In Chicago, property owners are responsible to maintain their properties in liveable condition. When a building develops a leaky roof or its foundation is damaged, or the plumbing backs up or the wiring fails, the owner is expected to repair it. If the owner can’t or won’t keep up with their responsibilities, receivership is one way to ensure that properties and buildings will be repaired and continue to operate safely.
Receivership is decided by a judge. The judge also appoints a receiver to complete essential repairs. The owner continues to own the building and is responsible for paying the receiver for their work.
The receivership process does not always work as it’s supposed to. For example, when a property is in a neighbourhood where house prices are low, receivers tend to be less interested in taking on the expenses and repairs.
And where are real estate values lower? In neighbourhoods that have historically been redlined1 and where the negative impacts of sub-prime lending2 hit hard.
Neighbourhoods on the south and west sides of Chicago are places where receivers aren’t stepping up to repair buildings. This includes receivers in for-profit businesses as well as non-profit receivership operations. They all need to profit or at least break even on their expenses for labour and materials3. When there’s no receiver, the next step can be demolition.
Local leaders on the south and west sides of Chicago are building out the receivership industry by training up community receivers.
The course is designed to support newbies in the business by teaching them how it works and coaching them to test their new skills. Trainees are people who want to see damaged properties in neighbourhoods with low house prices repaired and maintained.
Since the course began in 2020, more than 500 people have completed receivership training and 16 buildings have been restored by community receivers. Once the course is completed, there are more hurdles, but it’s a start.
If you’re looking for ideas to strengthen investment in neighbourhoods, this article about community receivership could be of interest. You can read more about the program and how it is evolving at Next City4: Black Investors Are Taking Back a Legal Tool to Restore Chicago’s Affordable Housing
Footnotes
- For more on redlining, try: Redlining: What Was It? And Should We Be Asking “What Is It?” Because It’s Still With Us, And It’s Bad and A History of Evolving Planning Prejudice in America
- Subprime mortgages are loans to individuals with credit ratings that don’t qualify for a conventional mortgage. Read more on the sub-prime market failure in History: Great Recession
- Chicago also has public programs that provide funding to owners so they can make repairs, but the number of homes that are eligible for the programs is way more than the available funding.
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