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In Property Revitalization Case, Court Declines To Impose Receivership On Owner Of Common Areas

Lesson. A receivership can be a powerful remedy but only will be granted in unique situations, unless it is a mortgage foreclosure case.

Case cite. Towne & Terrace v. City of Indianapolis, 122 N.E.3d 846 (Ind. Ct. App. 2019).

Legal issue. Whether a receiver should have been appointed in a nuisance/unsafe property case.

Vital facts. Towne & Terrace involved a dispute between the City of Indianapolis (City) and Town and Terrace (T&T), a corporation that developed a condominium complex at 42nd and Post in 1964. Due to crime in the area, in 2014 the City filed a public nuisance suit against T&T for, among other things, safety-related concerns in the complex, including poor conditions in the common areas. The litigation later evolved into a receivership proceeding in which both sides sought the appointment of a receiver for various purposes. The litigation was complicated by the fact that, at the time of the courts’ decisions, the City owned portions of the property, T&T owned portions (mainly common areas), and third parties owned other portions. Please read the opinion for a more in-depth summary of the factual and legal issues in the case, of which there were many. One element of the case dealt with the trial court’s effort to create a public-private partnership to rebuild and recreate “a safe and thriving T&T neighborhood.”

Procedural history. This post relates to the trial court’s order granting the City's motion to appoint a receiver over the property owned and controlled by T&T within the complex.  The trial court ordered both the City and T&T to pay for the receiver’s services, which were to upgrade, repair, and restore the common areas in the complex.

Key rules. Indiana Code 32-30-5 is our state’s general receivership statute. Subsection (7) [aka the “catch all” provision] provides that a receiver may be appointed in cases “as may be provided by law or where, in the discretion of the court, it may be necessary to secure ample justice to the parties.”

Indiana common law provides that "a receiver should not be appointed if the plaintiff has an adequate remedy at law [basically, money damages] or by way of temporary injunction.”

Holding. The Indiana Court of Appeals reversed the appointment of a receiver over T&T, specifically the property T&T owned.

Policy/rationale. T&T did not own any structures in the complex. Thus, T&T’s involvement was limited to common areas that it managed. There was no evidence that those common areas were “so deteriorated that they contribute to the undesirable activities at the complex….” Moreover, T&T had not violated any ordinances or statutes. Because the “extreme necessity” for a receiver did not exist, the Court declined to appoint one. My guess is that an unstated rationale in play was that T&T did not want to fund the receivership and was able to convince the Court of Appeals that it should not have to. Receivers do not work for free.

Related posts.

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My practice includes the representation of lenders and borrowers, as well as receivers, entangled in real estate-related cases. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at john.waller@woodenlawyers.com. Also, don’t forget that you can follow me on Twitter @JohnDWaller or on LinkedIn, or you can subscribe to posts via RSS or email as noted on my home page.

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