Galef Announces Passage of Legislation to Give Greater Protection for Consumers Facing Foreclosure of Property

August 24, 2006

Assemblywoman Sandy Galef, 90th Assembly District, and State Senator Elizabeth Little, 45th Senate District, have announced the signing of their legislation (A.11870/S.8217 Chapter 415) on July 26. The new law expands the rights of consumers by requiring more personal notice to be given to real estate owners being faced with foreclosure.

The bill outlines a new process of notification for those on the verge of foreclosure, and offers much more protection of the consumers’ rights. Now certified mail is the only method of notice to property owners allowed, and it can often go unclaimed by the owner. With the new legislation, both certified mail and first class mail will be required and both must be received by the owner, and if not, returned within 45 days. After that time, efforts must be made by the municipal enforcing agency to locate an alternative address for the owner as well as posting a foreclosure notice on the property. The new bill also makes it mandatory for all parties with knowledge of an owner’s alternative address to notify the enforcing officer, making it virtually impossible for any property owner to not receive proper notification of foreclosure.

“When you purchase property, it is one of the largest investments of your life. When you have financial difficulties and you have a potential for your property being taken because you haven’t paid your taxes, I believe we should make sure that proper notices be given to the property owner,” says Assemblywoman Sandy Galef. “A one-time notice of an impending foreclosure is insufficient and does not protect the consumer.”

“This legislation clearly defines the notification process for foreclosures, which earlier this year was brought into question by the U.S. Supreme Court,” said Senator Betty Little (R,C,I,-Queensbury). “Ensuring that reasonable steps are taken, beyond a mailed notice, to inform someone of a pending foreclosure is in the best interests of property owners as well as local taxing districts.”

The catalyst for this new bill was the Supreme Court case Jones vs. Flowers, which took place in Arkansas. In this case, the petitioner Jones had paid off the mortgage of his home in Arkansas while he lived elsewhere in the same city, however, the property taxes were left unpaid. A certified letter stating the failure to pay taxes was sent to the unoccupied home, and was returned unclaimed. Two years later, another certified letter was sent to the still unoccupied home, and the letter again came back unclaimed. The property was then sold to the respondent Flowers. When Jones was finally informed of the sale, he filed a state-court suit against the respondents, alleging that the Commissioner’s failure to provide adequate notice resulted in the taking of his property without due process, which was ruled in his favor.

The bill, which will become effective on November 23rd, 2006, the 120th day after it became law, would be a more successful approach to protect the consumers than previous laws. More notice is given, and a greater effort will now be put forth to make sure the notice is actually received.