Receiverships and conservatorships are ripe for abuse in California

Pop star Britney Spears shocked the world in June when she begged a Los Angeles court for power over her own life and estate, which her father and a private guardian have controlled since 2008. She cannot even choose her own attorney to fight for her rights.

Though Ms. Spears’ story is what made waves in the media, these complicated legal arrangements are not extraordinary—especially in California. And when even the wealthiest Californians cannot escape them, everyday Californians are left with little hope in a system stacked against them.

This system is dominated by two similar legal processes—conservatorships and receiverships—that grant decision-making rights to a trustee to act in the best interests of the owner of a property.

But both processes let opportunists exploit those people and their property. A conservator like Britney Spears’ father can control how she lives her life and uses her property—while he gets paid from that same property. And a receiver likewise takes over someone’s property—while that receiver (or an assortment of lawyers) pay themselves out of that property’s equity.

Retired Norco homeowner Ron Mugar found out about receiverships the hard way. When Mugar was hospitalized for heart surgery, his house was put into receivership because he had a cluttered yard.

My public interest law firm, the Institute for Justice, represented Mugar. When he got out of the hospital, he fixed the property himself. He admits he had clutter around his home, but nothing that endangered his neighbors. The problem was manageable, and Mugar took care of it without the receiver’s help.

Mugar’s home was within weeks completely code-compliant, foiling Norco’s attempt to give the home to a receiver. Yet despite his victory, Norco still saddled Mugar with a $100,000 bill—to pay the lawyers the city had hired for the receivership proceedings.

Mugar’s case, like Spears’, shows how the system works against property owners. It is often these fees, and not any purported “health and safety” concerns, that truly drive these arrangements. Take the case of Mary Lou Jacobs, whose property was put into a receivership by a private law firm. Her receiver wanted over $100,000 more than the actual cost of bringing her property up to code.

Once the legal maneuvering begins, California is not innocent. The state rigs the system in favor of conservators and receivers, making it incredibly difficult to challenge their appointment or decisions. As Mugar discovered, even if you win, you stand to lose thousands in fees to greedy lawyers.

Speaking of lawyers, courts and governments have no reason not to abuse these processes. That’s because all their costs—including attorneys’ fees—are normally paid from the property under control. So a conservator’s or receiver’s fees, as well those of the government’s lawyers, are completely cost-free to the cities or courts that use these processes.

California has a cottage industry of law firms that profit—at no cost to government entities—off of receiverships and similar processes. That profit motive makes receiverships, like conservatorships, ripe for abuse.

Receiverships and conservatorships are sometimes necessary. But they are extreme tools meant for extreme situations. They are sledgehammers, too often used when chisels would do. At the very least, these legal processes shouldn’t be profit opportunities for conservators, receivers or their lawyers.

Lawmakers must change the game, by removing the profit opportunities from powerful legal processes and ensuring property owners get due process. In the meantime, if any good can come out of Britney Spears’ tragic story, one hopes that people will notice how vulnerable Californians’ property rights are.

Joshua House is an attorney with the Institute for Justice in Arlington, Virginia.