Michael Darcy v. Petura R. Billie
DECISION RE MOTION FOR APPOINTMENT OF RECEIVER OF RENTS (# 152)
The plaintiff, Michael Darcy, has moved for the appointment of a receiver of rents 1 in this matter for the reason that the property is an investment property; the first and second mortgages are delinquent; and the defendant, Petura R. Billie, is not utilizing the rents received from the property to pay expenses in connection with the property and the plaintiff's position is being jeopardized. The court, by decision dated December 22, 2011, denied an identical motion but without prejudice to the plaintiff's right to renew the motion. A new motion was file on December 30, 2011 and was heard by the court on January 9, 2012 at which time the plaintiff and his attorney appeared, as did the defendant, who is representing herself in this matter. The plaintiff submitted exhibits which, he believed, addressed the issues the court relied on in denying his previous motion. The plaintiff claimed that the defendant is collecting rent from tenants at the property but not using the funds to pay the mortgages, taxes or upkeep of the property. He submitted photographs which indicate that the property is in disrepair. The defendant claims that the taxes and utilities are up to date and that although the first mortgage is in foreclosure she is working with the bank in that matter to resolve it. Although the defendant made this same claim when the previous motion was heard, no evidence was presented of any actual agreement having been reached between the defendant and the bank. The defendant indicated that she was awaiting paperwork from the bank. Although the bank has indicated in correspondence to the defendant that the foreclosure is stopped,2 the action is still pending and the defendant has been defaulted. The plaintiff counters that the first mortgage holder, and not the defendant, has paid the real estate taxes, which diminishes further the plaintiff's interest in the property.
In the present action a judgment of strict foreclosure was entered on February 16, 2010 at which time the court found the defendant's debt to the plaintiff to be $21,872.07 and the value of the property to be $80,000.00. The property is a four-unit apartment building. The foreclosure worksheet submitted at that time notes that encumbrances in the amount of $134,876.00 are prior in right to the plaintiff's mortgage. Consequently, if Citimortgage's foreclosure proceeds, Darcy's interest in the property will likely be foreclosed out. Darcy, although named as a defendant in that action, has not appeared in the action and has been defaulted. If this action proceeds, and the plaintiff takes the property by strict foreclosure subject to the prior encumbrances, he indicated that he would attempt to work out a payment arrangement with the holders of those liens, although no evidence was presented that they would be willing to do so. The plaintiff also provided a copy of the mortgage which provides for an assignment of rents as additional security. The mortgage provides that the defendant may utilize the rents as long as she is not in default of the mortgage.
The plaintiff cites the criteria the court should utilize when determining whether a receiver of rents should be appointed as those set forth by the court in Antonino v. Johnson, 113 Conn.App. 72, 77–78 (2009): “(1) whether waste or loss is occurring ․ (2) the risk to the foreclosing party that he will recover less than the full amount of his debt, that is, whether the deficiency is certain or only threatened ․ and (3) whether there are provisions in lending documents that allow or require the appointment of a receiver in the event of the mortgagor's default.” (Internal citations omitted.) In any event, the appointment of a receiver is within the discretion of the court. Lasalle Bank v. Shook, 2001 WL 538901 (Conn.Super.).
Here it now appears that waste is occurring on the property. The pictures provided to the court indicate that the property is in need of repair and the plaintiff stated that there was water in the stairway when he visited the property. As to the second criteria, it is unlikely that the plaintiff will recover his debt in this proceeding or that there is any equity in the property to which his interest has attached. However, his ability to collect any money is being further eroded by the payment of taxes by the first mortgagee which increases the amount of the encumbrances prior to the plaintiffs. Lastly, the mortgage, which was submitted to the court, assigns the right to the rents to the plaintiff. In its previous decision the court noted that, if a receiver of rents is appointed, it could undermine the defendant's ability to comply with any payment plan she may have entered into with Citimortgage and jeopardize her ability to forestall its foreclosure, however there has been no evidence presented to the court that, in fact, such a payment plan has been agreed to by Citimortgage.
Therefore, for all the reasons set forth above, the motion of the plaintiff for appointment of a receiver of rents is granted subject to the plaintiff's submission of a proposed order to the court for approval by January 30, 2012.
Jane S. Scholl, J.
FN1. Although this matter is currently the subject of an appeal, the appointment of a receiver is not subject to any stay, if applicable. Lasalle Bank v. Shook, 2001 WL 538901 (Conn.Super.) [29 Conn. L. Rptr. 462], and Fedor v. Taylor, 2000 WL 177298 (Conn.Super.) [26 Conn. L. Rptr. 396].. FN1. Although this matter is currently the subject of an appeal, the appointment of a receiver is not subject to any stay, if applicable. Lasalle Bank v. Shook, 2001 WL 538901 (Conn.Super.) [29 Conn. L. Rptr. 462], and Fedor v. Taylor, 2000 WL 177298 (Conn.Super.) [26 Conn. L. Rptr. 396].
FN2. The court previously took judicial notice of the file in that matter, Citimortgage v. Billie, CV 106009498.. FN2. The court previously took judicial notice of the file in that matter, Citimortgage v. Billie, CV 106009498.
Scholl, Jane S., J.