TITLE XI
HOSPITALS AND SANITARIA

CHAPTER 151-H
RECEIVERSHIP OF NURSING HOMES AND OTHER RESIDENTIAL CARE FACILITIES

Section 151-H:5

    151-H:5 Leases, Mortgages or Secured Transactions. –
I. During the period of receivership, a receiver shall honor any lease, mortgage, or agreement granting security interests entered into by the licensee, owner or owners, or administrator, unless the court:
(a) Makes a determination in writing, upon the filing of a motion by the receiver to avoid any such lease, mortgage or security agreement and a hearing at which interested persons are allowed to participate, that based on clear and convincing evidence presented by the receiver that the lessor, lender, or secured party entered into such agreement with the licensee, the owner or owners, or the administrator for a fraudulent purpose or to hinder or delay creditors or the agreement is unrelated to the operation of the facility; and
(b) Orders the receiver to avoid such agreement. The court shall hold a hearing on any such motion within 15 days of the date of filing. At least 10 days prior to the hearing, the receiver shall provide a copy of the motion to the licensee, owner or owners, administrator, lessees, mortgagees, secured parties, and lienholder of record of the property.
II. If the receiver is in possession of real or personal property subject to a lease which the receiver is permitted to avoid, as provided in paragraph I of this section, and if the possession of such property is necessary for the continued operation of the facility, the receiver shall motion the court to set a reasonable rent to be paid by the receiver to the person entitled thereto during the duration of the receivership. The court shall hold a hearing on the motion within 15 days of the date of filing. The receiver shall send notice of the application to any owners of record and to mortgagees and other secured parties and lienholders of record of the property involved at least 10 days prior to the hearing. In no event shall the amount set by the court exceed what is reasonable for the facility. Payment by the receiver of the amount determined by the court to be reasonable shall be a defense to any action against the receiver for payment or for the possession of said property subject to the lease involved by any person who received such notice, but the payment shall not relieve the owner or operator of the facility of any liability following the termination of the receivership for the difference between the amount paid by the receiver and the amount due under the original lease.
III. Notwithstanding paragraphs I and II of this section, or any other federal or state law to the contrary, there shall be no foreclosure or eviction of the facility by the property owner during the receivership period.
IV. Nothing in this section shall be deemed to relieve any licensee, owner or owners, administrator, or employee of a facility placed in receivership of any civil or criminal liability incurred, or any duty imposed by law, by reason of acts or omissions of the licensee, owner or owners, administrator, or employee prior to the appointment of a receiver; nor shall anything contained in this section be construed to suspend during the receivership any obligation of the licensee, owner or owners, administrator, or employee for payment of taxes or other operating and maintenance expenses of the facility nor of the licensee, owner or owners, administrator, employee or any other person for the payment of mortgages or liens. The owner or owners shall retain the right to sell or mortgage any facility under receivership, subject to approval of the court.

Source. 2012, 162:1, eff. June 7, 2012.