Bill Text: NY A05607 | 2023-2024 | General Assembly | Introduced

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Bill Title: Provides for the distribution of proceeds from a tax foreclosure sale; requires notice to a former property owner of the existence of a surplus.

Spectrum: Partisan Bill (Democrat 8-0)

Status: (Introduced) 2024-01-03 - referred to ways and means [A05607 Detail]

Download: New_York-2023-A05607-Introduced.html

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                STATE OF NEW YORK
        ________________________________________________________________________

                                          5607

                               2023-2024 Regular Sessions

                   IN ASSEMBLY

                                     March 16, 2023
                                       ___________

        Introduced by M. of A. WILLIAMS -- read once and referred to the Commit-
          tee on Real Property Taxation

        AN  ACT  to amend the real property tax law, in relation to distribution
          of surplus in tax enforcement proceedings

          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:

     1    Section  1.  The  real  property  tax  law  is amended by adding a new
     2  section 989 to read as follows:
     3    § 989. Distribution of surplus in tax  enforcement  proceedings.    1.
     4  Notwithstanding  the  provisions of any general, special or local law to
     5  the contrary, when a property owner is divested  of  title  due  to  the
     6  foreclosure  of a delinquent real property tax lien on the property, and
     7  the property is sold to a third party, the proceeds of such  sale  shall
     8  be distributed as follows:
     9    (a)  If  the  proceeds of the sale are less than or equal to the total
    10  taxes due on the property plus interest,  penalties  and  other  charges
    11  duly imposed upon the property, including the administrative costs asso-
    12  ciated  with  the foreclosure process, the entire proceeds shall be paid
    13  to the local government.
    14    (b) If the proceeds of the sale exceed the  total  taxes  due  on  the
    15  property  plus  interest,  penalties and other charges duly imposed upon
    16  the property, including the administrative  costs  associated  with  the
    17  foreclosure process, the excess shall be distributed as follows:
    18    (i) If the property is not subject to other liens, the excess proceeds
    19  shall be paid to the prior owner or owners of the property.
    20    (ii)  If the property is subject to other liens, the lienholders shall
    21  be paid from the excess proceeds in the  same  order  and  to  the  same
    22  extent as they would be in an action to foreclose a mortgage pursuant to
    23  article  thirteen  of the real property actions and proceedings law. Any
    24  proceeds remaining after the other lienholders have been so  paid  shall
    25  be paid to the prior owner or owners of the property.

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD10302-01-3
        A. 5607                             2

     1    2. The provisions of this section shall apply whether property is sold
     2  through a public auction or otherwise.
     3    3.  When a foreclosure concludes with the tax district taking title to
     4  property, the provisions of this section  shall  not  apply  unless  and
     5  until  the  tax  district  sells the property to a third party; provided
     6  that in such a case, if there are excess proceeds  to  be  paid  to  the
     7  prior  owner  or  owners of the property, such proceeds shall be paid to
     8  the owner or owners of the property prior to its acquisition by the  tax
     9  district.
    10    4.  The  provisions of this section shall not apply to the enforcement
    11  of tax liens on abandoned real property. For purposes of  this  section,
    12  real property shall be deemed abandoned if it:
    13    (a)  has  been included on a local municipal roll, registry or list of
    14  vacant and abandoned residential property  pursuant  to  section  eleven
    15  hundred eleven-a of this chapter, or
    16    (b)  has  been  certified  as  abandoned commercial or industrial real
    17  property pursuant to article nineteen-A of the real property actions and
    18  proceedings law, or
    19    (c) has been included on the statewide registry of  vacant  and  aban-
    20  doned  property  pursuant  to  section  thirteen hundred ten of the real
    21  property actions and proceedings law.
    22    5. A municipality shall notify a property owner when the owner's prop-
    23  erty netted a surplus at a tax foreclosure auction that was held  on  or
    24  after the effective date of this section. The notification shall be made
    25  as  directed  by  the  court and shall state the possible existence of a
    26  surplus, how to obtain the surplus and the steps the property owner must
    27  take to obtain the surplus.
    28    6. This section shall be construed to supersede all  general,  special
    29  and  local laws relating to tax enforcement to the extent that such laws
    30  would otherwise allow the proceeds of a sale  to  be  distributed  in  a
    31  manner  other  than  as  set  forth in this section. This section is not
    32  intended to supersede such laws in other respects.
    33    § 2. Subdivision 2 of section 1104 of the real property  tax  law,  as
    34  amended  by  chapter 532 of the laws of 1994, paragraph (iii) as further
    35  amended by subdivision (b) of section 1 of part W of chapter 56  of  the
    36  laws of 2010, is amended to read as follows:
    37    2. The provisions of this article shall not be applicable to a county,
    38  city or town which: (i) on January first, nineteen hundred ninety-three,
    39  was authorized to enforce the collection of delinquent taxes pursuant to
    40  a county charter, city charter, administrative code or special law; (ii)
    41  adopted  a local law, no later than July first, nineteen hundred ninety-
    42  four, providing that the collection of taxes in  such  county,  city  or
    43  town  shall  continue  to  be enforced pursuant to such charter, code or
    44  special law, as such charter, code or special law may from time to  time
    45  be  amended;  and  (iii) filed a copy of such local law with the commis-
    46  sioner  no  later  than  August  first,  nineteen  hundred  ninety-four.
    47  Provided,  however,  that nothing contained herein shall be construed to
    48  exempt any such county, city or town from the provisions of section nine
    49  hundred eighty-nine of this chapter.
    50    § 3. Subdivision 1 of section 1166 of the real property  tax  law,  as
    51  amended  by  chapter  500  of  the  laws  of 2015, is amended to read as
    52  follows:
    53    1. Whenever any tax district shall become vested  with  the  title  to
    54  real  property by virtue of a foreclosure proceeding brought pursuant to
    55  the provisions of this article, such tax district is  hereby  authorized
    56  to  sell  and  convey the real property so acquired, which shall include
        A. 5607                             3

     1  any and all gas, oil or mineral rights associated with such real proper-
     2  ty, either with or without advertising  for  bids,  notwithstanding  the
     3  provisions  of any general, special or local law.  The proceeds obtained
     4  from  any  such  sale  shall  be  distributed  in the manner provided by
     5  section nine hundred eighty-nine of this chapter.
     6    § 4. This act shall take effect October 1, 2023, and  shall  apply  to
     7  all tax foreclosure proceedings commenced on and after such date.