Removes provisions of law where a tax district has sold or conveyed a tax-foreclosed property to a land bank, a housing development agency or another public entity and the sale or conveyance was not the result or a public sale.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A9353
SPONSOR: Magnarelli TITLE OF BILL:
An act to amend the real property tax law, in relation to the determi-
nation of the amount of surplus
PURPOSE:
To eliminate the redundant requirement that a tax delinquent property
must fail to sell at auction twice before it can be freely transferred
to a land bank, a housing development agency, or another public entity.
SUMMARY OF SPECIFIC PROVISIONS:
Section 1: Repeals subdivision 2 of § 1196 of the Real Property Tax Law
to no longer require that when a foreclosing governmental unit wishes to
transfer a property tax delinquent property to a land bank, a housing
development agency, or another public entity that it must first put the
property up for auction at two public sales within 3 months.
Section 2: Establishes the effective date.
JUSTIFICATION:
In 2023, the US Supreme Court decision in Tyler v. Hennepin County held
that it was unconstitutional for municipalities to retain surplus
proceeds following real property tax foreclosure sales without providing
a process for parties in interest to claim surplus proceeds of the sale.
Article 11 of the Real Property Tax Law was subsequently amended in 2024
to bring New York law in compliance with that decision.
As part of these changes § 1196 was added to determine the existence and
amount of a surplus. Subdivision 2 of that section implies that if a
foreclosing governmental unit wishes to transfer a tax delinquent prop-
erty to a land bank, a housing development agency, or another public
entity that it must first put the property up for auction at two public
sales within 3 months. While this was intended to give municipalities
wishing to transfer a property to its land bank or other public entity
safe harbor from the payment of surplus proceeds, it has created
confusion in its application. Several municipalities have misinterpreted
this section to prohibit the sale of tax foreclosed property to a land
bank, a housing development agency, or another public entity without the
property first going to public auction twice in three months. This is
causing delays in getting foreclosed and blighted properties into the
ownership of land banks tasked with returning the property to productive
use.
This legislation seeks to remedy this confusion be repealing § 1196(2).
Foreclosing governmental units must still comply with all the other
requirements of § 1196 for determining and paying surplus funds when
applicable. However, this would eliminate the redundant requirement of
having a second public auction when the property has already failed to
sell at a first one.
LEGISLATIVE HISTORY:
New Bill.
FISCAL IMPLICATIONS:
None to the State or localities.
EFFECTIVE DATE:
Immediately.
