PETITION FOR JUDGMENT IN REM FOR NUISANCE
Present law authorizes an acceptable petitioner to file a petition for a judgment in rem against a subject parcel, naming the subject parcel as the defendant and seeking an order that the subject parcel is a public nuisance and for the abatement of the public nuisance. A proceeding pursuant to this present law must be a proceeding in rem. If the applicable municipal corporation is not the acceptable petitioner, then the applicable municipal corporation must be put on notice of the in rem proceeding and provided with a full copy of the petition as filed by the acceptable petitioner. If the acceptable petitioner has not attached a certificate of public nuisance to the petition, the municipal corporation must complete an inspection of the subject parcel within 30 calendar days after the first setting of the matter in court, and the court must promptly schedule a hearing on the issue of public nuisance. At the conclusion of the hearing on the issue of public nuisance, the court must determine whether or not the issuance of a certificate of public nuisance is warranted. The court must dismiss the action if the subject parcel is found not to be a public nuisance by the court.
Present law requires the filing of a petition for a judgment in rem to create a receiver's lien that secures an undetermined amount until the court establishes the amount. The precise amount of the receiver's lien will be established by the court at any time upon the request of any owner, interested person, or the receiver. The receiver's lien must be a first lien on the subject parcel, which is superior to all prior and subsequent liens or other encumbrances associated with the subject parcel. The acceptable petitioner must file for record in the register's office of the county an abstract certified by the clerk, within one day of certification by the clerk, containing the names of the parties to the suit, a statement that petition has been filed, a description of the subject parcel and its ownership, and a brief statement of the nature and amount of the lien sought to be imposed, all in compliance with existing law, which filing acts as a lien lis pendens against the subject parcel. The outstanding principal amount of the receiver's lien carries interest at a standard statutory rate applicable to judgment liens.
This bill removes the requirement that the precise amount of the receiver's lien will be established by the court at any time upon the request of any owner, interested person, or the receiver.
ABATEMENT PLAN
Prior to ordering any action be taken to abate the public nuisance, present law requires the court to cause a detailed development plan to be submitted for review, which must include the following:
(A) A detailed budget for abating the public nuisance;
(B) A projected timeline for abating the public nuisance;
(C) If repair and rehabilitation of the subject parcel are found not to be feasible, the cost of demolition of the subject parcel or of the portions of the subject parcel that constitute the public nuisance; and
(D) The terms, conditions, and availability of any financing that is necessary to abate the public nuisance or a show of sufficient assets.
Present law provides that if the receiver is submitting the plan, then the receiver may petition the court for authority to conduct an auction and sale to a qualified buyer without abatement of the public nuisance upon showing that the terms of the auction minimum bid will include a bond or other security, in an amount fixed by the court, ensuring performance of the remediation within nine months of the date of the auction sale, executed by the qualified buyer in favor of the receiver.
This bill revises the above provisions to, instead, require a stabilization plan submitted by a proposed receiver to provide the following in writing: (i) a detailed budget for stabilizing the subject parcel; (ii) a projected timeline for stabilizing the subject parcel; and (iii) the terms, conditions, and availability of any financing that is necessary to stabilize the subject parcel or a show of sufficient assets.
If the court deems a plan submitted by a receiver to be sufficient and appropriate, present law authorizes the court to empower the receiver to (i) take possession and control of the subject parcel; (ii) pay all expenses of operating and conserving the subject parcel, including obtaining property insurance; (iii) pay prereceivership mortgages or installments of such mortgages and other liens; and (iv) implement the plan; provided, that, if the plan requires demolition, the court must order that the demolition be done properly and in compliance with applicable laws.
This bill adds to the present law by authorizing the court to empower the receiver to pay all outstanding municipal fines, penalties, expenditures, and assessments and all amounts attributable to state and local taxes and assessments, including all outstanding amounts secured by delinquent property tax liens.
Present law requires the receiver to file a report with the court every 60 calendar days and, upon completion of the detailed development plan, must file a final report with the court indicating that the public nuisance has been abated and moving for the establishment of the full amount of the receiver's lien. Upon a finding by the court that the public nuisance has been abated and establishing the amount of the receiver's lien, the owner must be put on notice that the owner has 30 days from such finding to satisfy the receiver's lien in full. If the owner satisfies the receiver's lien in full during such time, the receivership must be terminated by order of the court.
This bill adds to the present law by requiring an owner or interested party that satisfies a receiver's lien established pursuant to a receiver's completion of a stabilization plan to submit and complete a public nuisance abatement plan.
AUCTION
If the receiver's lien is not satisfied by the owner pursuant to the existing law, present law requires the court to direct the receiver to offer the subject parcel for sale in accordance with the following:
(1) The sales procedure must follow the procedures provided in existing law regarding notice, plan of division of land, and published start and end time for auctions;
(2) The minimum bid at a receiver's lien sale must be the full amount of the receiver's lien;
(3) If any local land bank notifies the receiver in writing in advance of the receiver's lien sale that it wishes to enter the minimum bid for cash for the subject parcel, then such minimum bid must preempt all other bids, and the local land bank must be the prevailing bidder;
(4) If there is no bidder at the receiver's lien auction for greater than the minimum bid, the subject parcel must be transferred by receiver's deed to the receiver, and there is no requirement of cash payment of the minimum bid by the receiver;
(5) When the successful bid is paid in cash, the amount of the minimum bid is paid to satisfy the receiver's lien, including payment to the appropriate property tax officials, of that portion of the receiver's lien that constituted delinquent property taxes. Any surplus must be distributed, as approved by the court, to the owner and interested persons in the priority in which their interests encumbered the subject parcel prior to the auction; and
(6) The receiver must report the prevailing bid at the sale to the court, and upon approval by the court, a receiver's deed must be issued to the successful bidder and promptly recorded in the office of the register of deeds. The county trustee must be allowed a credit pursuant to existing law for any local taxes and assessments that are not collected as a result of the failure of the receiver's lien sale to receive a cash payment for the minimum bid. Title must be absolute in the purchaser, and the interests of any interested persons prior to the auction must be terminated as of the date of the sale. The receivership must be terminated after the sale by order of the court after a hearing on receiver's motion for termination of the receivership.
This bill clarifies that the sale of the subject parcel is through an auction.
This bill also revises (3) above to, instead, provide that if the receiver has completed work pursuant to an approved stabilization plan, then only bidders who have been certified by the court as qualified buyers may bid at the receiver's auction. The terms of the auction must include the requirement of a bond or other security, in an amount fixed by the court, ensuring abatement of the public nuisance within nine months of the date of the closing of the sale to the qualified buyer. If a qualified buyer prevails at such an auction and the qualified buyer's bid is approved by the court, then the receiver's plan must be amended by the court to include supervision of the qualified buyer and reports to the court of the qualified buyer's progress until the abatement of the public nuisance is completed, at which time the receivership must be terminated by order of the court after a hearing on the receiver's motion for termination of the receivership.
This bill also removes the requirement in (6) above that allows the county trustee a credit for any local taxes and assessments that are not collected as a result of the failure of the receiver's lien sale to receive a cash payment for the minimum bid. Further, this bill clarifies in (6) above that except as provided in (3) above, the receivership must be terminated after the sale by order of the court after a hearing on receiver's motion for termination of the receivership.
RECEIVER'S LIEN DEFINITION
As used in present law, a "receiver's lien" means a first priority lien in favor of the receiver against the subject parcel that, with regard to the subject parcel, upon approval of the court, secures (i) any and all direct and indirect expenses and costs incurred by the receiver, including reasonable attorney's fees and costs; (ii) any and all outstanding municipal fines, penalties, expenditures, and assessments; (iii) any and all amounts attributable to state and local taxes and assessments, including any and all outstanding amounts secured by delinquent property tax liens; and (iv) a fee, payable to the receiver, equal to 10 percent of the total of the amounts provided under (i), but in no event less than $2,500. This bill deletes (ii) and (iii).
ON MARCH 28, 2024, THE HOUSE ADOPTED AMENDMENT #1 AND PASSED HOUSE BILL 2567, AS AMENDED.
AMENDMENT #1 makes the following changes:
(1) Establishes that a "receiver's lien" means a first priority lien in favor of the receiver against the subject parcel of land that, with regard to the subject parcel, upon approval of the court, secures any and all reasonable expenses and costs incurred by the receiver, including reasonable attorney's fees and costs;
(2) Clarifies that if a subject parcel is found to be a public nuisance, then the finding must take place after a hearing, and the court must issue an order of compliance requiring the owner of the subject parcel to produce a plan for the abatement of the public nuisance; and
(3) If the court deems a plan submitted by any certified person appointed by the court for the purpose of preserving or improving the subject parcel ("receiver") to be sufficient and appropriate, authorizes the court to empower the receiver to pay all outstanding municipal fines, penalties, expenditures, and assessments and all amounts attributable to state and local taxes and assessments, including all outstanding amounts secured by delinquent property tax liens; however, within 30 days of being appointed, a receiver is required to fully satisfy all outstanding amounts secured by delinquent property tax liens.

Statutes affected:
Introduced: 13-6-102(15)(A), 13-6-102, 13-6-102(15), 13-6-106(c)(1), 13-6-106, 13-6-106(c)(2), 13-6-106(e), 13-6-106(f), 13-6-106(g), 13-6-106(h), 13-6-106(i)(1), 13-6-106(i)(2), 13-6-106(j), 13-6-106(j)(2), 13-6-106(j)(3), 13-6-106(j)(4), 13-6-106(j)(5), 13-6-106(j)(6)