NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A7763
SPONSOR: Hunter TITLE OF BILL:
An act relating to a temporary in rem foreclosure moratorium; and
providing for the repeal of such provisions upon the expiration thereof
PURPOSE:
Institutes an in rem foreclosure moratorium in response to United States
Supreme Court Case Tyler v. Hennepin County, Minnesota.
SUMMARY OF PROVISIONS:
Section 1 explains the legislative findings, and the Legislature's
conclusion that there should be a moratorium placed on in rem foreclo-
sures as a result of the legal uncertainty that exists following the
Supreme Court's decision in Tyler v. Hennepin County, Minnesota.
Section 2 institutes an in rem foreclosure moratorium and provides that
no tax enforcement officer may convey title to any tax-delinquent parcel
of real property owned by a tax district, which has been the subject of
an in rem tax foreclosure proceeding, to the treasurer or other offi-
cial. of the tax district, in any in rem foreclosure action which was
filed and adjudicated prior to the effective date of the act, and prior
to its expiration date.
Section 3 provides that any properties that a tax district acquired
title to prior to July 1, 2023 pursuant to an in rem tax foreclosure
proceeding may be auctioned by the tax district if the surplus funds are
held in a segregated trust account that's maintained by the chief fiscal
officer of the tax district until the moratorium is repealed on June 30,
2024. Tax districts that opted out of the state law and have local
procedures that govern their tax foreclosures will be able to continue
those foreclosures so long as they have, or they subsequently institute,
.a legal mechanism that provides for the return of the surplus funds
that is compliant with the Tyler v. Hennepin decision.
Section 4 provides that the act is effective immediately and will expire
on June 30, 2024.
JUSTIFICATION:
Tyler v. Hennepin County was a United States Supreme Court case decided
in May, 2023 which ruled on local governments' ability to seize property
for unpaid taxes, when the value of the property is greater than.the tax
debt. The Court unanimously held that the surplus value (the amount the
property sells for above the value of the property) are protected by the
Fifth Amendment's Takings Clause. Effectively, this means that local
governments must return surplus funds to homeowners.
In New York, tax foreclosures occur when a property owner is delinquent
on their taxes and does not pay the delinquency by the redemption date.
Localities then either foreclose on the property and sell it at auction
or utilize a tax lien sale where the tax liens are sold to third party
buyers. Some municipalities return the surplus funds, while others do
not. In the wake of Tyler v. Hennepin, certain areas of New York's stat-
ute are incompatible with this recent Supreme Court precedent. As issues
of real property tax, delinquencies, in rem foreclosures, and the asso-
ciated surpluses are complex issues of policy and law, the Legislature
seeks to provide time for the various stakeholders to discuss the tax
foreclosure process and how best to change New York's statute; as such,
this legislation institutes a moratorium on most in rem foreclosures
until June 30, 2024.
LEGISLATIVE HISTORY:
New Bill.
FISCAL IMPLICATIONS:
None to the state or localities.
EFFECTIVE DATE:
This act shall take effect immediately and shall expire and be deemed
repealed on and after June 30, 2024.
STATE OF NEW YORK
________________________________________________________________________
7763
2023-2024 Regular Sessions
IN ASSEMBLY
June 7, 2023
___________
Introduced by M. of A. HUNTER -- read once and referred to the Committee
on Ways and Means
AN ACT relating to a temporary in rem foreclosure moratorium; and
providing for the repeal of such provisions upon the expiration there-
of
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Legislative findings. The legislature finds that the United
2 States Supreme Court Case of Tyler v. Hennepin County, Minnesota,
3 decided on May 25, 2023, has created legal uncertainty with regard to
4 how municipalities must conduct their in rem delinquent real property
5 tax lien foreclosures and return any surplus funds thereby derived to
6 the appropriate parties, when necessary. As such, the legislature seeks
7 to find a solution that will provide legal certainty in this process and
8 ensure the rights of property owners and municipalities are adequately
9 protected.
10 § 2. No tax district, as defined in subdivision 6 of section 1102 of
11 the real property tax law or enforcing officer, as defined in subdivi-
12 sion 3 of such section, shall convey to any person title to any tax-del-
13 inquent parcel of real property which has been the subject of an in rem
14 tax foreclosure proceeding in any court of competent jurisdiction
15 against any parcel or parcels of real property located within the
16 geographic boundaries of such tax district until the expiration of the
17 moratorium under this act.
18 § 3. This act shall not apply to:
19 1. properties owned by a tax district which were acquired at any time
20 after May 25, 2023 and prior to July 1, 2023, pursuant to article 11 of
21 the real property tax law, or where the tax district filed the final
22 foreclosure judgement order with the court within such time period. In
23 the event that any tax district has acquired title to any delinquent
24 parcel of real property prior to July 1, 2023 pursuant to an in rem tax
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD11739-05-3
A. 7763 2
1 foreclosure proceeding under article 11 of the real property tax law,
2 the tax district may auction said parcel or parcels contingent upon the
3 foreclosing tax district holding any and all surplus funds in a segre-
4 gated trust account to be maintained by the chief fiscal officer of such
5 tax district until such time that this moratorium is repealed on June
6 30, 2024; or
7 2. a tax district that has a mechanism by which the municipality
8 offers the return of surplus funds to the delinquent tax property owner
9 and such municipality: (a) on January 1, 1993, was authorized to enforce
10 the collection of delinquent taxes pursuant to a county charter, city
11 charter, administrative code or special law; or (b) adopted a local law,
12 no later than July 1, 1994 providing that the collection of taxes in
13 such county, city or town shall continue to be enforced pursuant to such
14 charter, code or special law, as such charter, code or special law may
15 from time to time be amended; and (c) filed a copy of such local law
16 with the commissioner of taxation and finance no later than August 1,
17 1994.
18 § 4. This act shall take effect immediately and shall expire and be
19 deemed repealed on and after June 30, 2024.
