Prevents referees from being held liable for interest or penalties on transfer taxes to be paid on deeds filed in their capacity as referee

BILL NUMBER:S3479A

Title of bill

An act to amend the tax law and the administrative code of the city of New York, in relation to the liability of referees for interest and penalties in connection with transfer taxes on deeds

Purpose

Prevents referees from. being held liable for interest or penalties on deeds filed in their capacity as referee.

Summary of provisions

Sections 1 through 14 amend Tax Law articles 31, 31-A, 31-B, 31-C, 31-D, 31-E, 31-F, and 31-G by adding a new section to each respective article providing that when real property is transferred by a referee or sheriff pursuant to a court order in a foreclosure proceeding ordering the sale of the property, the referee or sheriff effectuating such transfer shall not be liable for any interest or penalties authorized pursuant to the Tax Law article being amended or Article 37 of the Tax Law.

Section 15 amends section 1240 of the Tax Law to provide that the authorization for the City of New York to impose a tax upon the transfer of real property that is granted by Tax Law section 1201(b) shall not include the authorization to impose a civil or criminal penalty upon a referee or sheriff who conveyed property as a result of a court order in a foreclosure proceeding ordering the sale of the property.

Section 16 amends the Administrative Code of the City of New York by adding a new section 11-2119, which provides that when real Property is transferred by a referee or sheriff pursuant to a court order in a foreclosure proceeding ordering the sale of the Property, the referee or sheriff effectuating such transfer shall not be liable for any interest or penalties authorized by the City's real property transfer tax or Chapter 40 of the Administrative Code.

Section 17 provides that this act shall take effect immediately.

Justification

By law, referees selling properties at foreclosure are treated as grantors. As grantors, these referees are subject to the provisions of the Real Estate Transfer Tax ("RETT"). While the statutes do not specifically address the liability of a referee that conveys property pursuant to a court order that orders the sale of the property in a foreclosure proceeding, 19 RCNY section 23-03 (d)(2) includes deeds given by referees, receivers, sheriffs, etc., for realty sold under foreclosure or execution regardless of whether the purchaser is the mortgagee, judgment creditor or other person in its examples of situations to which the RETT applies.

Currently, there is no provision off law or regulation that exempts a referee, acting as a grantor, from the penalty and interest provisions otherwise imposed under the RETT. In foreclosure sales, a referee's authority is limited to the terms of the court order. Therefore, this

legislation is necessary to prevent referees from being held liable for interest or penalties on deeds filed in their capacity as referee/arbiter.

Legislative history

2012: S.6467-A - Referred to Judiciary Committee

Fiscal implications

To be determined.

Effective date

This act shall take effect immediately.