griswold-law-banning-ca-receivershipCalifornia law is not clear on whether Health & Safety Code section 17980.7 applies to commercial properties. When a court is considering appointing a health and safety receiver over a commercial property, the arguments between the municipality petitioner and any objecting party typically focus on the distinction between a “residential” property and a “commercial” property. Objecting parties (typically the property owner or an existing lienholder objecting to the receivership appointment) argue that the statute mentions “residential buildings” and does not specifically use the word “commercial,” therefore the California legislature must have intended to exclude commercial properties from the statute’s application.

The municipality’s argument often focuses on two major points.

  1. The argument goes that the purpose of the statute was to protect the general public, as well as occupants, of substandard properties. The “type” of property is not the focus.
  2. Municipalities typically highlight the specific factual nature of the property and its condition. For instance, many times abandoned commercial projects are left sitting vacant for years. These abandoned “commercial” properties can become “residences” for homeless individuals, attractive nuisances for children in the neighborhood and an inviting location for criminal activity.

Finally, municipalities do have options. Should a health and safety receivership appointment be denied, a municipality may seek the appointment of a receiver under Code Civ Proc section 564(b)(9). That subsection permits the appointment of a receiver where “necessary to preserve the property or rights of any party.” As a municipality petitioner, a receiver may be sought to preserve a substandard property and/or the rights of the residents of that municipality to be free from a dangerous nuisance property.