§ 38-12-513 — Receivership of residential housing - definition

Colorado § 38-12-513

• Jurisdiction: Colorado
• Title 38: Property -
• Art.: Tenants and Landlords

Text

(1) The purpose
of this section is to establish a receivership mechanism that will be available as a
remedy for violations of applicable laws and regulations by the landlord of
multifamily residential property. The duties of a receiver are to achieve the
purposes of this part 5 pursuant to section 38-12-501, to ensure that multifamily
residential property is fit for human habitation as required by section 38-12-503 (1),
and to ensure that the multifamily residential property complies with all county or
municipal public health codes or municipal ordinances regulating public health and
safety that apply to multifamily residential property.

(2) The following parties may apply to the district court for the appointment
of a receiver to operate a multifamily residential property:

(a) The attorney general, when the attorney general has reasonable cause to
believe that any person, whether in this state or elsewhere, has engaged in or is
engaging in a pattern of neglect in connection with the multifamily residential
property; and

(b) A county, city and county, or municipality when the county, city and
county, or municipality has reasonable cause to believe that any person, whether in
this state or elsewhere, has engaged in or is engaging in a pattern of neglect in
connection with the multifamily residential property.

(c) As used in this subsection (2), unless the context otherwise requires,
pattern of neglect means evidence that a person has maintained the multifamily
residential property in a state of disrepair that constitutes a threat to the health,
safety, or security of the tenants or the public. A threat to the health, safety, or
security of the tenants includes:

(I) A vermin or rat infestation;

(II) Filth or contamination;

(III) Inadequate ventilation, illumination, sanitary, heating, or life safety
facilities;

(IV) Inoperative fire suppression or warning equipment;

(V) Inoperative doors or window locks; and

(VI) Any other condition that constitutes a hazard to tenants, occupants, or
the public.

(3) (a) A petitioner seeking the appointment of a receiver pursuant to this
section must file an application with the district court for the county or city and
county where the multifamily residential property is located.

(b) (I) The district court shall not hold a hearing concerning an application for
the appointment of a receiver pursuant to this section sooner than three business
days after the following parties have been served with notice thereof, as provided in
the Colorado rules of civil procedure:

(A) The landlord of the multifamily residential property;

(B) Any lessee or mortgagee of the multifamily residential property, except
that the failure to serve any such party whose name and address are not available
to the petitioner does not preclude the court from holding the hearing or
invalidating the proceeding so long as the notice is posted at the property;

(C) The city or town in which the multifamily residential property is located;

(D) The county or city and county in which the multifamily residential
property is located;

(E) The attorney general's office;

(F) The department of local affairs; and

(G) If the multifamily residential property is subject to a form of local, state,
or federal government subsidy or support or other government assistance that has
a recorded use covenant upon the property, the provider of that subsidy, support, or
other government assistance.

(II) In providing notice pursuant to subsection (3)(b)(I) of this section, a party
does not have to provide notice to itself.

(III) A petitioner seeking the appointment of a receiver pursuant to this
section must conspicuously post notice of the petition on and around the relevant
multifamily residential property. This notice shall include the phone number and
email address of the petitioner. The petitioner is strongly encouraged to post the
notice in languages other than English, if the petitioner is aware that those
languages are spoken by the property's tenants.

(c) An application for appointment of a receiver pursuant to this subsection
(3) has precedence and priority over any civil or criminal case pending in the district
court where the application is filed.

(4) (a) The district court's appointment of a receiver pursuant to this section
shall be in accordance with and governed by rule 66 of the Colorado rules of civil
procedure.

(b) To appoint a receiver pursuant to this section, the district court must find
that:

(I) Grounds for the appointment of a receiver exist due to a finding by the
district court, based on a preponderance of the evidence, supporting the relevant
claims in an application submitted by a party pursuant to subsection (2) of this
section; and

(II) Proper notice as required by subsection (3) of this section has been
served.

(c) A receiver appointed by the district court pursuant to this section must be
a person with knowledge and experience in the operation, maintenance, and
improvement of residential housing. The receiver must be financially and legally
independent of the multifamily residential property's ownership or management.
The district court may also require that the receiver post a bond with adequate
sureties as determined by the court.

(d) In appointing a receiver pursuant to this section, the district court must
hold a hearing, at which time the parties may appear and be heard.

(e) Following the hearing described in subsection (4)(d) of this section, if the
court appoints a receiver, the court must enter an order of appointment that
specifies the duties and responsibilities of the receiver, which must include that the
receiver:

(I) Within thirty days of being appointed by the district court, submit a plan to
the district court for the remediation of any violations of this part 5, other than a
violation of section 38-12-503 (5), a county or city and county public health code, or
a municipal ordinance;

(II) Take the actions necessary to ensure that the multifamily residential
property is no longer in violation of this part 5, other than a violation of section 38-12-503 (5), a county or city and county public health code, or a municipal ordinance;

(III) No later than every thirty days after being appointed by the district
court, submit an accounting and status report to the district court, which must
include actions that have been completed and actions that are still ongoing to
achieve compliance with this part 5, a county or city and county public health code,
or a municipal ordinance; and

(IV) At the end of the receivership, as described in subsection (8) of this
section, submit a final accounting and status report to the court, which must
include actions that have been completed and actions that are still ongoing to
achieve compliance with this part 5, a county or city and county public health code,
or a municipal ordinance.

(5) (a) A receiver appointed by the district court pursuant to this section has
the power to:

(I) Remediate any violation by the multifamily residential property of this
part 5, other than a violation of section 38-12-503 (5), a county or city and county
public health code, or a municipal ordinance;

(II) As necessary to accomplish the remediation and compliance described in
subsection (5)(a)(I) of this section:

(A) Enter into new contracts;

(B) Borrow money;

(C) Secure funds by granting liens upon the multifamily residential property;
and

(D) Receive rent from tenants of the multifamily residential property; and

(III) Exercise any other powers deemed necessary by the district court and
not inconsistent with rule 66 of the Colorado rules of civil procedure.

(b) The receiver's fees established in the district court's order of
appointment entered pursuant to subsection (4)(e) of this section may only be
covered by money that the receiver raises pursuant to subsection (5)(a)(II)(C) of this
section.

(c) In exercising its powers pursuant to this subsection (5), a receiver is not
required to employ standard public bidding practices and may:

(I) Carry out executory contracts;

(II) Enter into new contracts;

(III) Borrow money;

(IV) Mortgage or pledge property;

(V) Sell assets at public or private sale;

(VI) Make and receive conveyances in the corporate name;

(VII) Lease real estate;

(VIII) Settle or compromise claims;

(IX) Commence and prosecute all actions and proceedings necessary to
enable liquidation; and

(X) Distribute assets either in cash or in kind among members according to
their respective rights after paying or adequately providing for the payment of
liabilities.

(6) The receiver shall perform duties, assume responsibilities, and preserve
the multifamily residential property in accordance with established principles of
law for receivers of real property. In so doing, the receiver:

(a) Shall perform their duties in a way that minimizes, to the greatest extent
possible, further disruption of the multifamily residential property's tenants;

(b) Shall communicate, at least once a week, in a manner reasonably
calculated to be received by the multifamily residential property's tenants, such as
by conspicuously posting communications on and around the property or on the
property's online tenant portal, concerning what measures the receiver is taking to
bring the property into compliance with a county or city and county public health
code, or a municipal ordinance and otherwise bringing the property into compliance
with this part 5;

(c) Shall first apply rents received pursuant to subsection (5)(a)(II)(D) of this
section toward the payment of any utilities or services for the multifamily
residential property;

(d) After applying rents received pursuant to subsection (5)(a)(II)(D) of this
section as described in subsection (6)(c) of this section, shall apply rents received
pursuant to subsection (5)(a)(II)(D) of this section toward the cost of remediating
any violation by the multifamily residential property of this part 5, other than a
violation of section 38-12-503 (5), a county or city and county public health code, or
a municipal ordinance and otherwise bringing the property into compliance with this
part 5;

(e) After applying rents received pursuant to subsection (5)(a)(II)(D) of this
section as described in subsection (6)(d) of this section, shall apply rents received
pursuant to subsection (5)(a)(II)(D) of this section for purposes reasonably
necessary in the ordinary course of business of the multifamily residential property,
including maintenance and upkeep of the property; mortgages, or other debts; and
payment of the receiver's fees;

(f) Has a fiduciary duty to the owner of the multifamily residential property
to maintain and preserve the property so long as the violation by the multifamily
residential property of this part 5, other than a violation of section 38-12-503 (5), is
addressed, and owes a duty to the property's residents;

(g) Shall not initiate a forcible entry or detainer action or proceeding related
to the nonpayment of before the beginning of the receivership;

(h) May initiate a forcible entry or detainer action or proceeding related to
the nonpayment of rent that occurs during the receivership; and

(i) Shall not increase rents, fees, or costs charged to the multifamily
residential property's tenants beyond the levels of the rents, fees, and costs
charged when the court appointed the receiver.

(7) Nothing in this section prevents the court from altering or amending the
terms and conditions of the receivership or the receiver's responsibilities and duties
following a hearing, at which time the parties may appear and be heard, and nothing
in this section prohibits the parties from stipulating to the terms and conditions of
the receivership and the responsibilities and duties of the receiver, including the
duration thereof, which stipulation must be submitted to the court for approval.

(8) (a) No sooner than ninety days after the district court has appointed a
receiver for a multifamily residential property, any of the following may submit an
application to the district court seeking the termination of the receivership:

(I) The landlord of the multifamily residential property;

(II) Any lessee of the entire multifamily residential property;

(III) The attorney general's office;

(IV) The city or town in which the multifamily residential property is located;
and

(V) The county or city and county in which the multifamily residential
property is located.

(b) A district court may only terminate a receivership if it:

(I) Receives an application to terminate the receivership pursuant to
subsection (8)(a) of this section;

(II) Finds that terminating a receivership is in the public interest and in the
best interest of the multifamily residential property's tenants; and

(III) Finds that the landlord, operator, or manager of the multifamily
residential property has:

(A) Demonstrated that it will carry out, in the time frame most recently
approved by the court pursuant to subsection (4) or (7) of this section, any
remaining actions identified by the receiver as necessary to ensure that the
multifamily residential property is no longer in violation of this part 5, other than a
violation of section 38-12-503 (5), a county or city and county public health code, or
a municipal ordinance;

(B) Paid or deposited with the district court any money necessary for the
receiver to complete their duties pursuant to this section;

(C) Agreed to assume all legal obligations, including debt or liens, incurred
by the receiver in connection with the receivership of the multifamily residential
property;

(D) Paid any costs incurred by the receiver in connection with the
receivership of the multifamily residential property; and

(E) Posted a bond with the district court in an amount determined by the
district court and equal to not more than fifty percent of the fair market value of the
multifamily residential property, which bond is forfeited in the event of future
violation by the multifamily residential property of this part 5, other than a violation
of section 38-12-503 (5), a county or city and county public health code, or a
municipal ordinance and failure to bring the multifamily residential property into
compliance with this part 5, county or city and county public health codes, and
municipal ordinances, and which bond is released when the actions, obligations, and
indebtedness identified in this subsection (8)(b)(III) are completed or otherwise
satisfied.

(c) Notwithstanding subsection (8)(b) of this section, the district court may
terminate the receivership upon a finding that the receiver has completed its work
and that all violations by the multifamily residential property of this part 5, other
than a violation of section 38-12-503 (5), a county or city and county public health
code, or a municipal ordinance have been remedied and the multifamily residential
property has been brought into compliance with this part 5, county or city and
county public health codes, and municipal ordinances.

(d) Upon a finding that the landlord of the multifamily residential property
has not complied with any of the conditions identified in subsection (8)(b)(III) of this
section, the district court may reappoint the receiver.

(e) After terminating the receivership pursuant to this subsection (8), the
district court:

(I) May appoint the receiver, or another qualified entity that satisfies the
requirements of a receiver established in subsection (4)(c) of this section, to
monitor the landlord's operation and maintenance of the multifamily residential
property;

(II) Shall order a final accounting and finally fix the fees and expenses of the
receiver following a hearing, at which time the parties may appear and be heard;
and

(III) Shall require the receiver to communicate in a manner reasonably
calculated to be available to the multifamily residential property's tenants, such as
by conspicuously posting communications on and around the property or on the
property's online tenant portal, that the receivership has been terminated and the
name, phone number, and email address of the owner, manager, or other entity that
will assume the responsibility of making the property compliant with this part 5, a
county or city and county public health code, or a municipal ordinance.

(9) Notwithstanding anything in this section to the contrary:

(a) Nothing in this section relieves the landlord of the multifamily residential
property of any civil or criminal liability or any duty imposed by reason of acts or
omissions of the landlord, nor does the district court's appointment of a receiver
suspend any obligation the landlord of the multifamily residential property or any
other person may have for payment of taxes, any operating or maintenance
expenses, or mortgages or liens, or for repair of the multifamily residential
property;

(b) A receiver appointed by a district court pursuant to this section is liable
for injuries to persons and property to the same extent as the landlord of the
multifamily residential property would have been liable; except that, such liability is
limited to the assets and income of the receivership, including any proceeds of
insurance purchased by the receiver in its capacity as receiver;

(c) A receiver is not personally liable for actions or inactions within the scope
of the receiver's capacity as receiver;

(d) Only a suit approved by the district court that appoints the receiver may
be brought against the receiver;

(e) Nothing in this section limits the right of tenants to seek a remedy for a
violation of this part 5, other than a violation of section 38-12-503 (5), including a
breach of the warranty of habitability, that occurred before the appointment of a
receiver pursuant to this section;

(f) Nothing in this section limits the powers of any home rule municipality to
enact ordinances or otherwise safeguard the health, safety, and welfare of
residents of multifamily residential properties; and

(g) Nothing in this section limits the right of tenants to raise any
counterclaims or defenses in any summary process or other action regarding
possession brought by a receiver.

Legislative History

Source: L. 2025: Entire section added, (SB 25-020), ch. 264, p. 1357, � 6, effective August 6.