Authorizes municipalities and the department of financial services to seek civil penalties for violations of the duty to maintain a foreclosed property in an amount of up to $500 per day for each day such violation persists after the judgement of foreclosure has been issued.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A5890
SPONSOR: Fahy TITLE OF BILL:
An act to amend the real property actions and proceedings law, in
relation to authorizing municipalities and the department of financial
services to seek civil penalties for violations of the duty to maintain
a foreclosed property
PURPOSE OR GENERAL IDEA OF BILL:
Authorizes municipalities and the department of financial services to
seek civil penalties for violations of the duty to maintain a foreclosed
property.
This bill would extend the authority of the department of financial
services and municipalities to prosecute zombie properties beyond judg-
ment of foreclosure by amending Real Property Actions and Proceedings
Law 1307 to include the same remedies available under Real Property
Actions and Proceedings Law 1308; which allow the department of finan-
cial services and municipalities to sue for $5001 per violation per day
after a judgment of foreclosure has been issued.
SUMMARY OF SPECIFIC PROVISIONS:
Section 1: Amends Section 1307 of the real property actions and
proceedings law by adding a new subdivision 3-a:
a. Provides that violations of this section may be brought before a
hearing officer or a court by the Department of Financial Services and
municipalities, as authorized by paragraph b or c of this subdivision.
Sets the civil penalty for violation of this section at $500 per day of
the violation.
b. Authorizes the superintendent of financial services to pursue
violations of this section by a plaintiff in a mortgage foreclosure
action. Sets the minimum time to give notice to the plaintiff at seven
days.
c. Authorizes municipalities to enforce obligations described in this
section provided that sufficient notice is given to the plaintiff in the
mortgage foreclosure for such property, unless such property requires
emergency repairs under certain circumstances, in which case, the muni-
cipality may enter and maintain such property to cure such emergency
provided that such plaintiff is notified as soon as practicable.
Further, this paragraph requires the municipality to provide the Depart-
ment of Financial Services with at least ten days notice prior to bring-
ing an action pursuant to this subdivision.
d. Authorizes the department of financial services to adopt rules and
regulations as necessary for the implementation, administration, opera-
tion, and enforcement of this section.
Section 2: Sets the effective date.
JUSTIFICATION:
This bill allows for the Department of Financial Services ("DFS" or the
"Department") and municipalities to undertake additional enforcement
activities relating to zombie properties. Zombie properties are mort-
gage-delinquent properties that the homeowner has abandoned, which typi-
cally languish for years in a state of disrepair and neglect until the
mortgagee completes the foreclosure process.
Currently, the Department and municipalities are contained from initiat-
ing action against mortgage lenders who fail to maintain a property to
code after they are awarded a judgment of foreclosure. Properties may
sit in limbo for years after a judgment is issued before being sold at
auction, and the inability to prosecute zombie property law violations
for this category of buildings allows these property owners to abdicate
their responsibilities to the community. As a result, the Department
has not prosecuted zombie properties in recent years and left enforce-
ment of zombie property laws up to municipalities, many of which do not
have the resources to pursue these cases.
This bill broadens the window during the foreclosure process when these
cases may be filed to include the period beyond when a judgment of fore-
closure is issued.
PRIOR LEGISLATIVE HISTORY:
New Bill
FISCAL IMPLICATION:
To be determined.
EFFECTIVE DATE:
This act shall take effect immediately.
STATE OF NEW YORK
________________________________________________________________________
5890
2023-2024 Regular Sessions
IN ASSEMBLY
March 24, 2023
___________
Introduced by M. of A. FAHY -- read once and referred to the Committee
on Judiciary
AN ACT to amend the real property actions and proceedings law, in
relation to authorizing municipalities and the department of financial
services to seek civil penalties for violations of the duty to main-
tain a foreclosed property
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Section 1307 of the real property actions and proceedings
2 law is amended by adding a new subdivision 3-a to read as follows:
3 3-a. (a) In addition to the rights to enforce certain obligations and
4 recover certain costs pursuant to subdivision three of this section,
5 violations of this section by a plaintiff in a mortgage foreclosure
6 action may be brought before a hearing officer or a court of competent
7 jurisdiction by an entity authorized pursuant to paragraph (b) or (c) of
8 this subdivision. If it shall appear to the satisfaction of such hearing
9 officer or court, based on the preponderance of the evidence, that such
10 plaintiff has violated this section, a civil penalty may be issued by
11 such hearing officer or court in the amount of up to five hundred
12 dollars per day for each day such violation persisted after the judgment
13 of foreclosure has been issued.
14 (b) The superintendent of financial services may, as appropriate and
15 in his or her sole discretion, pursue any suspected violation of this
16 section by a plaintiff in a mortgage foreclosure action. Before taking
17 such action, the superintendent of financial services shall give such
18 plaintiff at least seven days' notice of such violation.
19 (c) The municipality in which such residential real property is
20 located shall have the right to enforce the obligations described in
21 this section in any court of competent jurisdiction after at least seven
22 days' notice to the plaintiff in the mortgage foreclosure action for
23 such property, unless such property requires emergency repairs to
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD10031-01-3
A. 5890 2
1 address a threat to public health, safety or welfare, in which case such
2 municipality may enter and maintain such property to cure such emergen-
3 cy, provided however, notice shall be provided to such plaintiff as soon
4 as practicable. Such municipality shall provide the department of finan-
5 cial services with written notice at least ten days prior to bringing an
6 action pursuant to this subdivision; provided, however, that failure to
7 comply with such notice requirement shall not be a defense against the
8 action pursuant to this subdivision. The authority provided by this
9 subdivision shall be in addition to, and shall not be deemed to diminish
10 or reduce, any rights of the parties described in this section under
11 existing law against the plaintiff for failure to maintain such proper-
12 ty. Any civil penalty imposed pursuant to paragraph (a) of this subdi-
13 vision in an action brought by a municipality pursuant to this paragraph
14 shall be retained by such municipality.
15 (d) The department of financial services shall be authorized and
16 empowered to adopt such rules and regulations as may, in the judgment of
17 the superintendent of financial services, be necessary for the effective
18 implementation, administration, operation and enforcement of this
19 section.
20 § 2. This act shall take effect immediately.
