Eliminates receivership as a defense in proceedings to deposit rents of multiple dwellings

BILL NUMBER:S1960

Title of bill

An act to amend the real property actions and proceedings law, in relation to proceedings to deposit rents

Purpose/summary of provisions

This bill would amend the real property actions and proceedings law by adding a new section seven hundred seventy-three, a new subdivision eight under section seven hundred seventy-eight, and three new subdivisions, four, five and six, under section thirteen hundred twenty-five. This bill has been introduced as a result of the Gomez vs. Smith Williamsburg Better Housing Court decision filed in Kings County, Trial Term, Part 35A. The purpose of this bill is to prevent slum-mortgagees from using the issue of receivership as a tactic to delay the implementation of article 7-A proceedings. The bill would establish that receivership shall not be adjourned, dismissed or delayed because the petitioner has not requested or received prior approval from the supreme court, the supreme court has not authorized such a lawsuit against a receiver or the receiver has not been named or served with process in such proceeding. Provides that the existence of a receiver prior to the judgement or appointment of an administrator in such proceeding, shall not affect the court's capacity to appoint or continue the appointment of such administrator. The court may appoint an existing receiver as an administrator when it is convinced that such receiver will take responsibility for correcting all existing violations and dangerous conditions to the dwelling. Lastly, the bill puts the receiver at risk if the court order appointing him in a foreclosure proceeding does not include the information mandated by the legislature in subdivision 3 of section 1325. Also, mandates that a receiver must register with the code enforcement agency within seven days after being appointed receiver, receivership order is void and receiver is stayed from commencing any action until he is registered. Eliminates any requirement to request, or receive, supreme court approval before a tenant or a municipal agent may commence an action against a receiver.

Justification

Article 7-A provides a method for tenants and municipal authorities to use rents, and other funds, to improve slum buildings where the owners and mortgagees did not correct housing code violations and/or hazardous conditions. However, some landlords and mortgagees attempt to use misrepresentations, delaying tactics and total disregard of provisions, in order to frustrate the legislative intent of this law. This bill would amend the law to prohibit slum-mortgagees from arguing that the receiver in a foreclosure should displace the 7-A administrator or that the petitioners in the proceeding have not gotten prior supreme court approval. This bill would also clarify the

section of the RPAPL which applies to the responsibility of a receiver in a foreclosure and provides an enforcement mechanism for ensuring that the receiver adheres to these responsibilities.

Fiscal implications

None.

Effective date

This act shall take effect on the first of October next succeeding the date on which it shall have become a law.