartment building.

(c) Except as provided in section (5)(b), the Court shall set a date for a hearing on the petition no later than 30 days after the filing of the petition.

Sec. 5. Notice and hearing requirements.

(a)(1) After a petition has been filed pursuant to section 4, the Chief Judge of the Superior Court or such Judge's designee shall immediately issue an order requiring the owner, agent, lessor, or manager, as respondent, to show cause why a receiver should not be appointed.

(2) The order of the Court, along with a copy of the petition, shall be served on the owner, agent, lessor, or manager at his or her last known address or by such other method as the Court may direct and shall be posted in a conspicuous place upon the apartment house in question.

(3)(A) If the petitioner is not the Mayor or the Mayor's designee the order of the Court along with a copy of the petition shall be served on the Mayor or the Mayor's designee.

(B) No later than 5 days, excluding Saturdays, Sundays, and legal holidays, after receiving a copy of the petition under paragraph (A) of this subsection, the Department of Consumer and Regulatory Affairs shall make available to the petitioner for his use in the proceedings certified copies of all licensure and housing inspection reports in the custody of the District government that document conditions in the rental housing accommodation within the previous 2 years.

(b)(1) If, upon filing of a petition, the court finds probable cause to believe a condition or practice in the affected rental housing accommodation poses an immediate danger to the health, safety, or security of the tenants, it may, ex parte, issue an order of not more than 14 days duration appointing a receiver and direct that the order be served along with the notice required by this section; provided that a hearing be commenced prior to the expiration of the order.

(2) In the event of any ex parte appointment pursuant to paragraph 1 of this subsection, the petitioner shall ensure that the owner, agent, lessor, or manager of the rental housing accommodation is served with notice of the hearing date and a copy of the petition, any supporting affidavits, and the order of appointment:

(A) By personal service within 72 hours after the appointment; or

(B) By notice conspicuously posted inside or on the front door of the rental housing accommodation within 96 hours of the appointment, if the petitioner files with the court a sworn statement setting forth in detail his diligent effort to serve notice pursuant to paragraph (A) of this subsection. Additionally, the petitioner shall serve the order of the Court along with a copy of the petition on the owner, agent, lessor, or manager at his or her last known address.

(c) A receiver appointed under subsection (b) of this section shall have the power to immediately collect all rents or payments for use and occupancy of the affected rental accommodation and to alleviate the conditions cited by the Court in the order appointing the receiver.

Sec. 6. Appointment of a receiver; continuation of ex parte appointment

(a) After a hearing the court may appoint a receiver for a rental housing accommodation or continue the appointment of a receiver made ex parte if it fords that the petitioner has proven, by a preponderance evidence, the existence of either or both of the grounds for receivership in section 3 of this act.

(b) Except as provided in subsection (c) of this section, the court may appoint as a receiver any person or entity who has demonstrated to the court his or her capacity and expertise to develop and supervise a viable financial and construction plan for the satisfactory rehabilitation of the building.

(c) The court shall not appoint as a receiver:

(1) An employee of a District of Columbia government agency that licenses or provides a financial payment the type of housing accommodation being placed in receivership;

(2) Any person who has a financial interest in any other real property in common with the owner of the property being placed under receivership.

(3) A parent, child grandchild, spouse, sibling, first cousin, aunt, or uncle of the owner of the property being placed under receivership or any tenant of the property being placed under receivership, whether the relationship arises by blood, marriage, or adoption.

Sec. 7. Powers and duties of a receiver.

(a) A receiver shall:

(1) Take charge of the operation and management of the housing accommodation and assume all rights to possess and use the building, fixture, furnishings, records, and other related property and goods that the owner or property manager would have if the receiver had not appointed;

(2) Give notice of the receivership, in accordance with subsection (b) of this section, to the housing facility's tenants and employees, all providers of public utilities for which the owner was responsible to pay prior to the appointment of the receiver, any mortgage company holding a lien against the property, and any other person whom the court orders should receive notice;

(3)(a) Have the power to collect all rents and payments for use and occupancy

(b) The owner, agent, manager, or lessor shall be enjoined from collecting rents and payments for use and occupancy for the duration of the receivership;

(4) Report to the court within 30 days following the issuance of the order of appointment a plan for the rehabilitation of the rental accommodation, including a timeline indicating when all causes giving rise to the appointment will be abated and a financial accounting indicating how the rehabilitation will be paid for;

(5) Report to the court every 6 months after the filing of the report required under paragraph (4) of this subsection reporting on the progress made in abating the conditions giving rise to the appointment, updating the financial accounting of the rehabilitation, and reporting to the court any changes in the conditions of the building that may change the timetable submitted under paragraph (4) of this subsection;

(6) Preserve all property and records with which he or she has been entrusted; and

(7) Carry out any other duties established by the court.

(b) The notice required by subsection (a)(2) of this section shah include at a minimum the following information in not less than 12-point type:

(1) The reasons for the receivership;

(2) The identity of the receiver, his or her address and telephone number;

(3) The receiver's responsibilities and duties; and

(4) The anticipated duration of the receivership.

(c) The receiver shall collect all private and third-party payments to the housing facility and, based on their total for a calendar month, make payments prioritized by the following provisions:

(1) Payments to abate housing code violations when such abatement is required within 24 or 48 hours of service. These payments may take up to 50% of the total payments received under subsection (c) of this section;

(2)(A) Payments to abate housing code violations when such abatement is required within 7 days of service; and

(B) Payments to reduce overdue accounts payable to all public utility providers, when such payments are overdue by more than one year.

(C) The payments required under (2)(A) and (2)(B) of this subsection shall be paid on a pro-rata basis and may take up to 60% of the balance remaining from payments received by the receiver after payments made under paragraph (1) of this subsection

(3)(A) Payments to abate housing code violations when such abatement is required within 30 days of service; and

(B) Payments to reduce overdue accounts payable to all public utility providers, when such payments are overdue by one year or less.

(C) The payments required under (3)(A) and (3)(B) of this subsection shall be paid on a pro-rata basis and may take up to 50% of the balance remaining from payments received by the receiver after payments made under paragraph (2) of this subsection.

(4) Payments to the receiver as determined by the court in the order appointing the receiver as compensation. Payments made under this paragraph may take up to 33 and 1/3 % of the balance remaining from payments received by the receiver after payments made under paragraph (2) of this subsection.

(5) The funds remaining after paragraphs (1), (2), (3), and (4) of this subsection shall be used for all other payments reasonable and prudent for the maintenance and upkeep, both physical and financial, of the housing facility.

(d) The receiver shall not have the power to make any improvements to the property except those necessary to abate housing code violations.

(e) The receiver shall not have the power to enter into any contract that would affect the property rights of the owner, except those contracts that are within the ordinary course of business of the property.

(f) The receiver shall be personally liable only for his or her acts of gross negligence or intentional wrongdoing in carrying out the receivership.

(g) A receiver shall be entitled to a reasonable fee established by the court and payable from the revenues of the housing facility.

See. 8. Termination of receivership.

(a)(1) Except as provided in subsection (b) of this-section, a receivership shall terminate when:

The person who will assume control of the building has been granted a current license by the Mayor, and

(A) The time period specified in the order appointing the receiver lapses and is not extended; or

(B) The court determines that the receivership is no longer necessary because the grounds on which the appointment of the receiver was based no longer exist, and that the receiver has received proper compensation for the services provided, and that the city has been reimbursed for all expenses related to the appointment of the receiver; or

(2) The court determines on recommendation from the receiver that the violations giving rise to the appointment of the receiver cannot be abated. The building shall be closed under the guidelines listed in DCMR 14-115. Disposition of the property under this paragraph does not abrogate any tenancy rights the tenants have under other District of Columbia and Federal laws.

(b)(1) Notwithstanding subsection (a) of this section, a receivership of a housing accommodation shall not be terminated in favor of any person who was the owner of the accommodation or his representative at the time the petition was filed pursuant to section 4, or, in the discretion of the court, any person who is or was an affiliate of the owner, agent, lessor, or manager, unless he or she first reimburses the District government, within 6 months of the establishment of the receivership, for the administrative costs incurred by reason of the receivership.

(2) The court may in addition require that, before a person specified in paragraph (1) of this subsection resumes control of a housing accommodation, he or she post bond in an amount the court deems appropriate as security against noncompliance with the law. If the receivership is not reinstated under subsection (c) of this section the bond money shall be returned with all applicable interest.

(3) Any owner recovering a housing accommodation pursuant to this section may not deduct any of the expenses incurred thereby from his or her District taxes.

(c) Should it appear that, within two years after a receivership is terminated in favor of a person specified in subsection (b)(1) of this section, that person is not maintaining the housing accommodation in substantial compliance with all applicable laws, and should the court so find after granting notice and a hearing to all parties to the earlier receivership proceeding, the previous order appointing a receiver may be reinstated. A receiver thus reappointed may use all or part of any bond posted pursuant to subsection (a)(2) of this section to remedy the deficiencies.

Sec. 9. Failure to recover housing facility from receivership

(a) If any person specified in section (8)(b)(1) of this act fails to recover the housing accommodation from receivership by meeting the conditions specified in section (8)(b)(1) of this act, he or she forfeits all right to the property. The property shall be offered as a cooperative to the present tenants under the following guidelines.

(1) Notice by receiver. - The receiver shall provide each tenant and the Mayor a written request for a tenant election by first class mail and post the request for an election in conspicuous places in common areas of the housing accommodation. The written request shall include, at a minimum, a summary of tenant rights and obligations, a list of tenant voter qualifications and disqualifications, and sources of technical assistance as published in the D.C. Register by the Mayor. If Spanish is the primary language of a head of household, the owner shall provide a Spanish translation of the request to the head of household. An owner shall also provide the Mayor with a list of tenants residing in the housing accommodation.

(2) Notice by tenant organization. -- Within 30 days of receipt of the receiver's request for an election, the tenants may establish a single tenant organization, if one does not exist, and if a tenant organization exists or is established, it shall provide each tenant, the receiver, and the Mayor with written notice of the election by first class mail and by conspicuous posting in common areas of the housing accommodation. Notice includes, at a minimum, the date, time and place of the election, and a summary of tenant rights, obligations, a list of tenant voter qualifications and disqualifications, and sources of technical assistance as published in the D.C. Register by the Mayor, if published.

(3) Conduct of election. -- Within 60 days of receipt of a receiver's request for an election, a tenant organization, if one exists or is established, shall conduct an election. If notice of an election is not provided as required by this section, upon the request of a tenant or the receiver, the Mayor shall provide notice and conduct an election within 60 days of receipt of the receiver's original request for an election.

(4) Qualified voter. -- A head of household residing in each rental unit of the housing accommodation is qualified to vote unless no member of the household has resided in the accommodation for at least 90 days before the election, or unless a member of the household is or has been an employee of the owner within 120 days prior to the date of application for eligibility, or unless he or she is a head of household whose continued right to remain a tenant is required by this chapter. The Mayor shall determine the eligibility of voters prior to the election and shall devise such forms and procedures as may be necessary to verify eligibility under this subsection.

(5) Absentee ballot. -- A head of household unable to attend the election may submit to the Mayor or tenant organization, prior to the election, a signed absentee ballot or sworn statement of agreement or disagreement with the conversion.

(6) Notification of election results. -- The tenant organization shall notify the receiver, the court, and the Mayor of the results of the election within 3 days. If the Mayor conducts the election, the Mayor shall notify the receiver and the court of the results of the election within 3 days.

(7) Election audit. -- The Mayor may monitor an election and take measures to preserve the integrity of the election process and result.

(8) Coercion prohibited. - The receiver, tenant organization, or third party purchaser shall not coerce a household in order to influence the head of household's vote. Coercion includes, but is not limited to, the knowing circulation of inaccurate information; frequent visits or calls over the objection of that household; threat of retaliatory action; an act or threat not otherwise permitted by law which seeks to recover possession of a rental unit, increase rent, decrease services, increase the obligation of a tenant or cause undue or unavoidable inconvenience, harass or violate the privacy of the household; refusal to honor a lease provision; refusal to renew a lease or rental agreement; or other form of threat or coercion.

(9) Compliance approved. -- If over 50% of the qualified voters vote in approval of conversion, or if an election is not held within 60 days of receipt of a receiver's request pursuant to subsection (a) of this section or within such reasonable extension of time as the Mayor may consider necessary to hold an election in accordance with the procedural requirements of this chapter, the Mayor shall certify compliance with this section for purposes of conversion.

(10) Compliance not approved. -- If 50% or less of the qualified voters vote in approval of conversion, or if an election is invalidated by the Mayor because of fraud or coercion in favor of conversion, the Mayor shall not certify compliance with this section for purposes of conversion, and the receiver shall petition the court to have property disposed of pursuant to subsections (b) of this section.

(11) New election. -- If an election is invalidated by the Mayor because of fraud or coercion on the part of the tenant organization, the Mayor shall conduct a new election within 30 days of the invalidation.

(b) If the tenants defuse to exercise their right of conversion under subsection (a) of this section then the receiver shall petition the court to dispose of the property. The court shall, in its sole discretion, either

(1) have the property put on the market, with the proceeds of the sale being used to satisfy all outstanding debts and expenses, including any administrative costs incurred by the District, incurred as a result of the receivership, with any excess amount to be paid to the owner; or

(2) have the property revert to the District of Columbia, which shall offer it as part of the District's homestead program.

Sec. 10. Final accounting.

Within 30 calendar days after termination of a receivership, the receiver shall give the court a complete accounting of al property with which he or she has been entrusted, all funds collected, and all expenses incurred.

Sec. 11. Fiscal impact statement.

The Council adopts the fiscal impact statement in the Committee Report as the fiscal impact statement required by section 602(c)(3) of the District of Columbia Home Rule Act, approved December 24, 1973 (87 Stat. 813; D.C. Code §1-233(c)(3)).

Sec. 12. Effective date.

This act shall take effect following approval by the Mayoral (or in the even of a veto by the Mayor, action by the Council to override the veto), approval by the Financial Responsibility and Management Assistance Authority as provided in section 203(a) of the District of Columbia Financial Responsibility and Management Assistance Act of 1995, approved April 17, 1995 (109 Stat. 116; D.C. Code §47-392.3(x)), a 30-day period of Congressional review as provided in section 602(c)(1) of the District of Columbia Home Rule Act, approved December 24, 1973 (87 Stat. 813; D.C. Code §1-233(c)(1)), and publication in the District of Columbia Register.

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