PRINTER'S NO. 2518
No. 1996 Session of 1999
INTRODUCED BY REINARD, PETRONE, FICHTER, ARGALL, BROWNE,
CAPPABIANCA, COY, DEMPSEY, GODSHALL, HARHAI, HENNESSEY, LEH,
MAHER, MARSICO, ORIE, PIPPY, RAMOS, READSHAW, ROBINSON,
STABACK, E. Z. TAYLOR, THOMAS, WALKO, WOGAN AND WOJNAROSKI,
OCTOBER 25, 1999
REFERRED TO COMMITTEE ON URBAN AFFAIRS, OCTOBER 25, 1999
AN ACT
1 Providing for court-appointed receivers to bring residential
2 buildings into municipal code compliance when owners fail to
3 comply.
4 The General Assembly of the Commonwealth of Pennsylvania
5 hereby enacts as follows:
6 Section 1. Short title.
7 This act shall be known and may be cited as the Blighted
8 Property Receivership Act.
9 Section 2. Legislative declaration and findings.
10 The General Assembly finds and declares as follows:
11 (1) Many citizens of this Commonwealth are adversely
12 affected by blighted residential property, those residing in
13 dwelling units located in buildings that fail to meet
14 municipal building and housing codes for public safety and
15 sanitation and those who live in proximity to such occupied
16 substandard buildings as well as vacant residential
17 buildings.
1 (2) Substandard housing units are unsafe. In addition,
2 tenants often pay rents disproportionate to the value of the
3 housing accommodations and services received. Substandard,
4 deteriorating residential structures whether occupied or
5 vacant are a public safety threat and nuisance, and their
6 blighting effect diminishes property values in the
7 neighborhoods in which these properties are located.
8 (3) If these buildings are not rehabilitated and brought
9 into code compliance, they are likely to be abandoned,
10 resulting in increased costs to the Commonwealth,
11 municipality and taxpayers to secure and ultimately demolish
12 these buildings.
13 (4) If it becomes necessary to ultimately abandon a
14 building, existing tenants will be displaced, disrupting
15 lives and adding to the affordable housing problems of the
16 municipality and the Commonwealth. Many displaced tenants may
17 become homeless.
18 (5) As a result of the aforementioned, the General
19 Assembly declares that, if the owner of a residential
20 building that has been declared to be a public nuisance or is
21 in violation of municipal and housing code requirements fails
22 to correct such code violations, it is in the best interests
23 of the Commonwealth, the municipality, the neighborhood and
24 the tenants for the court, pursuant to the provisions of this
25 act, to appoint a receiver to make the necessary improvements
26 to bring the building into code compliance before the
27 building deteriorates further and necessitates abandonment
28 and demolition, resulting in the displacement of the existing
29 tenants occupying the building and/or removal of the building
30 from the housing supply.
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1 Section 3. Definitions.
2 The following words and phrases when used in this act shall
3 have the meanings given to them in this section unless the
4 context clearly indicates otherwise:
5 "Code." Any building, housing, property maintenance, fire or
6 other public safety ordinance enacted by a municipality.
7 "Competent entity." Any person or entity with experience in
8 the operation and maintenance of residential buildings.
9 "Court." The appropriate court of common pleas.
10 "Municipality." Any city of the first, second, second class
11 A or third class, any incorporated town, any township of the
12 first or second class and any borough.
13 "Nonprofit corporation." Any nonprofit corporation organized
14 for the purpose of initiating community development activities,
15 including housing.
16 "Owner." The holder or holders of title to a residential
17 building.
18 "Parties in interest." Parties in interest shall be those
19 persons or entities who have a direct and immediate interest in
20 a residential building, including:
21 (1) The owner.
22 (2) Any individuals, associations and corporations who
23 have interests of record in the residential building or who
24 are in actual possession thereof or who collect or receive
25 rents payable for housing accommodations therein.
26 (3) Any tenants living in the building pursuant to a
27 lease.
28 (4) Any mortgage lienholders and other secured creditors
29 of the owner.
30 (5) A nonprofit corporation carrying out community
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1 development activities within the municipality where the
2 residential building is located.
3 (6) A municipality in which the residential building is
4 located.
5 "Party." The owner, all petitioners and any party in
6 interest that has intervened in the receivership proceeding.
7 "Public nuisance." A condition at or with respect to a
8 residential building that is dangerous to the health, safety or
9 welfare of the residents of the neighborhood in which the
10 residential building is located; or which unlawfully obstructs
11 or unreasonably interferes with the public rights; or which has
12 been declared to be a public nuisance under applicable local
13 ordinance.
14 "Residential building." Any building or structure and the
15 land appurtenant thereto containing one or more dwelling units.
16 Section 4. Petition for receiver.
17 (a) Petitioner.--A petition for the appointment of a
18 receiver to take possession and to assume the operation,
19 improvement and/or maintenance of a residential building may be
20 filed by a party in interest.
21 (b) Grounds.--If a petition is filed under subsection (a),
22 the court may grant appropriate relief if:
23 (1) The building is currently in violation of any
24 municipal building or housing code requirements and the
25 violation or violations have persisted, unabated, for at
26 least 90 days; the building has been declared a public
27 nuisance by the municipality; or the safety, health or
28 welfare of the tenants or adjoining property owners is in
29 immediate jeopardy.
30 (2) The code violations or nuisance or unsafe conditions
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1 are not likely to be abated in accordance with law unless a
2 receiver is appointed by the court.
3 (3) The appointment of a receiver is in the best
4 interest of the public.
5 (c) Contents.--The petition submitted to the court shall
6 include a concise statement of the grounds for relief and, to
7 the extent available to the petitioner:
8 (1) A copy of any citation or citations charging the
9 owner with being in violation of municipal building code
10 requirements or declaring the residential building to be a
11 public nuisance.
12 (2) A recommendation of the receiver to be appointed.
13 (3) The proposed receiver's preliminary plan with
14 initial cost estimates for improvement of the residential
15 building and compliance with all municipal codes.
16 (d) Verification.--The petition shall be verified by a
17 petitioner.
18 (e) Notification of owner.--The petitioner shall notify the
19 current owner of the property by registered or certified mail to
20 the last known address of the owner immediately upon filing the
21 petition with the court. With regard to occupied properties,
22 unless tenants have been provided with written notice to the
23 contrary, the most recent address to which tenants were directed
24 to send or deliver rent shall be considered an adequate address
25 for this notice.
26 (f) Mortgagees and lienholders.--Upon scheduling of a
27 hearing on the petition, the petitioner shall mail all
28 mortgagees and lienholders of record, as of the day that the
29 petition was filed, a copy of the petition, together with notice
30 of the hearing. Within seven days after the scheduling of this
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1 hearing, the petitioner shall file with the court a certificate
2 of service verifying compliance with this requirement.
3 Section 5. Appointment of receiver.
4 (a) Court action.--The court shall act upon any petition
5 submitted by holding a hearing within 30 days of receipt of the
6 petition and rendering a decision no later than 30 days after
7 completion of the hearing.
8 (b) Intervention.--Subject to the court's discretion, any
9 party in interest may intervene in the proceeding and be heard
10 with respect to the petition, the requested relief or any other
11 matter which may come before the court in connection with the
12 proceedings.
13 (c) Hearing.--At the hearing, any party in interest will be
14 permitted to present evidence to support or contest the
15 petition.
16 (d) Appointment.--If the court determines after hearing that
17 the grounds for relief set forth in section 4(b)(1) through (3)
18 have been established, the court may appoint a receiver and
19 grant such other relief as may be just and appropriate. If the
20 court appoints a receiver, the court may appoint a nonprofit
21 corporation or other competent entity. In appointing a receiver,
22 the court shall consider any recommendations contained in the
23 petition or otherwise presented by a party in interest.
24 (e) Conditional relief.--If the court finds after hearing
25 that the grounds for relief set forth in section 4(b)(1), (2)
26 and (3) have been established, but the owner represents that the
27 violations or nuisance or emergency condition will be abated in
28 a reasonable period, the court may, but shall not be obligated
29 to, enter an order providing that in the event that the
30 violations or nuisance or emergency condition is not abated by a
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1 specific date or that other specified remedial activities have
2 not occurred by a specific date or dates, then an order granting
3 the relief set forth in the petition will be entered. The court
4 may also require the owner to post a bond in the amount of the
5 repair costs estimated in the petition, as a condition to
6 retaining possession of the residential building.
7 (f) Hearing on receiver's plan for abatement.--Within 30 to
8 60 days, the court shall set a date for hearing on the
9 receiver's plan for abatement.
10 (g) Bond or surety.--Upon appointment, the receiver shall
11 furnish the court a bond or such other surety or insurance as
12 the court deems sufficient in the circumstances of the case.
13 (h) Immediate possession.--The receiver shall take
14 possession of the residential building and other property
15 subject to the receivership promptly after posting of the
16 required bond or surety and shall immediately be authorized to
17 exercise all powers delegated by this act.
18 (i) Removal by court.--Any receiver appointed may be removed
19 by the court at any time upon the request of the receiver or
20 upon a showing by a party in interest that the receiver is not
21 carrying out its responsibilities under this act.
22 (j) Injunction.--Neither the filing of a petition under
23 section 4(a) nor the appointment of a receiver under subsection
24 (d) shall stay the filing or continuation of any action to
25 foreclose a mortgage or lien on the residential building or to
26 sell the property for delinquent taxes or unpaid municipal
27 claims, provided that nothing contained in this act shall
28 prevent the court in which the petition is filed, after notice
29 and hearing, from enjoining any such action if it determines
30 that the interest of the mortgagee or lienholder in the
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1 residential building is adequately protected during the period
2 the injunction is in effect. In the event that the residential
3 building is sold through a mortgage foreclosure or tax sale
4 while a receiver is in possession, the property shall remain
5 subject to the receivership, and the receiver shall remain in
6 possession unless and until discharged under section 9.
7 Section 6. Powers and duties of receiver.
8 (a) Full powers and duties.--The receiver shall have all the
9 powers granted to a receiver in connection with the foreclosure
10 of a mortgage on real property under the laws of this
11 Commonwealth, and all other powers and duties necessary or
12 desirable, from time to time, for the efficient operation,
13 management and the improvement of the residential building in
14 order to bring it into compliance with all municipal building
15 and housing code requirements and to fulfill the receiver's
16 responsibilities under this act. Such powers and duties shall
17 include the power to:
18 (1) Take possession and control of the residential
19 building, appurtenant land and any personal property of the
20 owner used with respect to the residential building,
21 including any bank or operating account for the residential
22 building.
23 (2) Collect rents and outstanding accounts receivable.
24 (3) Pursue all claims or causes of action of the owner
25 with respect to the residential building and all other
26 property subject to the receivership.
27 (4) Contract for the repair and maintenance of the
28 residential building, which contracts need not be subject to
29 any advertisement or bidding requirements. These contracts
30 may include contracts or agreements with tenants and/or
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1 members of the receiver organization, provided that all such
2 contracts or agreements shall be appropriately documented and
3 included in the receiver's expenses and improvements under
4 other provisions of this legislation.
5 (5) Borrow money and incur credit in accordance with
6 section 7.
7 (6) Contract and pay for the maintenance and/or
8 restoration of utilities to the residential building.
9 (7) Purchase materials, goods and supplies to accomplish
10 repairs and operate the residential building.
11 (8) Renew existing rental contracts and leases for a
12 period not to exceed one year.
13 (9) Enter into new rental contracts and leases for a
14 period not to exceed one year.
15 (10) Affirm, renew or enter contracts providing for
16 insurance coverage on the residential building.
17 (11) Engage and, subject to court approval, pay legal,
18 accounting, appraisal and other professionals to aid the
19 receiver in the conduct of the receivership.
20 (12) Eject or commence eviction proceedings against
21 tenants where necessary and prudent, even if the owner was
22 delinquent in taxes or municipal claims, or the dwelling was
23 unfit for human habitation, at the time of the receivership.
24 (13) Sell the residential building in accordance with
25 section 8.
26 (14) Exercise all authority that an owner of the
27 residential building would have to operate, manage, improve
28 and otherwise deal with the residential building.
29 (b) Affirmative duty.--While in possession of the
30 residential building, the receiver shall have the affirmative
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1 duty to:
2 (1) Maintain, safeguard and insure the residential
3 building.
4 (2) Apply all revenue generated from the residential
5 building consistent with the provisions of this act.
6 (3) Develop the plan for the abatement of the conditions
7 which caused the petition to be granted referred to in
8 section 5(f) or, if no such feasible plan can be developed,
9 to develop alternatives, including the closing, sealing or
10 demolition of all or part of the residential building.
11 (4) Implement the plan referred to in section 6(b)(3)
12 upon approval by the court.
13 (5) Submit a status report to the court and parties in
14 interest every six months. This report shall include:
15 (i) A copy of any contract entered into by the
16 receiver regarding the improvement of the residential
17 building.
18 (ii) A description of any action taken with regard
19 to any tenant or lease.
20 (iii) An account of the disposition of all revenue
21 generated from the residential building.
22 (iv) An account of all expenses and improvements.
23 (v) The status of developing and/or implementing a
24 plan pursuant to paragraph (3).
25 (vi) A description of any proposed actions to be
26 taken in the next six months to improve the residential
27 building.
28 (c) Submission of plan.--The plan referred to in subsection
29 (b)(3) shall be submitted to the court and all parties in
30 interest. After notice and an opportunity for a hearing, the
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1 court may amend the plan.
2 (d) Accounting.--Upon the implementation of the plan
3 approved by the court, the receiver shall file with the court a
4 full accounting of all income and expenditures during the period
5 of time it took to implement the plan.
6 Section 7. Incurring indebtedness.
7 (a) Borrowing.--From time to time the receiver may borrow
8 money or incur indebtedness in order to preserve, insure, manage
9 or operate the residential building or to otherwise fulfill the
10 receiver's obligations under this act.
11 (b) Liens.--With the approval of the court, after notice and
12 hearing, the receiver may secure the payment of any borrowing or
13 incurrence of indebtedness under subsection (a) by a lien or
14 security interest in the residential building or the other
15 assets of the receivership. If the borrowing or incurrence of
16 indebtedness is for the safeguarding, insurance, repair or
17 improvement of the residential building, the court may authorize
18 the receiver to grant a lien or security interest with priority
19 over all other liens or mortgages, including, if approved by the
20 municipality, municipal liens and claims. No such lien shall be
21 effective unless recorded in the recorder of deeds office for
22 the county in which the residential building is located.
23 (c) Owner obligations.--Nothing in this section shall be
24 deemed to relieve the owner of the residential building of any
25 civil or criminal liability or any duty imposed by reason of
26 acts or omissions of the owner nor shall the appointment of a
27 receiver suspend any obligation the owner or any other person
28 may have for payment of taxes, any operating or maintenance
29 expense, mortgages or liens or repair of the premises.
30 Section 8. Sale of residential building.
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1 (a) Sale.--Upon application of the receiver, the court may
2 order the sale of the residential building if the court finds
3 that:
4 (1) notice was given to each record owner of the
5 residential building and each lienholder of record;
6 (2) the receiver has been in control of the residential
7 building for more than one year and the owner has not
8 successfully petitioned to terminate the receivership under
9 section 9; and
10 (3) the sale would be in the best interests of the
11 parties.
12 (b) Sale free and clear.--In connection with the sale, the
13 court may authorize the receiver to sell the residential
14 building free and clear of liens, claims and encumbrances, in
15 which event, all such liens, claims and encumbrances shall be
16 transferred to the proceeds of sale with the same priority as
17 existed prior to resale in accordance with subsection (c).
18 (c) Distribution.--The court shall confirm the sale and
19 shall order a distribution of the proceeds of the sale, after
20 paying court costs, in accordance with the following priorities
21 to:
22 (1) The costs and expenses of sale.
23 (2) (i) Repay principal and interest on any borrowing
24 or incurrence of indebtedness granted priority over
25 existing liens and security interest under section 7(b);
26 and
27 (ii) any fees and expenses of the receiver in
28 connection with the sale or the safeguarding, insurance,
29 repair or improvement of the residential building.
30 (3) Valid liens and security interests in accordance
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1 with their priority.
2 (4) Any costs and expenses of the receiver not covered
3 in paragraphs (1), (2) and (3).
4 (5) Reimburse expenses and improvements, planning costs,
5 attorney fees, expert witness costs and inspection fees and
6 costs incurred by the tenants, affected property owners or
7 nonprofit organizations in petitioning the court to place the
8 property in receivership.
9 (6) Any unpaid obligations of the receivership.
10 (7) The owner.
11 Section 9. Termination of receivership.
12 Upon request of a party in interest or the receiver, the
13 court may order the termination of the receivership if it
14 determines:
15 (1) the conditions that were the grounds for the
16 petition and all other code violations have been abated or
17 corrected, the obligations, expenses and improvements of the
18 receivership, including all fees and expenses of the
19 receiver, have been fully paid or provided for and the
20 purposes of the receivership have been fulfilled;
21 (2) the owner, mortgagee or lienholder has requested the
22 receivership be terminated and has provided adequate
23 assurances to the court that the conditions that constituted
24 grounds for the petition will be promptly abated, all
25 obligations, expenses and improvements of the receivership,
26 including all fees and expenses of the receiver, have been
27 fully paid or provided for and the purposes of the
28 receivership have been fulfilled;
29 (3) the residential building has been sold and the
30 proceeds distributed in accordance with section 8(c); or
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1 (4) the receiver has been unable after diligent effort
2 to present a plan that could be approved under section
3 6(b)(3) or implement a previously approved plan or, for any
4 reason, the purposes of the receivership cannot be fulfilled.
5 Section 10. Sequestration.
6 A municipality may seek the appointment of a sequestrator in
7 the event that an owner shall have outstanding and unpaid
8 municipal claims, including, without limitation, claims arising
9 from code violations, unpaid water, sewer or gas bills or
10 demolition liens, in the same manner and with the same effect as
11 if the owner were delinquent in the payment of taxes. The remedy
12 provided in this section shall be in addition to any other
13 remedies or powers provided by law.
14 Section 11. Effective date.
15 This act shall take effect in 90 days.
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