Extends the effectiveness of provisions relating to new owners of buildings for which administrators have been appointed pursuant to article 7-A of the real property actions and proceedings law

BILL NUMBER:S7408

Title of bill

An act to amend chapter 375 of the laws of 1999 amending the real property actions and proceedings law relating to new owners of buildings for which administrators have been appointed pursuant to article 7-A of such law, in relation to the effectiveness thereof

Summary of provisions

Subdivision 10 of section 778 of the Real Property Actions and Proceedings Law (the "RPAPL") grants the City of New York the authority to evaporate ("reduce to zero") liens on Article 7-A properties for municipally financed repairs. Such authority expires on June 30, 2012 and this legislation would extend this authority until June 30, 2015. Furthermore, the City's deadline for submitting a report to the Governor, the Senate and the Assembly, describing the program activities carried out during the two prior calendar years pursuant to subdivision 10, is also extended.

Reasons for support

Pursuant to Article 7-A, the Civil Court of the City of New York appoints administrators to operate privately owned buildings that have been effectively abandoned by their owners and are plagued by conditions dangerous to the life, health and safety of tenants occupying such buildings. Administrators act under court order to collect rents; which are used for providing essential services to tenants and for making necessary repairs. In many instances, City capital funds are utilized to repair or replace buildings systems or to make essential repairs.

All money expended by the City for such purposes becomes a lien on the property. Subdivision 10 of Section 778 of the RPAPL provides that a new owner of an Article 7-A property may take advantage of lien evaporation only if the owner enters into a regulatory agreement with the New York City Department of Housing Preservation and Development ("HPD"). This regulatory agreement requires that the 7-A property must be utilized for affordable housing for a term of not less than 30 years. The regulatory agreement also requires that the new owner has no direct or indirect interests with the prior owner.

Article 7-A has enabled the City to encourage not-for-profit and for-profit entities to purchase 7-A buildings, thereby allowing such properties to be developed into a source of permanent affordable housing for families and individuals. Article 7-A evaporation is limited exclusively to the transfer of a building to a new owner who has no business or other interests with the original owner. This will prevent a prior owner of a 7-A administered building from benefiting from lien evaporation. The new owner must comply with all provisions of the regulatory agreement entered into with HPD in order for lien evaporation to be utilized.

Since 2002, Article 7-A has helped make necessary repairs in 34 buildings consisting of 422 units. As a result, these residential units have been successfully integrated back into communities throughout New York City.

This legislation will continue to allow the City of New York to help transform effectively abandoned buildings, often in dangerous disrepair, sources of affordable housing.

Accordingly, the Mayor urges the earliest possible favorable consideration of this proposal by the Legislature.