A Rhode Island Appellate Court Addresses Requirement of Legal Standing in Receivership Case

After a party fails to manage their property accordingly, a real estate dispute may involve the court-ordered appointment of a temporary receiver who steps in to manage the property on that party’s behalf. The Rhode Island Supreme Court recently issued an opinion in a real estate case involving condominiums and a receivership. The court addressed whether plaintiffs lacked standing to appoint a temporary receiver after the defendant failed to make payments and make repairs to the units. The court ultimately vacated the lower court’s order, removing the appointment of a temporary receiver. This case highlights the complexities in bringing a receivership case due to the requirement of having legal standing.

According to the opinion, the defendants owned nine out of thirteen of the condominiums while the plaintiffs owned the remaining four units. Because the defendant owned a majority of the units, the defendant had a controlling voting share in the condominium association. The association failed to hold an annual meeting in 2017 and 2018 and collected no assessment fees until January 2020.

In April 2019, the roof of the condominium began to leak and repairs were not made in a timely fashion. The defendant argued that repairs were not made due to the insurance carrier and that a receiver should not be appointed, while the plaintiff argued that it was willful or negligent on part of the association and that the condominium should go into receivership. A receiver is appointed by the court when a person is deemed incapable of managing their affairs, allowing the receiver to manage the property on their behalf instead.

The defendant also missed payments due to its mortgagee, which led the mortgagee to foreclosure on the defendant’s mortgage. In all, the plaintiffs argued that the defendants had not finished the condominium units, had not provided appropriate maintenance, and had been the subject of multiple foreclosures. A temporary receiver was eventually appointed, to which the defendants appealed and argued that the plaintiffs lacked standing to file a motion to appoint a temporary receiver.

The appellate court explained that a party either has standing when they suffer injury or as a result of a statute expressing the party as a beneficiary who has standing. For receiverships, standing is available only for shareholders of a corporation and its creditors. Here, the plaintiffs were not shareholders or creditors although they attempted to argue so, and the plaintiffs lacked any standing from statutory authority. As a result, the appellate court vacated the order appointing a temporary receiver.

Obtaining Legal Advice for a Rhode Island Property Dispute

If you are facing a property dispute in Rhode Island, contact the experienced attorneys at Bilodeau Capalbo. The attorneys at Bilodeau Capalbo have experience handling receiverships and are skillful at advising their clients on how to meet their objectives when attempting to resolve disputes. Having a skilled attorney to assist you in your Rhode Island property disputes can be essential to navigating complex legal matters. Contact our offices today at 401-300-4055 to schedule a free consultation and discuss your case.