Relates to real property tax lien transfers; repealer

Under this bill, a local government will receive funds that it might otherwise have to wait on or recover through an in rem foreclosure action. This legislation will help local governments across the state that are struggling to balance their budgets and seeking to minimize foreclosures.

The legislation also benefits New York property owners because it gives property owners the opportunity to pay their taxes over time. Property owners could obtain manageable repayment agreements instead of having to make a single lump sum payment - a meaningful benefit in this difficult economy. These benefits accrue to both homeowners who want to keep their homes and commercial property owners who want to keep their business properties, preserve jobs, and expand their businesses with cash on hand.

The bill also provides various protections for homeowners and commercial property owners, including a maximum allowable interest rate, pre-foreclosure notice requirements, and a post foreclosure redemption (reconveyance) option. These provisions are much more consumer-oriented and protective than current options. For example, a taxing district currently has the option to conduct an in rem foreclosure on a tax-delinquent property a much speedier process.

Summary of specific provisions

Section 1

Section 960 Legislative intent of the bill.

Section 961 Definitions.

Section 962 establishes the authority for and provides the mechanism of a tax lien transfer, whereby a property owner authorizes a third party to pay the owner's taxes, the payor pays the tax collector, the collector transfers the tax lien to the payor, and the owner repays the payor.

Section 963 and 964 detail the form and content of the tax lien transfer certificate signed by the tax collector and the transfer authorization signed by the property to consent to the transaction.

Section 965 governs the terms that may be in the payment agreement between the owner and the transferee, including limits on the fees and interest a transferee may charge, and distinguishes a transferred tax lien from a mortgage lien.

Section 966 establishes the procedure and conditions under which a transferred tax lien may be foreclosed, limits the fees and costs a foreclosing transferee may charge, and imposes a statute of limitations on the initiation of such actions.

Section 967 provides property owners and previously recorded first lien mortgagees the ability to redeem property in the event a foreclosure takes place.

Section 968 requires taxing districts to report their tax lien information to the State Comptroller so that the data can be disseminated upon.

Section 2 - Effective date. This act shall become effective on the ninetieth day after it becomes law.

Statement in support

Local governments rely heavily on property taxes to fund their services, but property owners have found it increasingly difficult to comply with the strict statutory requirements for paying their taxes. The result is that local governments must rely on increased foreclosures or bulk lien sales to collect their-taxes. The property owners thus are faced with either the possibility of foreclosure or repaying an unknown third party.

This bill does not create any new liens or obligations for property owners; instead, it gives them the option of authorizing the transfer of their existing tax liens from the public entity to a private one. The owner will have the ability to negotiate and approve the repayment terms before the transferee ever makes the payment to the tax collector and the transferee will not be allowed to add on excessive fees, cost.s, or interest to the amount the owner owes. The legislation would have no effect on local governments' ability to utilize bulk tax lien sales.

The result will be increased tax collections, fewer tax lien foreclosures, and increased financial flexibility for New York property owners.

Prior legislative history

New Bill.

Fiscal implications

None to the State but improved tax collections for tax districts.

Effective date

This act shall become effective on the ninetieth day after it becomes law.