What's happening
This bill requires courts to notify former property owners in foreclosure actions about their right to claim surplus money from the sale.
Why it matters
Ensures that former owners are informed about possible surplus funds. Previously, many people who lost homes in foreclosure were unaware they might be entitled to leftover money after the property was sold. This bill requires courts to directly notify them, reducing the chance that these funds go unclaimed.
Promotes fairness and transparency in foreclosure proceedings. By mandating notification, the bill helps prevent situations where municipalities, lenders, or others keep surplus proceeds simply because former owners didn’t know to claim them.
May provide financial relief to individuals after foreclosure. For people who have lost their property, learning about and claiming surplus sale proceeds could make a significant difference in recovering from the financial blow of foreclosure.
Strengthens procedural protections for property owners. This change reinforces the idea that legal processes should actively protect the rights of individuals, not just institutions, especially in situations as disruptive as property foreclosure.
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Who cares
Former owners of foreclosed property
They would receive court notice of surplus sale proceeds and their right to file a written claim for all or part of those funds.
Courts handling foreclosure actions
They would be required to notify former owners about surplus proceeds and claim rights, with separate notice requirements for court-directed tax foreclosure sales.
Municipalities and tax districts
In court-directed tax foreclosure sales, courts would notify former owners that ownership has transferred to a municipality or tax district and that a sale could generate surplus funds they may claim.
Headline styles
Notify Owners of Foreclosure Surplus
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Recommit, enacting clause stricken
- Referred to housing, construction and community development
Full text
1 pageUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
882
2019-2020 Regular Sessions
IN SENATE
January 9, 2019
Introduced by Sen. YOUNG -- read twice and ordered printed, and when printed to be committed to the Committee on Housing, Construction and Community Development
AN ACT to amend the real property actions and proceedings law and the real property tax law, in relation to requiring the court in a foreclosure action to provide notice to the former owner of the real property of the right to apply for surplus moneys from the sale of such property
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Section 1354 of the real property actions and proceedings law is amended by adding a new subdivision 5 to read as follows:
5. The court shall provide notice to the former owner or owners of the foreclosed real property of the existence of surplus moneys resulting from the sale and their right to file a written notice of claim to all or a portion of such proceeds pursuant to section thirteen hundred sixty-one of this article.
§ 2. Section 1136 of the real property tax law is amended by adding a new subdivision 4 to read as follows:
4. Notice to former owners. In the event the court directs the sale of real property pursuant to this section, the court shall provide notice to the former owner or owners of the foreclosed real property that ownership of such property has been transferred to a municipality or a tax district, that after the sale thereof there is a potential that surplus moneys may result from the sale and in the event a surplus results, such owner or owners shall have a right to file a written notice of claim to all or a portion of such proceeds pursuant to section thirteen hundred sixty-one of the real property actions and proceedings law.
§ 3. This act shall take effect immediately.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD04125-01-9
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the real property actions and proceedings law and the real property tax law, in relation to requiring the court in a foreclo- sure action to provide notice to the former owner of the real property of the right to apply for surplus moneys from the sale of such property
Purpose
This bill will require that those who formerly owned foreclosed property are notified that they may be entitled to a portion of the surplus of funds remaining after an in rem foreclosure sale.
Summary of provisions
Section 1. Adds a new subdivision 5 to section 1354 of the real property actions and proceedings law to require that after the surplus monies resulting from an in rem foreclosure tax sale are provided to the court, the court shall provide notice to the former owner or owners Of the property of their right to file a written notice of claim to all of a portion of such proceeds pursuant to section 1361 of the real property tax law.
Section 2. Adds a new subdivision 4 to section 1136 of the real property tax law to require a court that has vested title to in rem foreclosed property to a municipal entity shall notify the former property owner or owners that they may be entitled to file for any surplus funds which may result from a future tax sale of such property.
Justification
Currently, there is no state requirement that former owners of a proper- ty foreclosed upon for failure to pay taxes are notified of their poten- tial entitlement to any surplus funds which may result when the property is sold. The bill will close a loophole in state law which was high- lighted in a recent news article examining the city of Buffalo's unclaimed tax foreclosure process. The City retained approximately $11.6 million in auction proceeds after the in rem foreclosure sale, which have never been claimed. The funds would eventually be transmitted to the state as unclaimed funds. Many former owners and other property lienholders were never made aware that the sale of their former property resulted in a surplus to which they may be legally entitled. This bill requires that a former be owner be notified that there is a potential surplus when the title is vested in the municipality and again, if, after the property has been sold by the municipality so that they will be afforded know- ledge of the existence of a surplus and their right to file a claim for a portion of those funds.
Legislative history
2017,2018: S.3948/A.10168 Passed Senate 2016: S.6259 Passed Senate
Fiscal implications
None.
Effective date
Immediate.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.