17. a. The receiver may borrow money and incur indebtedness in order to preserve, insure, manage, operate, repair, improve, or otherwise carry out its responsibilities under the terms of the receivership.

b. With the approval of the court, after notice to the owner and all parties in interest, the receiver may secure the payment of any borrowing or indebtedness under subsection a. of this section by a lien or security interest in the building or other assets subject to the receivership.

c. Where the borrowing or indebtedness is for the express purpose of making improvements to the building or other assets subject to the receivership, the court, after notice to the owner and all parties in interest, may authorize the receiver to grant a lien or security interest not in excess of the amount necessary for the improvements with priority over all other liens or mortgages, except for municipal liens. Prior to granting the receiver’s lien priority over other liens or mortgages, the court shall find (1) that the receiver sought to obtain the necessary financing from the senior lienholder, which declined to provide such financing on reasonable terms; (2) that the receiver sought to obtain a voluntary subordination from the senior lienholder, which refused to provide such subordination; and (3) that lien priority is necessary in order to induce another lender to provide financing on reasonable terms. No lien authorized by the court shall take effect unless recorded in the recording office of the county in which the building is located.

d. For the purposes of this section, the cost of improvements shall include reasonable non-construction costs such as architectural fees or building permit fees customarily included in the financing of the improvement or rehabilitation of residential property incurred by the receiver in connection with the improvements.

L.2003,c.295,s.17.