Relates to tax lien foreclosure; establishes senior, disabled, and veteran homeowner real property tax assistance program; establishes installment plans for certain real property taxes.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A4445
SPONSOR: Dilan TITLE OF BILL:
An act to amend the real property tax law and the social services law,
in relation to tax lien foreclosure
PURPOSE OF BILL:
The purpose of this bill is to provide homeowners at risk of tax lien
foreclosures the same protections that are afforded to borrowers in
residential mortgage foreclosure proceedings.
SUMMARY OF PROVISIONS OF BILL:
Section 1 of the bill amends the real property tax law section 1185
titled "homeowner bill of rights" to add new rights for homeowners
facing tax lien foreclosure: All foreclosures for property tax liens
must be judicial proceedings; The owner must have a chance to partic-
ipate in a mandatory settlement conference process to avert foreclosure;
Any payments must be applied to the oldest liens first; and If the resi-
dential property is foreclosed on, the owner must receive any money
remaining after the tax lien is satisfied ahead of any secured credi-
tors.
Section 2 of the bill amends the real property tax law to require all
taxing jurisdictions, even those who previously opted out of or were
exempted from Article 11 to include protections for homeowners that are
at least as protective as the homeowner bill of rights.
Section 3 of the bill amends the real property tax law to allow for
local laws that increase the maximum threshold for repayment plans to
cure tax delinquency.
Section 4 of the bill amends the real property tax law to require taxing
authorities to send pre-foreclosure notices and provide homeowners the
opportunity to participate in settlement conferences prior to commencing
a foreclosure action.
Section 5 of the bill amends the social services law to require social
services districts to assist eligible homeowners with property tax
assistance.
Section 6 of the bill amends the real property tax law to require all
taxing jurisdictions to offer installment plans for homeowners to prepay
taxes.
Section 7 contains a severability clause. Section 8 states the effective
date.
JUSTIFICATION:
In New York, when a homeowner owes property taxes or other property-re-
lated charges for an extended period, those delinquent taxes become
liens that put the property at risk of a tax lien foreclosure. These
property tax foreclosures disproportionately impact homeowners who have
satisfied their mortgages. Because the typical mortgage products last 30
years, many of these owners are retired or approaching retirement and
are living on fixed incomes. As such, inequity relating to tax liens and
their collections falls most heavily on senior citizens. Additionally,
research has consistently shown that more liens are generated in commu-
nities of color. These factors contribute to gentrification and strip-
ping of equity and generational wealth in communities adversely impacted
by appreciating real estate values.
Tax lien foreclosures are governed by Article 11 of the Real Property
Tax Law Article 11, but many jurisdictions were exempted from the law or
were permitted to opt out. Therefore, there are many parts of the State
of New York that are not governed by the provisions of state law. This
has created a hodgepodge of property tax collection schemes throughout
the state and a homeowner's rights and the protections they are afforded
are entirely dependent on where they live. Even for those localities to
which Article 11 applies, many of the provisions in it are permissive,
instead of prescriptive and therefore carry little force or authority.
Additionally, Article 11 does not afford homeowners facing property tax
foreclosures the same consumer protections that are available to home-
owners in residential mortgage foreclosure actions and proceedings, such
as pre-foreclosure notices under Article 13 of the Real Property Actions
and Proceedings Law and mandatory settlement conferences under CPLR
3408. In many jurisdictions tax lien foreclosures are obscure processes
with strict deadlines that can be detrimental for homeowners and have
dire consequences because of the system's rigidity. The absence of these
protections is especially harmful because tax lien foreclosures - due to
the low amounts of debt involved as compared to the value of the encum-
bered homes - often can be easily resolved through affordable repayment
plans or even lump sum payments (where the debt has been significantly
increased by exorbitant interest and fees). This is especially the case
for senior homeowners who have paid off their mortgages, but who may be
tax burdened or who may have experienced health challenges that have
caused their property taxes to become delinquent. Foreclosure that are
not averted can represent a loss of substantial equity if a home is sold
to satisfy a tax lien that represents a small proportion of the home's
value. Indeed, homeowners in some jurisdictions face total loss of the
equity in their homes as the tax lien foreclosure is accomplished by a
simple transfer to the municipality and a complete termination of all
ownership rights. These problems are exacerbated in some municipalities
or counties that sell tax liens to Wall Street investors who relentless-
ly pursue foreclosure and refuse to engage in the sort of basic loss
mitigation procedures that are required in the mortgage foreclosure
context.
Providing basic due process protections such as a pre-foreclosure notice
comparable to those required in mortgage foreclosures - and governed by
the same legal requirements - and a mandatory settlement conference
process governed by a good faith negotiation standard can promote earli-
er resolution of tax lien arrears and ensure that taxing authorities are
not promoting displacement of vulnerable citizens - and especially
senior citizens - and gentrification in New York's communities of color.
This bill aims to protect the due process rights of homeowners who are
at risk of losing their homes to property tax foreclosure by granting
them the same protections that are afforded to borrowers in the residen-
tial mortgage foreclosure process - most importantly the right to retain
the equity in their homes, which for many is their only significant
asset.
LEGISLATIVE HISTORY:
New bill, 2024.
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
To be determined.
EFFECTIVE DATE:
This act shall take effect immediately.
STATE OF NEW YORK
________________________________________________________________________
4445
2025-2026 Regular Sessions
IN ASSEMBLY
February 4, 2025
___________
Introduced by M. of A. DILAN -- read once and referred to the Committee
on Real Property Taxation
AN ACT to amend the real property tax law and the social services law,
in relation to tax lien foreclosure
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Section 1142 of the real property tax law, as added by
2 section 12 of part BB of chapter 55 of the laws of 2024, is amended to
3 read as follows:
4 § 1142. Homeowner bill of rights. Any owner of a residential property,
5 as defined in section eleven hundred eleven of this article, who occu-
6 pies such property as their primary residence, or whose heirs or distri-
7 butees occupy the property as their primary residence where the homeown-
8 er is deceased, or any purchaser of a contract for a residential
9 property, or successor in interest to such purchaser, subject to a tax
10 lien on any parcel of real property, including those loans otherwise
11 exempt under this article, shall have the following rights:
12 1. Notwithstanding any other general, special, or local law, local tax
13 act, code, rule, regulation, or charter provision to the contrary, to
14 not have exemptions removed or waived for nonpayment of property taxes,
15 except to the extent otherwise provided in section one hundred seventy-
16 one-w of the tax law and any other general law that explicitly author-
17 izes the removal of an exemption due to the nonpayment of taxes;
18 2. To be informed of the amount of tax due, the number of tax years
19 for which the parcel has been in arrears, the date on which the redemp-
20 tion period ends, the accepted forms of payment, the location where
21 payments shall be made, and the contact information for the responsible
22 taxing authority, provided that a claim by an owner that they were not
23 so informed shall not constitute a valid defense to a foreclosure
24 proceeding;
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD08485-01-5
A. 4445 2
1 3. To receive homeowner warning notices pursuant to section eleven
2 hundred forty-four of this title;
3 4. In the event that their primary residence is foreclosed upon, to
4 receive a share of any surplus resulting from the sale of the property
5 in the manner provided by law; provided however, that such homeowner
6 shall receive any surplus following the sale of the property after the
7 tax lien is satisfied ahead of any secured creditors pursuant to section
8 fifty-two hundred six of the civil practice law and rules;
9 5. To be charged interest at a rate no higher than the maximum allow-
10 able statutory interest rate for unpaid property taxes;
11 6. To enter into installment plans or repayment plans for purposes of
12 paying delinquent taxes [where locally authorized];
13 7. For owners who are senior citizens who are receiving a senior citi-
14 zens exemption, an enhanced STAR exemption or an enhanced STAR credit,
15 to receive a grace period of five business days to pay their taxes with-
16 out interest in a local government that has opted to grant such an
17 extension to such persons;
18 8. In the event that their primary residence is foreclosed upon, to
19 have all debts related to delinquent taxes owed on such primary resi-
20 dence extinguished upon the foreclosure, except when they have reac-
21 quired title pursuant to subdivision four of section eleven hundred
22 thirty-six of this article; provided, however, that nothing contained
23 herein shall be construed to preclude a tax district from bringing an
24 action against a former owner to recover reasonable costs incurred in
25 acting pursuant to law to remove, abate or mitigate unsafe conditions
26 and/or nuisances that were present on the property at the time of fore-
27 closure, including but not limited to the demolition of unsafe struc-
28 tures and the elimination of fire and health hazards where warranted[.];
29 9. For real property tax-lien related foreclosures to be judicial
30 proceedings;
31 10. The right to attend a pre-foreclosure settlement conference with
32 the taxing jurisdiction; and
33 11. Homeowner payments toward delinquent taxes will apply in reverse
34 chronological order of when the liens become due.
35 § 2. Subdivision 2 of section 1104 of the real property tax law, as
36 amended by chapter 532 of the laws of 1994, paragraph (iii) as further
37 amended by subdivision (b) of section 1 of part W of chapter 56 of the
38 laws of 2010, is amended to read as follows:
39 2. The provisions of this article shall not be applicable to a county,
40 city or town which: (i) on January first, nineteen hundred ninety-three,
41 was authorized to enforce the collection of delinquent taxes pursuant to
42 a county charter, city charter, administrative code or special law; (ii)
43 adopted a local law, no later than July first, nineteen hundred ninety-
44 four, providing that the collection of taxes in such county, city or
45 town shall continue to be enforced pursuant to such charter, code or
46 special law, as such charter, code or special law may from time to time
47 be amended; and (iii) filed a copy of such local law with the commis-
48 sioner no later than August first, nineteen hundred ninety-four.
49 Provided, however, that notwithstanding any provisions of any general,
50 special or local law to the contrary, if such charter, code or special
51 law does not include provisions allowing for any "surplus" as defined by
52 section eleven hundred ninety-five of this article to be claimed by the
53 former owner or other parties whose interests were extinguished by the
54 foreclosure of a delinquent tax lien, then until such charter, code or
55 special law is amended to comply with the provisions of title three-A of
56 this article, any claims for surplus within such tax district shall be
A. 4445 3
1 administered in a manner substantially similar to that prescribed by
2 title three-A of this article; and provided further, that on or after
3 the effective date of the chapter of the laws of two thousand twenty-
4 five that amended this subdivision, all local taxing jurisdictions must
5 provide protections to homeowners at least as protective as those
6 prescribed in title three-A of this article.
7 § 3. Subdivision 1 of section 1146 of the real property tax law, as
8 added by section 12 of part BB of chapter 55 of the laws of 2024, is
9 amended to read as follows:
10 1. [The governing body of a tax district is hereby authorized and
11 empowered to enact and amend a local law providing that in] In the case
12 of primary residences with a tax delinquency greater than five hundred
13 dollars but less than thirty thousand dollars or such other limit as may
14 be provided by such local law, the property owner shall be permitted to
15 enter into a repayment plan to cure a tax delinquency at any time until
16 the date of redemption; provided however, that each taxing jurisdiction
17 shall be authorized and empowered to enact a local law to increase the
18 maximum threshold of thirty thousand dollars for tax arrears by passage
19 of a local law, ordinance, or resolution.
20 § 4. The real property tax law is amended by adding a new section 1149
21 to read as follows:
22 § 1149. Pre-foreclosure settlement conferences. 1. Notwithstanding
23 any inconsistent general, special, or local law, local tax act, code,
24 rule, regulation, or charter provision to the contrary, no taxing juris-
25 diction shall commence a foreclosure action against any primary resident
26 homeowner without first providing such homeowner with the notice
27 required pursuant to section eleven hundred forty-four of this title,
28 and providing such homeowner an opportunity to engage in a pre-foreclo-
29 sure settlement conference.
30 2. The purpose of such settlement conference shall be, at a minimum,
31 to offer such homeowner information about their rights as enumerated in
32 section eleven hundred forty-two of this title, and to offer such home-
33 owner to opt into a repayment plan as enumerated in section eleven
34 hundred forty-six of this title. Such homeowner shall be informed at
35 such settlement conferences that they shall have the right to enter into
36 a repayment plan of twelve, eighteen, twenty-four, or thirty-six months,
37 as enumerated in section eleven hundred forty-six of this title, if they
38 so opt to avail themselves of such repayment plan. No taxing jurisdic-
39 tion shall initiate a foreclosure proceeding until and unless at least
40 fourteen days have passed since the settlement conference has taken
41 place and the primary resident homeowner has either not opted into a
42 repayment plan, or has defaulted upon such repayment plan.
43 3. Housing counselors from New York-based homeowner protection program
44 agencies may attend such settlement conferences, and may provide infor-
45 mation to such homeowner at such settlement conferences.
46 4. Local taxing jurisdictions may conduct such pre-foreclosure settle-
47 ment conferences in group settings or batches, and an in-person attend-
48 ance option must be offered; provided however, that a homeowner's
49 inability to attend such pre-foreclosure settlement conference shall not
50 be a defense against a foreclosure action, so long as such homeowner was
51 properly notified of such settlement conference, and a virtual attend-
52 ance option was provided.
53 § 5. The social services law is amended by adding a new section 97-a
54 to read as follows:
55 § 97-a. Senior, disabled, and veteran homeowner real property tax
56 assistance program. 1. Each social services district shall assist eligi-
A. 4445 4
1 ble households found in such districts to obtain real property tax
2 assistance. However, only those persons who qualify for senior, disa-
3 bled, or veterans' assistance in accordance with state requirements, and
4 standards promulgated by the department, shall be certified as eligible
5 for and entitled to receive said homeowner real property tax assistance.
6 No person shall be certified as eligible for and entitled to receive
7 said real property tax assistance if no funds are available for such
8 purpose.
9 2. Notwithstanding any inconsistent provision of law, rule, or regu-
10 lation to the contrary, the amount of any real property tax payments or
11 allowances provided to an eligible household under this program shall
12 not be considered income or resources of such households, or of any
13 member thereof, for any purpose under any federal or state law, includ-
14 ing any law relating to taxation, food stamps, public assistance or
15 other benefits available pursuant to this chapter.
16 § 6. Section 972 of the real property tax law is amended by adding a
17 new subdivision 6 to read as follows:
18 6. Installment plans. Notwithstanding any inconsistent general,
19 special, or local law, local tax act, code, rule, regulation, or charter
20 provision to the contrary, beginning in all local fiscal years commenc-
21 ing in calendar year two thousand twenty-six and thereafter, all local
22 taxing jurisdictions shall offer an option for taxpayers to enter into
23 installment plans which shall permit collection of taxes on at least a
24 quarterly basis.
25 § 7. Severability clause. If any clause, sentence, paragraph, subdivi-
26 sion, section or subpart contained in any part of this act shall be
27 adjudged by any court of competent jurisdiction to be invalid, such
28 judgment shall not affect, impair, or invalidate the remainder thereof,
29 but shall be confined in its operation to the clause, sentence, para-
30 graph, subdivision, section or subpart contained in any part thereof
31 directly involved in the controversy in which such judgment shall have
32 been rendered. It is hereby declared to be the intent of the legislature
33 that this act would have been enacted even if such invalid provisions
34 had not been included herein.
35 § 8. This act shall take effect immediately.
