What’s a Receiver?
A receiver is a person or company appointed by a government entity, court, or other party to take over the day-to-day operations of a community association. Like a good property manager, a receiver pays bills, collects income and schedules repairs. Receivers take charge when communities can’t come together in a quorum with a functional board of directors, or when the community is troubled from legally elected officials who have lost favor with a majority of owners because of perceived or actual mismanagement, fraud, or theft.
Members of the association can petition the Superior Court to appoint a receiver to handle the community’s business when they are unhappy about how their money is being spent or how their property is being maintained. It is a temporary, but an expensive fix that can last a few years or more. The costs are high because members must pay for court fees and the professional receiver’s services. These expenses will be added to owners’ regular assessments and the HOA’s normal operating expenses.
Receivers have more power than the board of directors in enforcing the CC&Rs and implementing budgets. Title holders get help managing their money and property with a receiver, but lose voting rights and their ‘voice’ once a receiver is appointed.
A better option for troubled associations is to consider hiring a good management firm that they can authorize to take over jobs previously handled by the board. When errant board members are the problem, a majority of members can vote to reassign board duties to the management company. If it’s necessary to pay a few members to serve on the board to have a quorum and the legal documents allow it, a receiver can assume the board’s responsibilities.
A strong management company can eliminate the need for a receiver. While getting a receiver is an option, it isn’t the only one. To avoid the stigma of receivership and a loss of power over their own affairs, homeowners should check their legal documents, determine what flexibility there is establishing a proper board, and discover other options to avoid the receivership option altogether.