Tex.
Local Gov't Code Section 214.0031
Additional Authority to Appoint Receiver for Hazardous Properties
(a)
In this section:(1)
“Eligible nonprofit housing organization” means a nonprofit housing organization that is certified by a home-rule municipality to bring an action under this section.(2)
“Multifamily residential property” means any residential dwelling complex consisting of four or more units.(b)
A home-rule municipality may annually certify one or more nonprofit housing organizations to bring an action under this section after making the following findings:(1)
the nonprofit housing organization has a record of community involvement; and(2)
the certification will further the home-rule municipality’s goal to rehabilitate hazardous properties.(c)
A home-rule municipality or an eligible nonprofit housing organization may bring an action under this section in district court against an owner of property that is not in substantial compliance with one or more municipal ordinances regarding:(1)
the prevention of substantial risk of injury to any person; or(2)
the prevention of an adverse health impact to any person.(d)
A municipality that grants authority to an eligible nonprofit housing organization to initiate an action under this section has standing to intervene in the proceedings at any time as a matter of right.(e)
The court may appoint a receiver if the court finds that:(1)
the property is in violation of one or more ordinances of the municipality described by Subsection (c);(2)
the condition of the property constitutes a serious and imminent public health or safety hazard; and(3)
the property is not an owner-occupied, single-family residence.(f)
The following are eligible to serve as court-appointed receivers:(1)
an entity with, as determined by the court, sufficient capacity and experience rehabilitating properties; and(2)
an individual with, as determined by the court, sufficient resources and experience rehabilitating properties.(g)
Notwithstanding Subsection (f), an entity is ineligible to serve as a receiver for a multifamily residential property if the nonprofit housing organization that brought the action under this section has an ownership interest or a right to income in the entity.(h)
The home-rule municipality or eligible nonprofit housing organization must send by certified mail notice of any ordinance violation alleged to exist on the property on or before the 30th day before the date an action is filed under this section to:(1)
the physical address of the property; and(2)
the address as indicated on the most recently approved municipal tax roll for the property owner or the property owner’s agent.(i)
In an action under this section, each record owner and each lienholder of record of the property shall be served with notice of the proceedings or, if not available after due diligence, may be served by alternative means, including publication, as prescribed by the Texas Rules of Civil Procedure. Actual service or service by publication on a record owner or lienholder constitutes notice to each unrecorded owner or lienholder.(j)
On a showing of imminent risk of injury to a person occupying the property or present in the community, the court may issue a mandatory or prohibitory temporary restraining order or temporary injunction as necessary to protect the public health or safety.(k)
Unless inconsistent with this section or other law, the rules of equity govern all matters relating to a court action under this section.(l)
Subject to control of the court, a court-appointed receiver has all powers necessary and customary to the powers of a receiver under the laws of equity and may:(1)
take possession and control of the property;(2)
operate and manage the property;(3)
establish and collect rents and income on the property;(4)
lease the property;(5)
make any repairs and improvements necessary to bring the property into compliance with local codes and ordinances and state laws, including:(A)
performing and entering into contracts for the performance of work and the furnishing of materials for repairs and improvements; and(B)
entering into loan and grant agreements for repairs and improvements to the property;(6)
pay expenses, including paying for utilities and paying taxes and assessments, insurance premiums, and reasonable compensation to a property management agent;(7)
enter into contracts for operating and maintaining the property;(8)
exercise all other authority of an owner of the property other than the authority to sell the property unless authorized by the court under Subsection (n); and(9)
perform other acts regarding the property as authorized by the court.(m)
A court-appointed receiver may demolish a single-family structure on the property under this section on authorization by the court and only if the court finds:(1)
it is not economically feasible to bring the structure into compliance with local codes and ordinances and state laws; and(2)
the structure is:(A)
unfit for human habitation or is a hazard to the public health or safety;(B)
regardless of its structural condition:(i)
unoccupied by its owners or lessees or other invitees; and(ii)
unsecured from unauthorized entry to the extent that it could be entered or used by vagrants or other uninvited persons as a place of harborage or could be entered or used by children; or(C)
boarded, fenced, or otherwise secured, but:(i)
the structure constitutes a danger to the public even though secured from entry; or(ii)
the means used to secure the structure are inadequate to prevent unauthorized entry or use of the structure in the manner described by Paragraph (B)(ii).(n)
On demolition of the structure, the court may authorize the receiver to sell the property to an individual or organization that will bring the property into productive use.(o)
On completing the repairs or demolishing the structure or before petitioning a court for termination of the receivership, the receiver shall file with the court a full accounting of all costs and expenses incurred in the repairs or demolition, including reasonable costs for labor and supervision, all income received from the property, and, at the receiver’s discretion, a receivership fee of 10 percent of those costs and expenses. If the property was sold under Subsection (n) and the revenue exceeds the total of the costs and expenses incurred by the receiver plus any receivership fee, any net income shall be returned to the owner. If the property is not sold and the income produced exceeds the total of the costs and expenses incurred by the receiver plus any receivership fee, the rehabilitated property shall be restored to the owner and any net income shall be returned to the owner. If the total of the costs and expenses incurred by the receiver plus any receivership fee exceeds the income produced during the receivership, the receiver may maintain control of the property until all rehabilitation and maintenance costs plus any receivership fee are recovered or until the receivership is terminated.(p)
A receiver shall have a lien on the property for all of the receiver’s unreimbursed costs and expenses, plus any receivership fee.(q)
Any lienholder of record may, after initiation of an action under this section:(1)
intervene in the action; and(2)
request appointment as a receiver under this section if the lienholder demonstrates to the court an ability and willingness to rehabilitate the property.(r)
A receiver appointed under this section or the home-rule municipality or eligible nonprofit housing organization that filed the action under which the receiver was appointed may petition the court to terminate the receivership and order the sale of the property if an owner has been served with notice but has failed to repay all of the receiver’s outstanding costs and expenses plus any receivership fee on or before the 180th day after the date the notice was served.(s)
The court may order the sale of the property if the court finds that:(1)
notice was given to each record owner of the property and each lienholder of record;(2)
the receiver has been in control of the property and the owner has failed to repay all the receiver’s outstanding costs and expenses of rehabilitation plus any receivership fee within the period prescribed by Subsection (r); and(3)
no lienholder of record has intervened in the action and tendered the receiver’s costs and expenses, plus any receivership fee, and assumed control of the property.(t)
The court may order the property sold:(1)
to a land bank or other party as the court may direct, excluding, for multifamily residential properties, an eligible nonprofit housing organization that initiated the action under this section; or(2)
at public auction.(u)
The receiver, if an entity not excluded under Subsection (t), may bid on the property at the sale described by Subsection (t)(2) and may use a lien granted under Subsection (p) as credit toward the purchase.(v)
The court shall confirm a sale under this section and order a distribution of the proceeds of the sale in the following order:(1)
court costs;(2)
costs and expenses, plus a receivership fee, and any lien held by the receiver; and(3)
other valid liens.(w)
Any remaining amount shall be paid to the owner. If the owner cannot be identified or located, the court shall order the remaining amount to be deposited in an interest-bearing account with the district clerk’s office in the district court in which the action is pending. The district clerk shall hold the funds as provided by other law.(x)
After the proceeds are distributed, the court shall award fee title to the purchaser. If the proceeds of the sale are insufficient to pay all liens, claims, and encumbrances on the property, the court shall extinguish all unpaid liens, claims, and encumbrances on the property and award title to the purchaser free and clear.(y)
This section does not foreclose any right or remedy that may be available under Section 214.003 (Receiver), other state law, or the laws of equity.
Source:
Section 214.0031 — Additional Authority to Appoint Receiver for Hazardous Properties, https://statutes.capitol.texas.gov/Docs/LG/htm/LG.214.htm#214.0031 (accessed Jun. 5, 2024).
