What's happening
This bill creates a rebuttable presumption against protection for purchasers of mortgaged property unless certain mortgagee statements are recorded.
Why it matters
Introduces a new requirement for mortgage transfers. In most cases where mortgaged property is sold between unrelated parties, a statement by the mortgage holder (mortgagee), confirming either loan assumption or satisfaction, must be officially recorded to protect the purchaser’s title.
Makes “good faith purchaser” protection less automatic. Without this recorded mortgagee statement, the law will presume that the purchaser is not protected—even if they paid value and did not know of any fraud—unless they can rebut this presumption.
Targets arms-length transactions and excludes family transfers. The rule does not apply to transfers between "associated parties" (such as family members or related entities), focusing its impact on typical sales between unrelated buyers and sellers.
Raises the standard for due diligence in real estate purchases. Buyers, sellers, and their attorneys must ensure compliance with this new recording requirement to avoid legal vulnerability, potentially affecting closing practices and increasing the importance of title review.
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Who cares
Buyers of mortgaged real estate
Buyers acquiring property from sellers who are not associated parties would face a rebuttable presumption against statutory title protection if the required mortgagee statement is not recorded.
Mortgage lenders
A duly acknowledged statement from the mortgagee confirming assumption or satisfaction of the mortgage debt would be needed to avoid triggering the presumption in covered transfers.
Real estate attorneys and title insurers
The bill would make recording the mortgagee’s statement a consideration when assessing title protection for purchasers and incumbrancers in covered transactions.
Homeowners transferring property to family members, family trusts or wholly owned LLCs
Transfers between parties meeting the bill’s definition of associated parties would fall outside the new presumption.
Headline styles
Protect Mortgage Title Rights
Plain English, a few words. Used as the page title.
Sponsors
7 Co-sponsors
1 Multi-sponsor
History
- Ordered to third reading cal.120
- Advanced to third reading cal.69
- Reported
- Referred to judiciary
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Protect Mortgage Transfers
In Senate Committee · Judiciary · Sponsor Tony Avella
Full text
1 pageUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
1569
2017-2018 Regular Sessions
IN ASSEMBLY
January 12, 2017
Introduced by M. of A. MOSLEY, WEINSTEIN, LENTOL, BARRON, COOK, HYNDMAN, TITUS, WALKER -- Multi-Sponsored by -- M. of A. NOLAN -- read once and referred to the Committee on Judiciary
AN ACT to amend the real property law, in relation to rebuttal of the right of an incumbrancer
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Section 266 of the real property law is amended to read as follows:
§ 266. Rights of purchaser or incumbrancer for valuable consideration protected. This article does not in any manner affect or impair the title of a purchaser or incumbrancer for a valuable consideration, unless it appears that he had previous notice of the fraudulent intent of his immediate grantor, or of the fraud rendering void the title of such grantor. There shall be a rebuttable presumption that this section shall not apply in the case of a transfer of mortgaged real property, between a purchaser and seller who are not associated parties, that is not accompanied by the recording with the clerk of the county or with the commissioner of deeds in which the property is located, of a statement, executed by the mortgagee, and duly acknowledged, stating, substantially, that (1) a party is assuming the seller's indebtedness secured by the mortgage; or (2) that the indebtedness secured by the mortgage has been satisfied.
For the purposes of this section, "associated parties" means spouses, ex-spouses, parents and children, siblings, a homeowner and that homeowner's family trust, or a homeowner and that homeowner's wholly-owned limited liability company.
§ 2. This act shall take effect immediately.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD04039-01-7
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.