Section 4670. Receiverships

1.  The  council  may, if it determines that
  serious operational deficiencies exist  or  serious  financial  problems
  exist  and  such  action  is desirable, enter into an agreement with the
  operator or owners  of  a  fee-for-service  continuing  care  retirement
  community  with  respect to the appointment of a receiver to take charge
  of the community under conditions as found acceptable by  both  parties.
  Receivership  commenced  in  accordance  with  the  provisions  of  this
  subdivision shall terminate at such time  as  may  be  provided  in  the
  receivership  agreement,  or  at  such time as either party notifies the
  other in writing that it wishes to terminate such receivership.
    2. Upon request of the council, the commissioner shall, at the time of
  revocation, suspension or  temporary  suspension  of  a  certificate  of
  authority,  apply  to  the supreme court where the community is situated
  for an order directing the owner of the land and/or structure on  or  in
  which  the community is located, to show cause why a receiver should not
  be appointed to take charge of the community. In those cases  where  the
  certificate  of  authority  has  been  revoked, suspended or temporarily
  suspended, the supreme  court  shall  appoint  a  receiver  that,  where
  reasonably possible, is a legal entity that holds a valid certificate of
  authority.  Such  application  shall contain proof by affidavit that the
  facility has had its certificate  of  authority  revoked,  suspended  or
  temporarily  suspended. Such order to show cause shall be returnable not
  less than five days after service is completed  and  shall  provide  for
  personal  service of a copy thereof and the papers on which it is based,
  on the owner or owners of the land and/or structures on or in which  the
  community  is  located.  If  any  such owner and manager cannot with due
  diligence be served personally within the county where the  property  is
  located  and  within  the  time fixed in such order, then service may be
  made on such person by posting a copy thereof  in  a  conspicuous  place
  within  the  community  in  question,  and  by sending a copy thereof by
  registered mail, return receipt requested, to such  owner  at  the  last
  address  registered  by him or her with the department or in the absence
  of such registration to the address set forth in the last recorded  deed
  with respect to the facility. Service shall be deemed complete on filing
  proof of service thereof in the office of the county clerk, or the clerk
  of the city of New York, as the case may be.
    3.  On  the  return of said order to show cause, the matter shall have
  precedence over every other business of the court unless the court shall
  find that some other pending  proceeding,  having  a  similar  statutory
  precedence,  shall  have  priority.  The  court may conduct a hearing at
  which all interested parties  shall  have  the  opportunity  to  present
  evidence  pertaining  to  the  application.  If the court shall find the
  facts warrant the granting thereof, then any such qualified and approved
  agency, person  or  corporation,  or  the  commissioner  or  any  person
  designated  by  the  commissioner,  shall  be appointed receiver to take
  charge and assume operation of the community. However, such receiver may
  make application to the appointing court for  decision,  reformation  or
  such other relief as may be appropriate to protect the best interests of
  the  residents  residing  within such community. No security interest in
  any real or personal property comprising the community shall be impaired
  or diminished in priority by the receiver. The receiver shall compensate
  the owner or owners of any goods held in inventory for those goods which
  he or she uses or causes to be used by reimbursing  the  costs  of  such
  goods,  except that no such compensation shall be made for any goods for
  which the owners  or  operators  of  the  community  have  already  been
  reimbursed.
    4.  Any  receiver appointed pursuant to this section shall have all of
  the powers and duties of a receiver appointed in an action to  foreclose

  a  mortgage  on  real property, together with such additional powers and
  duties as are granted and imposed pursuant to this section. The receiver
  may correct  or  eliminate  those  deficiencies  in  the  facility  that
  seriously  endanger  the  life,  health,  safety  or  finances  of  such
  residents subject to such terms as the court may  direct.  The  receiver
  shall  operate  the  community  in  such  a manner as intended to assure
  safety and adequate care for such residents.  Any  receiver  who  is  an
  official  or  employee  of  the  state shall not be required to file any
  bond. The receiver  shall  honor  all  existing  leases,  mortgages  and
  chattel  mortgages that had previously been undertaken as obligations of
  the owners or operators of the community.
    5. The appointing court, upon application of the  receiver,  may  make
  such  provision  as  justice may require for reasonable compensation and
  reimbursement of the reasonable expenses of the receiver.  The  receiver
  shall  be  liable  only  in  his  or her official capacity for injury to
  person and property by reason of conditions of the community in  a  case
  where  an owner would have been liable; provided that he or she operates
  such facility in compliance with the terms of his  or  her  appointment,
  the  receiver  shall  not  have  any  liability  in  his or her personal
  capacity, except for gross negligence and intentional acts.
    6. a. The court  shall  terminate  the  receivership  only  under  the
  following circumstances:
    (i) when the community is issued a new certificate of authority; or
    (ii)  at  such time as all of the residents in the community have been
  provided alternate residential and health care services.
    b. At the time of termination, the receiver shall render  a  full  and
  complete  accounting  to the court and shall make disposition of surplus
  money at the discretion of the court.
    7. a. Any person who is served  a  copy  of  an  order  of  the  court
  appointing  the  receiver  shall,  upon  being  notified of the name and
  address of the receiver, make all payments for  goods  supplied  by  the
  community,  or  services  rendered  by the community, to the receiver. A
  receipt shall be given for each such payment, and  copies  of  all  such
  receipts  shall  be kept on file by the receiver. The amount so received
  shall be deposited by the receiver in a special account which shall also
  be used for all disbursements made by the receiver.
    b. Any person refusing or omitting to make such a payment  after  such
  service  and  notice  may  be sued therefor by the receiver. Such person
  shall not in such suit dispute the authority of the receiver to incur or
  order such expenses, or the right of the receiver to such payments  made
  to  him or her. The receipt provided by the receiver for any sum paid to
  him or her shall, in all suits  and  proceedings  and  for  every  other
  purpose,  be  as effectual in favor of any person holding the receipt as
  actual payment of the amount thereof to the operator or other person  or
  persons  who  would,  but  for the provisions of this section, have been
  entitled to receive the sum to be paid. No resident shall be discharged,
  nor shall any contract or rights  be  forfeited  or  impaired,  nor  any
  forfeiture  or  liability  be incurred, by reason of any omission to pay
  any operator, owner, contractor or other person any sum so paid  to  the
  receiver.
    8.  Any  other  provision of this article notwithstanding, the council
  may, if it deems  appropriate,  grant  to  any  community  operating  or
  scheduled  to  operate under a receivership authorized by this section a
  certificate of authority, the duration of which shall be limited to  the
  duration of the receivership.
    9.  a.  No  provision  of  this section shall be deemed to relieve the
  operator, owner or manager of any civil or criminal liability  incurred,
  or  any  duty  imposed  by  law,  by  reason of acts or omissions of the

  operator, owner or manager prior to  the  appointment  of  any  receiver
  pursuant  to  this  section,  nor  shall  anything  in  this  section be
  construed to suspend during the receivership any obligation of the owner
  for  the payment of taxes or other operating and maintenance expenses of
  the community nor of the owner or any other person for  the  payment  of
  mortgages or liens.
    b.  The receiver shall not be responsible for any obligations incurred
  by the owner, manager or prime lessor, if any, prior to the  appointment
  of  the  receiver, other than those obligations to residents pursuant to
  the fee-for-service continuing care contracts.
    c. The receiver shall be entitled to use for operating and maintenance
  expenses and the basic needs of the residents of the community a portion
  of the revenues due the operator during the month in which the  receiver
  is  appointed,  which  portion  shall be established on the basis of the
  amounts of the unpaid operating and maintenance expenses for such month.