The Connecticut Supreme Court recently decided a case regarding the powers of a receiver of rents appointed by a municipality. In Town of Canton v. Cadle Properties of Connecticut, Inc., 316 Conn. 851 (May 19, 2015), the Court decided two main issues: (1) whether a receiver appointed by a municipality can collect only rent that was owed by the tenant after the receiver’s appointment; and (2) whether the receiver has the power to commence eviction proceedings against a tenant for delinquent real property taxes for the purpose of leasing the property to a new tenant. As to the first issue, the Court held that the
receiver may use legal process to collect past-due rent. The Court’s decision regarding the second issue, the more interesting part of this case, was that under Connecticut General Statutes 12-163a, the receiver does not have the authority to serve a notice to quit against the delinquent tenant and evict the
tenant; rather, it can only “collect funds and make payments.” The Court determined that only the owner of the property has the authority to evict and replace the defaulting tenant.

The town argued that the Court’s rationale that the receiver cannot commence eviction proceedings against the very tenant it is allowed to sue for nonpayment of rent would be tantamount to having “a toothless lion that is able to roar but not bite.” Part of the dissent’s opinion seized on this point and argued that more elasticity should be extended to the receiver’s authority; otherwise, the statute would be rendered meaningless. The dissent argued that the majority’s holding essentially means that a tenant in default would have no incentive to cure its arrearage—even after an action for nonpayment is commenced by the receiver—because that tenant knows that the receiver does not have the power to go one step further and evict that tenant. The dissent reasoned that the threat of an eviction by the receiver would provide the tenant with the requisite incentive to pay the rental arrearage. A monetary judgment against a delinquent tenant cannot be converted into a judgment of possession without the power to commence an eviction proceeding to cement the tenant’s eviction from the premises. Given that premise, it is not clear why the mere threat of instituting a civil action for nonpayment of rent would incentivize the tenant to pay the receiver.

The Court’s determination that only the owner of the property has the “authority” to evict the tenant, might have overlooked a common scenario within the receivership context: the financial state of affairs of the property owner. In this particular case, the owner of the property owed the town taxes in the amount of $358,220.04. Further, testimony proffered during trial suggested that the owner of the property had “essentially disappeared.” Any absentee owner that owes a municipality a large amount in taxes would likely lack the financial resources necessary to hire a lawyer to evict a tenant.

One of the negative implications of this decision is that the delinquent tenant benefits because even if it is sued for nonpayment, it could presumably continue to occupy the premises (however long) without the threat of being evicted. Moreover, the municipality loses because the tenant knows that a “toothless lion” does not have the power to disturb its continuing occupancy of the premises.