This memorandum addresses the substantive amendments to California Health & Safety Code §17980 enacted through Senate Bill 1465 (“SB 1465”), signed by Governor Gavin Newsom on September 22, 2024. The legislation took effect January 1, 2025.
Historically, California Health & Safety Code §17980 has provided local enforcement agencies with statutory authority to petition courts for receivership appointments over substandard residential properties where a health officer has determined that specific conditions substantially endanger “the life, limb, health, property, safety, or welfare of the public or its occupants.” The statute’s application to non-residential properties remained unclear, limiting municipalities’ ability to effectively address unsafe conditions in commercial and mixed-use buildings through receivership remedies.
DISCUSSION/ANALYSIS
Definition of “Substandard Building” Expanded
SB 1465 expands the definition of “substandard building” within the meaning of H&S 17920.3 to include “any building or portion thereof, regardless of zoning designation or approved uses of the building…” (Health & Safety Code § 17920.3.). This revision addresses an ambiguity in the law that previously existed wherein it had been argued that Sections 17980.6 and 17980.7 of the Health & Safety Code, the statutory provisions relied on to appoint a receiver, only applied to residential buildings. The Legislature has now made it clear that the Health & Safety Code applies to all buildings, addressing a critical gap in enforcement authority. The new standard requires consideration of danger to three distinct groups: occupants of the building, nearby residents, and the general public.
It is not uncommon for abandoned commercial and industrial buildings to attract transients and squatters, especially during the winter months. In these circumstances, it is also common to see fires occur at these buildings, endangering not only the occupants but also the surrounding buildings and the community at large.
Expanding the definition of substandard buildings to include commercial and non-residential properties, provides local agencies with the ability to utilize and rely on a legal mechanism that has been highly effective in addressing substandard residential properties in the state for the past three decades. For example, municipalities can use this legal mechanism to address: (1) illegal cannabis operations, (2) abandoned or vacant properties used or known by law enforcement to be a haven or “hot spot” for drugs, prostitution, gang activity and/or other criminal activity, and (3) problematic properties with a history of dispropionate calls for service and police assistance (e.g. nightclubs, multi-unit housing complexes and/or hotels/motels).
Procedural Requirements for “Unoccupied” Buildings
SB 1465 sets forth specific procedural requirements that must be met in order to obtain a receiver over a substandard building based solely on the property being “unoccupied” (Health & Safety Code § 17980(c)(3)). While in practice it is rare to see a court appoint a receiver based on a single code violation, it is noteworthy that the Legislature found it necessary to codify these additional procedural requirements.
“Appointment or Replacement” of a Receiver Appointed Pursuant to Another Law
SB 1465 also amends Section 17980.7(c) to add that the “appointment of a receiver for a substandard building pursuant to another provision of law shall not prevent an enforcement agency from seeking, or the court from appointing or replacing, a receiver pursuant to this section” (Health & Safety Code § 17980(c)).
In practice, this provision has limited application but could theoretically apply in situations involving properties with complex ownership structures and where a court has appointed a receiver to oversee the dissolution of a business or partition of a property. In that case, the fact that a receiver is already appointed would not preclude a city from seeking to either appoint or replace the existing receiver if it is determined that the existing receiver lacks the requisite experience or knowledge to abate nuisance conditions or rehabilitate substandard properties.
No Automatic Stay on Appeal
SB 1465 added a provision that states that an appeal of a court order or judgment shall not stay the proceedings absent a writ (Health & Safety Code § 17980.7 (i)) Previously, when a property owner or recorded interest appealed the order appointing a receiver, receivers would cease work until a ruling on the appeal was rendered. This provision adds an additional hurdle for the appealing party that unless they specifically sought, and were granted, a writ by the appellate court, the receiver can commence their work as ordered by the Superior Court. In practice, this revision could eliminate potential delays in enforcement created by the appeals process wherein a property can sit for months with no action taken while the matter is under review by the appellate court.
Cost Recovery
SB 1465 also amended Health & Safety § 17992, which applies to new owners who take an ownership interest after the notice of pendency of action is recorded. The amendment makes clear that new owners can be found “liable for any costs and fees of the receiver or enforcement agency” (Health & Safety Code 17992). This change in the law can be especially helpful for properties that change ownership due to a recent foreclosure by a bank or other lender.
CONCLUSION
With the passage of SB 1465, the Legislature has given cities and public agencies an additional enforcement tool to abate any substandard building regardless of zoning designation. By virtue of expanding the definition of substandard buildings and making it possible to utilize the Health & Safety Code to appoint a receiver over commercial buildings, it also makes it possible for cities to obtain cost recovery where such cost recovery was limited under the law. Cities can now address unsafe conditions or illegal activity across all property types through receivership and strategically expand enforcement in this area without concern over the potential economic impact litigation could have on their budgets.
While the amendments also create some new procedural requirements in certain instances, they ultimately strengthen municipalities’ ability to protect public health and safety by widening the reach of the Health & Safety Code. This expanded authority, coupled with stronger cost recovery provisions, creates a more effective framework for addressing substandard buildings, regardless of zoning designation.
Should you have any questions or wish to initiate a receivership action through our office, please do not hesitate to contact our office at (916) 771-0635 and/or submit an electronic intake-evaluation form at https://jones-mayer.com/contact/#receivership-form
Information on www.jones-mayer.com is for general use and is not legal advice. The mailing of this Memorandum is not intended to create, and receipt of it does not constitute, an attorney-client-relationship.