The Tenant Receivership Act

The Tenant Receivership Act (TRA) is a District law that allows the Attorney General to ask a judge to appoint a “Receiver” to address chronic health and safety issues at a rental property. A receiver is a neutral third party who takes control of the property, makes all decisions about its management and operation, and ensures necessary repairs are made. The receiver must be a person or company with experience managing rental properties, as well as the knowledge and skills to assess what repairs are needed at a building and to hire and supervise professionals to make the repairs.

When does this law apply?

The TRA applies to situations where there are risks to life, health and safety because of chronic neglect by the owner or manager. A judge can appoint a Receiver if the judge agrees that at least one of the following is true:

  1. The Department of Buildings (DOB) has served Notices of Violation ordering the owner to repair code violations that present a risk to health, safety, and security, and the owner failed to correct the code violations in the time allowed.

    Example: DOB inspects an apartment building on the first day of the month and finds that there are no smoke alarms or fire extinguishers anywhere in the building. The inspectors write a Notice of Violation to the owner that tells the owner to fix the problem in five days. The inspectors send that notice by mail, and the owner receives the mail on the third day of the month. The owner has until the 8th of the month to fix the problem. If the smoke alarms and fire extinguishers are still missing on the 9th, that would be grounds for appointing a Receiver.
     
  2. The owner has engaged in a pattern and practice of neglect that has resulted in risks to health, safety, or security that have been present for more than 30 days.

    This ground for a receiver is useful where problems caused by landlord’s neglect are difficult or impossible for DOB to cite. For example, DOB does not cite for mold. Other problems our office has seen that did not have DOB citations:
  • Pest infestation: Sometimes tenants experience chronic pest infestation for more than 30 days, but the DOB inspector does not see signs of pests on the day they come to inspect, so they do not issue a citation for that problem.
  • Roof or plumbing leaks: In some cases, landlords will repair walls and ceilings damaged by chronic leaks, without actually fixing the cause of the leak.

How does the Attorney General build a case for a Receiver?

When our office hears about a property that might need a Receiver, we will investigate the situation to see whether the facts justify filing a case. OAG generally hears about problematic properties in one of two ways: DOB Notices and tenant complaints based on their experiences.

DOB Notices: OAG will

  1. Review existing DOB Notices
  2. Schedule a property-wide inspection
  3. Schedule a follow-up inspection to see whether owner fixed the violations

Tenant Experiences: OAG will

  1. Speak to Tenants Association or to tenants directly. If there is no Tenant Association, our office may ask tenant organizers to help with outreach to tenants.
  2. Make sure all residents can provide access to DOB for property-wide inspections.
  3. Collect tenant statements and other relevant evidence about conditions in the property.

What is the remedy? (What does the Receiver do?)

If OAG makes the case for appointing a Receiver and the judge agrees that a Receiver is necessary, the Receiver “takes over” property management and:

  • Collects rents;
  • Makes emergency repairs;
  • In the first 30 days, conducts an assessment of needs at the property and creates a plan for fixing the property (an “abatement plan”);
  • Submits the abatement plan to the judge in the case for review by the judge and the parties;
  • Controls the property until all repairs have been made OR the court ends the Receivership for another reason.

Important Exception: Before the court decides to appoint a Receiver, the owner of the property can propose their own abatement plan:

  • The law states that the owner can propose to fix problems at the property through their own abatement plan instead of having a Receiver appointed.
  • Courts are often inclined to allow owners this last chance before appointing a Receiver.
  • If owner fails (“defaults”) under the terms of their own plan, a Receiver can be appointed.

Tenant Receivership and Consumer Claims

When the Attorney General files a petition to appoint a Receiver under the TRA, we will also file consumer protection claim as part of the same case. While a Receiver addresses conditions going forward, a consumer claim allows our office to get some repayment for tenants for the rent they paid while living in dangerous or unhealthy conditions caused by the owner’s neglect.

The District’s consumer protection statute protects consumers from fraud in the representation of a consumer good. In a consumer case about rental apartments:

  • The rental property is the consumer good;
  • The representation is the “implied warranty of habitability” – anyone who rents an apartment is implicitly claiming that the apartment is in a livable and safe condition.
  • The fraud is the poor condition of the property.