The Receivership Process

A health and safety receivership under Tennessee Code Ann. § 13-6-106 is a dramatic, immediate, comprehensive, and systematic tool that ends issues with problem properties without costs to the referring agency or government. Receivership is an effective mechanism to communicate to neighbors and surrounding communities that a municipality/county/agency is taking concrete steps to remedy the problems that the neighborhood has endured as a result of code violations and nuisance conditions.

Under Tennessee’s Neighborhood Preservation Act (NPA), a petitioner may seek an order that a property is a public nuisance and for the abatement of said nuisance. The petitioner may be a nonprofit; a municipal corporation where the property is located; the owner or occupant of a parcel impacted by the subject property; or any interested party. If the court finds the subject property to be a public nuisance, an Order of Compliance is issued, requiring the owner or interested party to file an abatement plan. If no party comes forward after a suitable time period, the court may issue an Order Establishing Non- Compliance and Authorizing Appointment of a Receiver.

A potential receiver submits an Appointment Application for an eligible property, detailing an abatement plan that complies with the statute. The court reviews all applications and nominates a receiver, who will then begin immediate abatement work at the property. A receiver may apply to complete a partial abatement receivership or a full abatement receivership.

Partial Abatement Receivership

In a partial abatement receivership, the receiver stabilizes and secures the property. Once the property is stable and secure, there is a redemption and notice period prior to auction. This gives the property owner another opportunity to pay expenses and redeem the property before it’s sold. If the owner does not come forward, the property is sold at auction to a Qualified Buyer who can demonstrate the knowledge and financial ability necessary to complete the full abatement. Qualified Buyer status is determined by the Court, not by the receiver. Receivership fees and costs are paid through the auction proceeds. The winning Qualified Buyer will complete the full property abatement under monitoring by the receivership.

Full Abatement Receivership

In a full abatement receivership, all abatement work is completed by the receiver. The fully abated property then goes through a redemption and notice period prior to auction, giving the property owner another opportunity to pay expenses and redeem the property before it’s sold. Receivership fees and costs are paid through auction proceeds.

If a receivership auction is not successful, the deed for the property passes to the receiver.

Once the receivership property is fully remediated, either by the Qualified Buyer or by the receiver, the Court reviews status. If the Court agrees that the public nuisance conditions have been abated, the receivership action is terminated and dismissed.

Work with Us as a Qualified Buyer!

Contact us, and we'll add you to our mailing list when new receivership properties become available for auction.

Auction bidders in Shelby County must be certified as Qualified Buyers through the Shelby County Environmental Court. This process demonstrates the buyer’s ability and financial capacity to complete the necessary remediation work.

The Qualified Buyer application and instructions for submission may be found here.

A Health and Safety Receiver is:

A neutral third party appointed by a judge
Given the power to remediate the blighted property based on the submitted abatement plan
Able to fund the remediation work by placing a lien on the property; in some cases, the lien may be given super-priority status
Responsible for reporting all money spent to rehabilitate the property, which becomes part of the Receiver’s Lien
Responsible to the court

Common Reasons to Consider a Receiver:

Unpermitted construction
Fire, hillside stability, or seismic danger
Rampant crime and repeated calls for service
Abandoned and unsecured structures
Occupants living in dangerous conditions
Accumulation of junk and debris, or hoarding
Hazardous materials, asbestos, or mold
An unmaintained exterior with a lack of defensible space
Structural inadequacy or complete failure
Lack of heat, electricity, and running water

The 7-Step Receivership Process

Advantages of a Health and Safety Receivership

1. A health and safety receivership can be the catalyst for lasting change.
2. Valuable taxpayer dollars do not have to be spent repairing private-property nuisances. Through receivership, a property pays its own repair costs, and the work to remedy the code violations and nuisance conditions is not the responsibility of the enforcement agency.
3. The property can be secured on day one of an appointment.
4. The property can be cleaned and the remediation begin shortly thereafter.
5. Once a receiver is appointed an enforcement agency can step back into a monitoring role, reducing the burden on its capacity as the receiver works on the day-to-day issues onsite.
6. Receivership can be applied to a wide variety of properties from single-family homes to multi-unit apartment buildings, commercial properties, and mobile home parks.
7. Tennessee Receivership Group’s approach allows properties of all shapes, sizes, encumbrances, and values to benefit from the receivership remedy.

The Problem

A property owner has been cited and given multiple opportunities to remedy serious code violations at a property, but they are unwilling or unable to comply.

The community has utilized all available code enforcement strategies without success. Valuable community resources have been expended attempting to gain compliance from the owner to no avail. In the meantime, the property has further deteriorated, aggravating the situation for neighbors and the community, with no clear or expected solution.

When prompted, most people can recall a nuisance property. The problem may be an abandoned house that’s become a magnet for vagrants, a motel owner who refuses to put reasonable controls on the conduct onsite, or a corner store that is a constant host of sirens and flashing lights. Most everyone knows a property of this sort, and most everyone has noticed that substantial time typically passes before a change occurs. The property may be a danger and nuisance for anyone living nearby, but it doesn’t seem like anything can be done to change it.

And maybe, it’s been that way for years.

A Solution

The first steps of code enforcement count on a property owner to respond to citations and comply with the law. In some cases, this is not enough, and an additional remedy is needed to ensure the abatement of the code violations: the appointment of a health and safety receiver.

During a receivership, the community can watch the progress as the receiver obtains court approval for the rehabilitation plan and then takes action.

Each receivership property should pay its own costs of repair. Abatement costs should not be the responsibility of the taxpayers in the surrounding community.

We believe that the petitioner that nominated the receiver should not be asked to cover any remediation costs. The priority is abatement and addressing nuisance conditions, even if a property is “underwater.”

Frequently Asked Questions

What is a health and safety receiver?
Unlike the traditional concept of a financial receivership, a health and safety receiver is appointed to remedy the state and municipal code violations at a nuisance property. A receiver is a neutral third party appointed by a judge and given the authority to remedy the issues onsite. Since a receiver can start work immediately after an appointment is granted, receivership can be a quick and effective way to handle emergency situations.

Who can start the process?
Under Tennessee’s Neighborhood Preservation Act, a petitioner can be a nonprofit; a municipal corporation where the property is located; the owner or occupant of a parcel impacted by the subject property; or any interested party.

How can I tell if a nuisance property is right for receivership?
Receivership is appropriate for perpetually hazardous properties when other code enforcement remedies have been unsuccessful. It does not have to be the absolute last-ditch effort, but it is a powerful remedy and should not be used to abate simple problems. A court can appoint a receiver on single-family homes, apartment buildings, hotels, motels, and other commercial properties. Depending on the court’s determination, the powers can be as broad or as limited as necessary. Receivership is a useful tool for pressing situations since the receiver can be onsite making a difference immediately after appointment. Please contact us with any property-specific questions.

What are the steps in the receivership process?
Step 1: Identify the Nuisance Property: A petitioner identifies a nuisance property in violation of state or local codes, as well as the owner’s failure to correct these violations.
Step 2: Request Order Determining Nuisance Property: The petitioner requests an Order of Compliance from the court, determining that a property is a public nuisance under the Neighborhood Preservation Act, and requesting abatement of the nuisance.
Step 3: Court Order of Compliance: After publication and notice of the petitioner’s request, if no party comes forward with an abatement plan, the court may find the subject property to be a public nuisance and issue an Order of Compliance.
Step 4: Court Order of Non-Compliance: If no party comes forward with an abatement plan, the Court may issue an Order Establishing Non-Compliance and Authorizing Appointment of Receiver.
Step 5: Appointment of a Receiver: Once a receiver is appointed, the property is under control of the court via the court-appointed receiver.
Step 6: Implementing the Rehabilitation Plan: The receiver begins work on the plan provided as part of the Receivership Application—either a stabilization plan for partial abatement receiverships, or a full abatement plan for full abatement receiverships. If a partial abatement, the stabilized property is auctioned to a Qualified Buyer, who then completes the full abatement under the receiver’s oversight.
Step 7: Termination & Discharge of Receivership: After the property is fully remediated, the court will terminate and discharge the receivership.

I’ve never filed a petition for a nuisance property before; where can I get help?
Tennessee Receivership Group can explain the receivership process. Each case is different, and every owner and property present their own issues. So, while it is up to the petitioner to file the papers, TRG can explain the necessary requirements.

What happens after the receiver is appointed?
Once the receivership application receives judicial approval, the bulk of the work lies with the receiver. The rehabilitation plan provided with the appointment application provides the blueprint for the work to be done. The receiver should be onsite immediately following the appointment to inspect the property and initiate the first steps. The receiver must file reports to update the court and parties regarding the receivership status. The receivership ends when the violations are abated, and the receivership is terminated and dismissed.

How is the receivership funded?
The receiver, under the authority and supervision of the appointing court, can borrow against the property and uses those funds to pay for emergency relocation, property rehabilitation, demolition, or other work as authorized by the court in order to bring the property into compliance with local and state regulations. This becomes the Receiver’s Lien on the property that may have priority status for reimbursement.

What happens if the owner or occupants are living onsite?
In most cases, it is too dangerous for anyone living onsite to remain while violations are present and remediation work is ongoing. The receiver can provide financial and physical assistance to any occupants, including those who are not living there legally, to help them relocate temporarily or permanently to safe, habitable housing. In some cases, this is unnecessary. Each case is unique, and the need for relocation depends on the scope of work and scale of conditions. These are case-dependent situations, based on the parties, their participation, and ultimately on the court’s evaluation of what has to be done.

Does an owner regain control of the property after receivership?

An owner has multiple opportunities to abate the property prior to appointment of a receiver, and there is also a period after the receiver’s abatement is complete when the owner can redeem the property and regain control.

Prior to appointment, there is a required notice and publication period after the petitioner has requested an Order of Compliance. The owner may come forward at this time with an abatement plan to resume control of the property.
If no party comes forward with an abatement plan, the Court may issue an Order of Compliance and again wait for an owner or interested party to come forward with an abatement plan.
If no one comes forward, the Court may issue an Order Establishing Non-Compliance and Authorizing Appointment of Receiver. There is typically also a period after this Order is issued and prior to receivership appointment, during which the owner may again come forward with an abatement plan.

If an owner does not come forward by this point, a receiver is appointed and completes the necessary work.

Prior to sale or auction, there is again a notice period; during this time, the owner has the option to pay the Receiver’s Lien and retain ownership. If the receivership was a partial abatement, the owner will be responsible for finishing the remediation.

If the owner does not come forward with a remediation plan at any point during this process, the property can be sold with court approval.

What is the legal basis for receivership in Tennessee?
The grounds for a the receivership process are laid out in the Neighborhood Preservation Act, Tenn. Code Ann. §§ 13-6-101 to 108.

Health and Safety Receiverships for Nuisance Properties in Tennessee