Provides that a private third party may contract with a property owner to pay real property taxes in exchange for transfer of liens on the property to the transferee

2 Co-sponsors

• Michael F. Nozzolio
• Kevin S. Parker

BILL NUMBER:S6817C

Title of bill

An act to amend the insurance law and the real property tax law, in relation to local government liens and payment contracts

Purpose or general idea of bill

Under this bill, a property owner may authorize a third party to pay the owner's property taxes. In exchange for the third party paying the taxing district the full amount of taxes and associated penalties and interest, the tax collector transfers the tax lien to the third party payor. The property owner then repays the transferee over time under agreed-upon, more flexible terms. This bill accomplishes two important purposes: (1) increases local government tax collections and (2) allows property owners flexibility in meeting the burden of paying their property taxes.

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-enforcement notice requirements, change of servicer notice, annual notice to borrower with status of account, and a lien repayment and release 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 is the Legislative intent of the bill. Section 2 and 3 relate to the powers of title insurance Corporations. Section 4 Establishes Title 4-B of the Real property Tax Law relating to Lien Payment Contracts Section 5 is the effective date.

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, costs, 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 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