Expands the definition of "tenant" for the purposes of required notice during a mortgage foreclosure action

Title of bill

An act to amend the real property actions and proceedings law, in relation to the definition of "tenant" for purposes of mortgage foreclosures

Purpose of bill

To ensure that all tenants lawfully residing in a home under foreclosure receive the notice protections intended for tenants residing in foreclosed properties.

Summary of provisions of bill

Section 1. Amends paragraph (c) of section 1305 of the Real Property and Procedures Law by expanding the definition of tenants entitled to notice of rights from those who were lawful tenants at the time the foreclosure was commenced to those who are lawful tenants during the pendency of the foreclosure action.

Section 2 provides for an effective date on the first of January following the date on which the proposal becomes law with the terms of the act to apply to actions commenced on or after such date.

Justification

In 2009, via chapter 507, New York State enacted the New York State Governor's proposal into law that included various provisions relating to foreclosure. One of the provisions of that law added section 1305 of the Real Property Act and Proceedings Law (RPAPL). This provision provides that tenants residing in properties under foreclosure have the right, as long as they continue to pay rent, to remain in the property for the greater of 90 days after the foreclosure sale, or the remainder of their lease, unless the buyer intends to occupy the property.

RPAPL 1305, however, defines a tenant as someone who was lawfully residing in the home under foreclosure at the time the foreclosure was commenced. Therefore, lawfully residing tenants who enter into leases with landlords after the commencement of a foreclosure action and during the pendency of the foreclosure, who were not tenants at the time the foreclosure was commenced, are not covered by the notice requirement of RPAPL 1305. This was an oversight.

RPAPL section 1305 was intended to establish protections for tenants in foreclosed homes. The written notice of rights under this section was intended for all lawfully residing tenants during the pendency of the foreclosure. Since foreclosure proceedings often take longer than a year to complete, tenants who enter into leases while the foreclosure is pending do not know of their rights, and find themselves without the benefit of the notice provision intended for them under RPAPL 1305.

This measure would remedy this oversight to fulfill the intent of the original law.

Legislative history

New bill, 2016.

Fiscal implications for state and local governments

None.

Effective date

It would take effect on the first of January following the date on which the proposal becomes law with the terms of the act to apply to actions commenced on or after such date.