Chapter 36A. Tenant Receivership.
§ 42–3651.01. Purpose of the appointment of a receiver.
The purpose of the appointment of a receiver under this chapter shall be to safeguard the health, safety, and security of the tenants of a rental housing accommodation if there exists a violation of District of Columbia or federal law which seriously threatens the tenant’s health, safety, or security. The receiver shall not take actions inconsistent with this purpose or take actions other than those necessary and proper to the maintenance and repair of the rental housing accommodation. Nothing in this chapter shall be construed to limit or abrogate any other common law or statutory right to petition for receivership, nor shall anything in this chapter prevent a tenant or tenant association from asserting as a defense or counterclaim a housing provider's non-compliance with applicable housing regulations.
§ 42–3651.02. Grounds for appointment of a receiver.
(a)(1) A receiver may be appointed if a rental housing accommodation has been cited by the Department of Buildings for a violation of chapters 1 through 16 of Title 14 of the District of Columbia Municipal Regulations or Title 12 of the District of Columbia Municipal Regulations, or its equivalent, which violation poses a serious threat to the health, safety, or security of the tenants; and
(2) The owner, agent, lessor, or manager has been properly notified of the violation but has failed timely to abate the violations; provided, that proper notification shall be deemed to have been effected if a copy of the notice has been served pursuant to applicable law or rule, or as follows:
(A) By personal service on the property owner, lessor, or manager or the agent thereof;
(B) By delivering the notice to the last known home or business address of the property owner, lessor, manager, or agent as identified by the tax records, business license records, or business entity registration records, and leaving it with a person over 16 years of age residing or employed therein;
(C) By mailing the notice, via first-class mail postage prepaid, to the last known home or business address of the property owner, lessor, manager, or agent as identified by the tax records, business license records, or business entity registration records; or
(D) If the notice is returned as undeliverable by the post office authorities, or if no address is known or can be ascertained from the District’s tax, business license, or business entity registration records, by posting a copy of the notice in a conspicuous place in or about the structure affected by such notice.
(b) A receiver may also be appointed if a rental housing accommodation has been operated in a manner that demonstrates a pattern of neglect for the property for a period of 30 consecutive days and such neglect poses a serious threat to the health, safety, or security of the tenants.
(c) For purposes of this section, the term:
(1) "Pattern of neglect" includes evidence that the owner, agent, lessor, or manager of the rental housing accommodation has maintained the premises in a state of disrepair that constitutes a serious threat to the health, safety, or security of the tenants or to the public.
(2) "Serious threat to the health, safety, or security of the tenants" includes violations that involve:
(A) Vermin or rat infestation;
(B) Filth or contamination;
(C) Inadequate ventilation, illumination, sanitary, heating or life safety facilities;
(D) Inoperative fire suppression or warning equipment;
(E) Inoperative doors or window locks; or
(F) Any other condition that constitutes a hazard to tenants, occupants or the public.
§ 42–3651.03. Petition for receivership.
(a) Notwithstanding the availability of any other remedy, the Attorney General for the District of Columbia may, in the name of the District of Columbia and based on the grounds set forth in § 42-3651.02, petition the Superior Court of the District of Columbia (“Court”) to appoint a receiver of the rents or payments for use and occupancy for the affected rental housing accommodation.
(a-1)(1) The Attorney General for the District of Columbia shall have the authority to issue subpoenas related to any investigation when necessary to determine whether adequate grounds exist to file a petition to appoint a receiver or to determine if a person or party subject to a receivership is maintaining other rental accommodations in a state of disrepair that constitutes a serious threat to the health, safety, or security of the tenants or to the public. Such subpoenas shall be for:
(A) The production of documents and materials;
(B) The inspection of premises;
(C) The attendance and testimony of witnesses under oath; and
(D) Sworn written responses to questions.
(2) Subpoenas issued pursuant to this subsection shall conform to the procedures established in § 1-301.88d.
(b) Notwithstanding the availability of any other remedy, a majority of the tenants in the rental housing accommodation may, based on the grounds set forth in § 42-3651.02, submit a written request asking the Attorney General for the District of Columbia to petition the Court to appoint a receiver of the rents or payments for use and occupancy of the affected rental housing accommodation. If the Attorney General for the District of Columbia denies the request or does not file a petition within 5 days, excluding Saturdays, Sundays, and legal holidays, after receiving a request, the requestor may file with the Court a petition for the appointment of a receiver.
(c) Except as provided in § 42-3651.04(b), the Court shall set a date for a hearing on the petition no later than 30 days after the filing of the petition.
§ 42–3651.04. Notice and hearing requirements.
(a)(1) After a petition has been filed under § 42-3651.03, the Chief Judge of the Superior Court, or the 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. The order shall include a notice that the Court will consider, in addition to the grounds for receivership set forth in § 42-3651.02, a plan submitted by the respondent to abate the conditions alleged in the petition.
(2) The order of the Court, along with the notice and a copy of the petition, shall be served on the owner of record, and the 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 rental housing accommodation.
(3)(A) If the petition is not filed by the Office of the Attorney General for the District of Columbia, the order of the Court, along with a copy of the petition, shall be served on the Attorney General for the District of Columbia.
(B) No later than 5 days, excluding Saturdays, Sundays, and legal holidays, after receiving a copy of the petition under subparagraph (A) of this paragraph, the Department of Buildings shall make available to the petitioner for its 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 3 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 before the expiration of the order.
(2)(A) In the event of an ex parte appointment under 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 and a copy of the petition, any supporting affidavits, and the order of appointment:
(i) By personal service within 72 hours after the appointment; or
(ii) 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 under sub-subparagraph (i) of this subparagraph.
(B) In addition, the petitioner shall serve the order of the Court, along with a copy of the petition, on the owner of record at his or her last known address and his or her agent, lessor, or manager at his or her last known address.
(c) A receiver appointed under subsection (b) of this section may immediately collect all rents or payments for use and occupancy of the affected rental housing accommodation and alleviate the conditions cited by the Court in the order appointing the receiver.
§ 42–3651.05. Appointment of a receiver; continuation of ex parte appointment.
(a)(1) 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 finds that the petitioner has proven, by a preponderance of the evidence, the existence of the grounds for receivership as set forth in § 42-3651.02 and finds that the respondent has not provided the Court with a sufficient plan for abatement of the conditions alleged in the petition. As part of any order granting a receivership, the Court may also enjoin the respondent from continuing any of the actions, practices, or patterns of neglect at the rental housing accommodation and at any other rental accommodations owned, managed, or controlled by the respondent.
(2) Upon acceptance of a respondent's plan, the Court shall retain the case for purposes of monitoring respondent's execution of the plan. The monitoring shall continue until the Court, on its own motion or that of any party:
(A) Dismisses the petition on grounds that all conditions that constituted a serious threat to the health, safety, or security of the tenants have been abated; or
(B) Finds the respondent has not made sufficient progress to complete the plan, in which event it may order appointment of a receiver under this section.
(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 the capacity and expertise to develop and supervise a viable financial and construction plan for the satisfactory rehabilitation of the rental housing accommodation.
(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 to the type of housing accommodation being placed in receivership;
(2) A person who has a financial interest in any other real property in common with the owner of the property being placed under receivership; or
(3) A parent, child, grandchild, spouse, or domestic partner as defined in § 32-701(3), sibling, first cousin, aunt, or uncle of the owner of the property being placed under receivership or a tenant of the property being placed under receivership, whether the relationship arises by blood, marriage, or adoption.
(d)(1) Before a receiver takes charge of a rental housing accommodation, the receiver shall post a bond, the premiums of which may be paid in installments, with the Court, which bond:
(A) Does not exceed the value of the rental housing accommodation and its furnishings, records, and other related personal property and goods; and
(B) Is held by the Court for the benefit of all persons interested in the faithful performance of the receivership.
(2) Unless the Court directs otherwise, the receiver may pay the premium of the bond from the rental housing accommodation’s income.
(3) The bond requirement of this subsection may be waived by the Court for good cause.
(e) Any person authorized to file a petition under § 42-3651.03 may petition the Court to appoint a substitute if a receiver:
(1) Dies;
(2) Has or develops a disability which impedes his or her ability to carry out the receivership;
(3) Has or develops a conflict of interest; or
(4) Fails to make reasonable progress in carrying out the receivership.
(f)(1) As part of any proceeding commenced for the appointment of a receiver, or in any plan for abatement presented by a respondent, the Court shall order that the respondent or any owner of the subject rental housing accommodation, or both, contribute funds in excess of the rents collected from the rental housing accommodation for any or all of the following purposes:
(A) Abating housing code violations;
(B) Reimbursing the District of Columbia for any abatements undertaken;
(C) Assuring that any conditions that are a serious threat to the health, safety, or security of the occupants or public are corrected;
(D) Relocating and maintaining tenants displaced during the implementation of any abatement plan into comparable units including paying any difference in the rent due to relocation;
(E) Satisfying the up-front receivership costs, including posting a bond pursuant to subsection (d) of this section, reasonable up-front compensation to the receiver, and any costs associated with obtaining professional studies or evaluations of the property's condition and abatement needs;
(F) Refunding prior rents paid of at least one-half of any month's rent up to 3 years prior to the date the receivership was granted for any period of time that the District of Columbia presents evidence that the rental housing accommodation suffered from a serious state of disrepair; and
(G) For other purposes reasonably necessary in the ordinary course of business of the property, including maintenance and upkeep of the rental housing accommodation, payment of utility bills, mortgages and other debts, and payment of the receiver's fees.
(2) For the purpose of this section, "owner" shall mean any person or entity who, alone or jointly or severally with others, meets either of the following criteria:
(A) Has legal title to the subject rental housing accommodation; or
(B) Has charge, care, or control of the subject rental accommodation, whether as owner or member, in whole or in part, of the legally titled owner, as agent of the legally titled owner, or as a fiduciary of the estate of the legally titled owner or any officer appointed by the court.
§ 42–3651.06. Powers and duties of a receiver.
(a) A receiver shall:
(1) Take charge of the operation and management of the rental housing accommodation and assume all rights to possess and use the building, fixtures, furnishings, records, and other related property and goods that the owner or property manager would have if the receiver had not been appointed; and
(2) Give notice of the receivership, in accordance with subsection (b) of this section, to the rental housing accommodation’s tenants and employees, all public utility providers whom the owner was responsible for paying before 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) Have the power to collect all rents and payments for use and occupancy;
(4)(A) Provide the Court, within 30 days following the issuance of the order of appointment, with a plan for the rehabilitation of the rental housing accommodation, including the projected dates when all causes giving rise to the appointment will be abated and a financial forecast indicating how the rehabilitation will be paid for;
(B) Serve a copy of the plan upon the owner of record, the Attorney General for the District of Columbia, and the tenants of the rental housing accommodation, or their representative;
(5)(A) Report to the Court every 6 months after the filing of the report required under paragraph (4) of this subsection, describing the progress made in abating the conditions giving rise to the appointment, updating the financial forecast for the rehabilitation, and describing any changes in the condition of the rental housing accommodation that may change the proposed completion dates submitted under paragraph (4) of this subsection;
(B) Serve a copy of the report upon the owner of record, the Attorney General for the District of Columbia, and the tenants of the rental housing accommodation, or their representative;
(6) Preserve all property and records with which the receiver has been entrusted;
(7) Assume all rights of the owner to enforce or avoid terms of a lease, mortgage, secured transactions, and other contracts related to the rental housing accommodation and its operation; and
(8) Carry out any other duties established by the Court.
(b) The notice required by subsection (a)(2) of this section shall include, at a minimum, the following information in not less than 12-point type in both English and Spanish:
(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;
(4) The anticipated duration of the receivership; and
(5) That no tenant is required to move as a result of the receivership.
(c) The receiver shall, under the plan described in subsection (a)(4) of this section, make payments in accordance with the following priorities:
(1) As a first priority, using monthly rental income, to abate housing code violations if abatement is required within 7 days of service of notice, and, after abatement of the conditions, to abate housing code violations if abatement is required within 30 days of service of notice; and
(2) As a second priority, for other purposes reasonably necessary in the ordinary course of business of the property, including maintenance and upkeep of the rental housing accommodation, payment of utility bills, mortgages and other debts, and payment of the receiver’s fee.
(d) The receiver shall not make capital improvements to the property except those necessary to abate housing code violations.
(e) The receiver shall not enter into contracts which affect the ownership 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 rental housing accommodation.
(h) The receiver may apply for grants and subsidies for the relief of distressed properties to the same extent as the owner of the rental housing accommodation.
(i) The owner, agent, manager, or lessor shall be enjoined from collecting rents and payments for use and occupancy for the duration of the receivership.
(j)(1) In a case in which the court has appointed a receiver in response to a petition made pursuant to § 42-3651.03, if the court finds, after notice and hearing, that the owner of the rental property currently lacks sufficient funds to pay for rehabilitation of the rental housing accommodation and that such funds cannot be feasibly and timely obtained through grants or subsidies:
(A) The court may issue an order authorizing the Attorney General to supply funding to the receiver, for initial and emergency repairs, from any funds available in the Tenant Receivership Abatement Fund, established by § 1-301.86e; or
(B) The Court may extend the receivership in place under this chapter based on a showing of demonstrated need and authorize the receiver to do either of the following:
(i) Sell the property for a fair-market price to an owner capable of maintaining the property; or
(ii) If the owner is a District of Columbia corporation or other entity, file a petition in the appropriate federal bankruptcy court to place the corporate owner into bankruptcy proceedings pursuant to, and in a manner consistent with, the federal Bankruptcy Code.
(2)(A) If a court issues an order pursuant to paragraph (1)(A) of this subsection, the owner shall be required to repay the funding supplied by the Attorney General no later than 30 days after the receiver receives those funds. Any funds unpaid as of that 30-day deadline shall incur interest at the rate of 6% per annum until repaid. The Attorney General may petition the court to convert the order into a final judgment, and once the order is so converted, the Attorney General may take actions to collect any unpaid balance, using all available collection methods authorized under District or other applicable law.
(B) An owner's obligation to repay funding pursuant to subparagraph (A) of this paragraph shall automatically become a lien on the owner's real property as of the date the Attorney General supplies funds to the receiver pursuant to paragraph (1)(A) of this section.
(C) A lien established pursuant to subparagraph (B) of this paragraph shall be a prior and preferred lien over all other liens or encumbrances on the real property.
§ 42–3651.07. Termination of receivership.
(a) Except as provided in subsection (b) of this section, a receivership shall terminate when:
(1) 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; the receiver has received proper compensation for the services provided; the District of Columbia has been reimbursed for all expenses related to the appointment of the receiver; the District of Columbia has been reimbursed for all expenses related to abatements performed by the District or on its behalf by any third-party; and all fines, infractions, and penalties arising from code violations at the property to date have been paid in full to the District of Columbia; or
(2) The Court determines on recommendation from the receiver that the violations giving rise to the appointment of the receiver cannot be abated and serves a copy of the order within 10 days on the Director of the Department of Buildings.
(b)(1) Notwithstanding subsection (a) of this section, a receivership of a rental housing accommodation shall not be terminated in favor of any person who was the owner of the rental housing accommodation or his representative at the time the petition was filed under § 42-3651.03, 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 of Columbia for the expenses incurred in creating the receivership, for all expenses related to abatements performed by the District or on its behalf by any third-party, and all fines, infractions and penalties arising from code violations at the property to date have been paid in full to the District of Columbia.
(2) The Court may in addition require that, before a person specified in paragraph (1) of this subsection resumes control of a rental 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.
(c) Should it appear that, within 2 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 affected rental 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 (b) (2) of this section to remedy the deficiencies.
(d) As part of any order terminating a receivership, the Court may also permanently enjoin the respondent from continuing any of the actions, practices, or pattern of neglect at the rental housing accommodation and at any other rental accommodations owned, managed, or controlled by the respondent.
§ 42–3651.08. Final Accounting.
Within 30 calendar days after termination of a receivership, the receiver shall give the Court a complete accounting of all property with which he or she has been entrusted, all funds collected, and all expenses incurred.
