What's happening
This bill establishes disclosure, recording, and consumer protection requirements for land contracts involving residential real property in New York.
Why it matters
Increases transparency and consumer awareness. By requiring sellers to provide a detailed "Consumer Caution and Counseling Notice" at least ten days before signing, buyers are explicitly warned about risks—such as losing the home if payments aren’t made or if the seller’s mortgage is foreclosed—giving them a clearer understanding of potential pitfalls.
Strengthens buyer protections against hidden encumbrances. Mandatory disclosures about existing mortgages, liens, and unpaid property taxes help prevent buyers from unwittingly taking on properties with undisclosed financial burdens or legal complications.
Mandates fair contract terms and record-keeping. The bill bans predatory provisions like excessive late fees, automatic forfeiture of equity, and waiver of legal rights, while also obligating sellers to record contracts quickly, maintain escrow funds separately, and provide buyers with receipts—reducing opportunities for fraud or abuse.
Empowers enforcement and legal recourse. By allowing the Attorney General to enforce these requirements and courts to grant remedies like injunctions, the bill ensures there are real consequences for violations, offering buyers a path to justice if they are wronged.
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Who cares
Headline styles
Protect Homebuyers in Land Contracts
Plain English, a few words. Used as the page title.
Sponsors
No co-sponsors yet.
History
- Referred to judiciary
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
908
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 Judiciary
AN ACT to amend the real property law, in relation to establishing requirements for land contracts
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. The real property law is amended by adding a new section 246-a to read as follows:
§ 246-a. Requirements for land contracts. 1. Definition. For the purposes of this section, "land contract" means any written agreement executed between a buyer and seller of residential real property or a parcel of real property for residential use, by installment payments, with a deposit of one thousand dollars or more, and a term of ninety days or more, pursuant to which such buyer is responsible for all repairs upon the real property and will be granted title to the real property upon the full payment of the stated purchase price. Such term shall not include a mortgage pursuant to which the seller executes and records a deed to the real property upon the buyer's execution and recording of a mortgage upon the real property; nor shall such term include a lease of real property pursuant to which the lessor is obligated to make repairs and pay real property taxes upon such property until the lessee tenders the stated purchase price.
2. Disclosure notice. Not less than ten days prior to the execution of a land contract, the seller shall provide to the buyer a written notice delivered by certified mail. Such notice shall be entitled "Land Contract-Consumer Caution and Counseling Notice" and shall include the following notices:
(a) "You can lose this property if you fail to make the payments and meet the other requirements of the land contract.";
(b) "You can lose this property if the seller of this property loses title to this property due to the foreclosure of an existing mortgage or
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD03650-01-9
S. 908 2
other lien, or other legal actions which may be brought against the seller by creditors or others.";
(c) "You can lose this property if other persons have a legal interest or claim against the property.";
(d) "Under the terms of this contract you are responsible for repairs to this property and therefore you should have the property adequately inspected before entering into this contract.";
(e) The name and addresses of the holders of any mortgages on the property whose consent is required before the property can be sold;
(f) The existence of any mortgages or liens of record on the property; and
(g) The unpaid property taxes or assessments on such property, if any.
3. Mandatory provisions. Every land contract shall provide:
(a) that if the seller is to provide the buyer with escrow payments, the seller must maintain the escrow funds in a separate account and provide the buyer with an annualized accounting and proof of taxes paid;
(b) that if the seller does not record the land contract within five days of the execution of such contract, the buyer shall be granted a right of recovery against the seller for all payments made under the land contract;
(c) that the buyer must be provided with a copy of the receipt for filing the land contract with the county clerk; and
(d) that the seller must provide the buyer with written receipts for any payments made under the land contract, including down payments.
4. Recording requirement. Within five business days after the execution of a land contract, such contract shall be recorded by the seller in the county clerk's office in the county in which the real property is located. The seller shall provide the buyer with a copy of the receipt issued for such recording.
5. Prohibited terms. No land contract shall contain the following:
(a) a provision which imposes excessive late fees;
(b) a provision in which the buyer consents to his or her removal from the contract by the buyer without the option of judicial intervention or a provision in which the buyer automatically consents to summary proceedings by the seller;
(c) a provision in which the buyer forfeits equity in the event of default; or
(d) a provision which waives any of the provisions of this section.
6. Enforcement. The attorney general may commence an action in the name of the people of the state of New York to enforce the terms of this section. A court may grant injunctive, declaratory or other equitable relief in any such action brought to enforce the provisions of this section.
§ 2. This act shall take effect on the one hundred twentieth day after it shall have become a law.
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 law, in relation to establishing requirements for land contracts
Purpose
To afford notice to and additional protections for homeowners who purchase their residence pursuant to a land contract.
Summary of provisions
Section 1. Adds a new section 246-a to establish requirements for the use of land contracts in New York State. Specifically, the bill defines a land contract as a written agreement which requires that the property buyer make installment payments to the seller which results in the transfer of the property at the end of the installment term. The defi- nition includes contracts with a deposit of $1000 or more for a term beyond 90 days in which the buyer is required to make any necessary repairs to the property. The bill requires that the land contract seller shall provide a written "Land contract Consumer Caution and Counseling Notice" by certified mail to the purchaser not less than 10 days before contract execution. This notice must include information notifying the consumer that they may lose the property if other individuals or enti- ties have a legal interest or claim to the property or if they fail to make payments or perform as mandated by the contract terms. The notice must also include information as to the existence of any mortgages or recorded liens, unpaid property taxes or assessments against the proper- ty. Additionally, the bill mandates that every land contract contain specific terms including the requirement that the seller maintain escrow funds required under the contract in a separate account and provide the buyer with an annual accounting and proof of taxes paid. The buyer must also record the land contract within five days of execution or be subject to a right of recovery for payments made by the purchaser. Land contracts are also prohibited from containing certain provisions such as the imposition of excessive late fees and an automatic waiver of judi- cial intervention or a waiver of equity in the event of buyer default.
Read the full memo (887 words)
Section 2. Provides for a 120-day effective date.
Justification
The distinct characteristic of a land contract is that the transfer of title to the property does not take place until all the payments on the property have been made. The buyer under a land contract does not receive the deed to the property until the end of the contract term. In contrast, in a traditional real property purchase, which is usually financed by a mortgage, the buyer gets a deed at the onset at the clos- ing. A mortgage is then held by the seller, or the financing entity as a lien against the property. Because a land contract buyer does not receive a deed until the end of the contract term, the buyer's home and investment are at a greater risk. These risks include potential foreclo- sure actions against the seller, or the seller actually encumbering the property after the land contract is signed. This risk can extend through the life of a land contract which usually spans form 10-20 years. Land contracts are typically entered into by low-income buyers who have poor credit, or lack the funds for a down payment. Often the housing they are purchasing under a land contract is in poor condition and is in need of repairs. Land contract buyers currently have the worst of both worlds in terms of statutory protection. Land contract buyers lack the statutory protections provided to tenants, such as right to repairs, rent notices, and defined procedures in the event of default. Land contract buyers also lack the statutory protection of homeowners who are purchasing by mortgage, such as recording requirements , regulation of escrow account- ing, limits on late fees and requiring foreclosure in the event of default. This gap in statutory protection has serious practical conse- quences for land contract buyers. Land contract buyers wishing to become homeowners will often scrape up, at great sacrifice, a down payment for the land contract and then invest substantial funds in repairing the property. Buyers then make payments month after month for years with the full expectation of receiving the deed to the property. Many problems often occur due to the lack of oversight of land contracts. These include the jeopardizing the investments made by the buyer due to the seller's failure to make his required mortgage payments resulting in foreclosure proceedings against the seller. Land contracts will often afford buyers little redress by containing clauses that impose excessive late fees or will allow the purchaser to enforce forfeiture terms in a summary proceeding. The seller can also sometimes fail to deliver the deed at the end of the contract term. Also, because land contracts are not typically recorded, buyers are unable to financial assistance from agencies for desperately needed repairs. This bill will provide a number of minimum mandatory notice requirements for those wishing to enter a land contract and will as well provide a minimum number of statutory land contract terms to help address these inequities.
Legislative history
2018: S.551 Referred to Judiciary 2017: S.551 Passed Senate 2016: S.3921 Recommitted to Rules 2015: S.3921 Passed Senate 2013, 2014: S.3504 Referred to Judiciary 2012: S.7011 Referred to Judiciary
Fiscal implications
None.
Effective date
This act shall take effect 120 days after becoming a law.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.