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S00640 Summary:

BILL NOS00640
 
SAME ASSAME AS A01595
 
SPONSORRYAN S
 
COSPNSR
 
MLTSPNSR
 
 
Enacts the "city of Buffalo historic preservation receivership act"; provides the city of Buffalo specific procedures for the appointment of a receiver of rents in instances where the property at issue is neglected or abandoned.
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S00640 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                           640
 
                               2025-2026 Regular Sessions
 
                    IN SENATE
 
                                       (Prefiled)
 
                                     January 8, 2025
                                       ___________
 
        Introduced  by  Sen. S. RYAN -- read twice and ordered printed, and when
          printed to be committed to the Committee on Housing, Construction  and
          Community Development
 
        AN  ACT  in relation to enacting the "city of Buffalo historic preserva-
          tion receivership act"

          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
 
     1    Section  1.  Short  Title. This act shall be known and may be cited as
     2  the "city of Buffalo historic preservation receivership act".
     3    § 2. Legislative findings and purpose. The  legislature  hereby  finds
     4  and declares that:
     5    1.  the  city of Buffalo is home to many buildings of historic signif-
     6  icance, and such buildings contribute to the cultural  heritage  of  the
     7  state and are a testament to its rich history and diverse population;
     8    2.  many  such  historic  buildings  are abandoned and/or neglected by
     9  their owners of record, or no such owner may be found;
    10    3. such neglected and abandoned buildings are a blight on their commu-
    11  nities and on the state as a whole;
    12    4. the state of New York imbued the city of Buffalo housing court with
    13  jurisdiction over "proceedings for the  appointment  of  a  receiver  of
    14  rents,  issues  and  profits of buildings in order to remove or remedy a
    15  nuisance or to make repairs required  to  be  made  under  such  housing
    16  codes," under subdivision (f) of section 202 of article X of chapter 570
    17  of the laws of 1909; and
    18    5.  the  legislature  resolves to provide the city of Buffalo specific
    19  procedures for the appointment of a receiver of rents in instances where
    20  the property at issue is neglected or abandoned as defined in this act.
    21    § 3. Definitions. For the purposes of this act,  the  following  terms
    22  shall have the following meanings:
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
        S                                                          LBD02454-01-5

        S. 640                              2
 
     1    1.  "abandoned property" means a property meeting the following condi-
     2  tions at the time a petition is filed pursuant to section four  of  this
     3  act:
     4    (a) the building has not been legally occupied for at least 12 months;
     5    (b)  the  owner  fails  to  present compelling evidence that they have
     6  actively marketed the property during the preceding  60-day  period  and
     7  made  a good faith effort to sell the property at a price which reflects
     8  the circumstances and market conditions;
     9    (c) the property is not subject to a pending foreclosure action by  an
    10  individual or nongovernmental entity;
    11    (d)  the  current owner fails to present sufficient evidence that they
    12  acquired the property within the preceding  six  months.  Such  evidence
    13  shall  not  include  instances  where the prior owner is a member of the
    14  current owner, unless the transfer of title results from  the  death  of
    15  the  prior  owner, or where the current or prior owner is a corporation,
    16  partnership, or other entity in which  either  owner  or  the  immediate
    17  family of either owner has an interest in excess of 5 percent; and
    18    (e) the court finds at least three of the following:
    19    (i) the building or physical structure is a public nuisance;
    20    (ii)  the  building  is  in  need of substantial rehabilitation and no
    21  rehabilitation has taken place during the previous 12 months;
    22    (iii) the building is unfit for human habitation, occupancy, or use;
    23    (iv) the condition and vacancy of the building materially increase the
    24  risk of fire to the building and to adjacent properties;
    25    (v) the building is subject to unauthorized entry leading to potential
    26  health and safety hazards and one of the following applies:
    27    (A) the owner has failed to take reasonable and necessary measures  to
    28  secure the building; or
    29    (B)  the  city of Buffalo has secured the building in order to prevent
    30  such hazards after the owner failed to do so;
    31    (vi) the property is an attractive nuisance  to  children,  including,
    32  but  not limited to, the presence of abandoned wells, shafts, basements,
    33  excavations and unsafe structures;
    34    (vii) the presence of vermin or  the  accumulation  of  debris,  uncut
    35  vegetation,  or  physical  deterioration or the structure or grounds has
    36  created potential health and safety hazards and the owner has failed  to
    37  take reasonable and necessary measures to remove the hazards;
    38    (viii)  the  dilapidated appearance or other condition of the building
    39  negatively affects the economic well-being of residents  and  businesses
    40  in  close  proximity  to  the  building, including decreases in property
    41  value and loss of business, and the owner has failed to take  reasonable
    42  and necessary measures to remedy appearance or the condition; or
    43    (ix) the property is an attractive nuisance for illicit purposes;
    44    2.  "actively marketed" means a "for sale" sign has been placed on the
    45  property with accurate contact information and the  owner  has  done  at
    46  least one of the following:
    47    (a) engaged the services of a licensee under the real property law, to
    48  place the property in a multiple listing service or otherwise market the
    49  property;
    50    (b)  placed  weekly  or more frequent advertisements in print or elec-
    51  tronic media; or
    52    (c) distributed printed advertisements;
    53    3. "building" means a residential, commercial, or industrial  building
    54  or structure and the land appurtenant thereto, including a vacant lot on
    55  which a building has been demolished;

        S. 640                              3
 
     1    4.  "code"  means  a  building,  housing,  property maintenance, fire,
     2  health or other public safety law or ordinance enacted by the  state  of
     3  New York or the city of Buffalo;
     4    5.  "competent  entity"  means  a person or entity including a govern-
     5  mental unit  with  experience  in  the  rehabilitation  of  residential,
     6  commercial, or industrial buildings and the ability to provide or obtain
     7  the necessary financing for such rehabilitation;
     8    6.  "costs  of  rehabilitation"  means  the  costs  and  expenses  for
     9  construction, stabilization, rehabilitation, maintenance, and  operation
    10  or  demolition,  including  reasonable non-construction costs associated
    11  with the project, including but not limited  to,  environmental  remedi-
    12  ation,  architectural,  engineering,  and legal fees and costs, permits,
    13  financing fees, and a receiver's or developer's fee;
    14    7. "court" means the city of Buffalo housing court;
    15    8. "historic property"  means  a  property  which  is  listed  on  the
    16  national  register of historic places or is a contributing property in a
    17  national register historic district or is located in a local  government
    18  ordinance historic district;
    19    9. "immediate family" means a parent, spouse, child, or sibling;
    20    10. "nonprofit corporation" means a nonprofit corporation that has, as
    21  one of its purposes, remediation of blight, community development activ-
    22  ities,  including  economic  development,  historic preservation, or the
    23  promotion or enhancement of affordable housing opportunities;
    24    11. "owner" means the holder or holders of a title to, or of  a  legal
    25  or  equitable  interest  in,  a  residential,  commercial, or industrial
    26  building.  The term shall include an heir, assignee, trustee,  benefici-
    27  ary,  and  lessee  provided  that  the ownership interest is a matter of
    28  public record;
    29    12. "party in interest" means a person or entity who  has  direct  and
    30  immediate interest in a residential, commercial, or industrial building,
    31  including:
    32    (a) the owner;
    33    (b) a lienholder or other secured creditor of the owner;
    34    (c) a resident or business owner within 2,000 feet of the building;
    35    (d)  a  nonprofit  corporation,  including a redevelopment corporation
    36  located in the city of Buffalo; or
    37    (e) the city of Buffalo;
    38    13. "public nuisance" means  a  property  that,  because  of  physical
    39  condition or use, has been declared by the appropriate official a public
    40  nuisance  in  accordance with the local housing, building, health, fire,
    41  or related code or is determined to be a public nuisance by the court;
    42    14. "substantial rehabilitation" means repairs to the building where:
    43    (a) the cost of repairs, replacements,  and  improvements  exceeds  15
    44  percent  of  the  property's  value  after  completion  of  all repairs,
    45  replacements, and improvements; or
    46    (b) more than one major building component is replaced. Major building
    47  components include:
    48    (i) roof structures;
    49    (ii) ceilings;
    50    (iii) wall or floor structures;
    51    (iv) plumbing systems;
    52    (v) heating and air conditioning systems; and
    53    (vi) electrical systems; and
    54    15. "receiver or developer's fee" means a fee equal to the greatest of
    55  the following:
    56    (a) an amount equal to $2,500, adjusted upward by 2 percent each year;

        S. 640                              4
 
     1    (b) a 20 percent markup of the costs and  expenses  for  construction,
     2  stabilization,  rehabilitation, maintenance, and operation or demolition
     3  as described in the proposed receiver's plan approved by the court; or
     4    (c) 20 percent of the sale price of the property.
     5    §  4.  Initiation of action. 1. Filing of petition. A petition for the
     6  appointment of a receiver to take possession and to undertake  rehabili-
     7  tation  of a building may be filed by a party in interest in the city of
     8  Buffalo housing court. The proceeding on the petition  shall  constitute
     9  an action in rem.
    10    2. Contents. The petition submitted to the court shall include a sworn
    11  statement  that, to the best of the petitioner's knowledge, the property
    12  is an abandoned building as defined in section three of this act, and to
    13  the extent available, after reasonable efforts to obtain  such  informa-
    14  tion:
    15    (a)  a copy of any citation charging the owner with being in violation
    16  of municipal code requirements or declaring the building to be a  public
    17  nuisance;
    18    (b)  a recommendation as to which person or entity should be appointed
    19  receiver;
    20    (c) a preliminary plan with initial cost estimates for  rehabilitation
    21  of the building to bring it into compliance with all municipal codes and
    22  duly  adopted  plans  for  the area in which the building is located and
    23  anticipated funding sources; and
    24    (d) a schedule of mortgages, liens,  and  other  encumbrances  on  the
    25  property.
    26    3.  Notice  of  lis pendens. The petitioner shall file a notice of lis
    27  pendens in the office of the recorder of deeds for Erie county.
    28    4. Notification of the owner, political subdivisions, and lienholders.
    29  (a) Upon filing the petition with the court, the petitioner shall notify
    30  the current owner of the property, all political subdivisions  in  which
    31  the  property  is  located,  all city authorities known to have provided
    32  services to the property, and all lienholders of the  filing  by  regis-
    33  tered or certified mail to the last known address of each and by posting
    34  a copy of the notice on the building.
    35    (b)  In  the  event  the registered or certified mail is returned with
    36  notation by the postal authorities that the recipient refused to  accept
    37  the  mail,  the  petitioner may mail a copy to the recipient at the same
    38  address by ordinary mail with  the  return  address  of  the  petitioner
    39  appearing thereon.
    40    (c) Service by ordinary mail shall be presumed complete if the mail is
    41  not returned to the petitioner within 30 days after mailing.
    42    (d)  In  the  event  that the registered or certified mail is returned
    43  with the notation by the postal authorities that it was  unclaimed,  the
    44  notice shall be personally served.
    45    (e)  In  the  event  that  the personal service is not able to be made
    46  after two such attempts, the petitioner shall mail the petition  to  the
    47  recipient  at  the same address by ordinary mail with the return address
    48  of the petitioner appearing thereon with service by ordinary mail deemed
    49  completed if the mail is not returned to the petitioner within  15  days
    50  after the mailing.
    51    (f)  The petitioner shall also notify the owner and each lienholder of
    52  the hearing date and provide notice that owner and lienholders may peti-
    53  tion to intervene in the action.
    54    5. Adjacent properties. The petition may include one or more  adjacent
    55  properties in a single action if:

        S. 640                              5
 
     1    (a) the property that is the primary subject of the action is owned by
     2  the same owner as the adjacent property; and
     3    (b) the properties were used for a single or interrelated purpose.
     4    § 5. Appointment of the receiver. 1. General rule. The court shall act
     5  upon a petition submitted by holding a hearing within 60 days of receipt
     6  of  petition  and  by  rendering  a decision no later than 30 days after
     7  completion of the hearing.
     8    2. Intervention. A party in interest may intervene in  the  proceeding
     9  and  be  heard with respect to the petition, the requested relief or any
    10  other matter which may come before the  court  in  connection  with  the
    11  proceeding.
    12    3.  Hearing.  At the hearing, any party in interest shall be permitted
    13  to present evidence to support or contest the petition,  including,  but
    14  not limited to, the schedule of encumbrances.
    15    4.  Conditions  for  receivership.  If  a petition is filed under this
    16  section, the court may appoint a receiver if the building  at  issue  is
    17  found  to  be  an abandoned building as defined in section three of this
    18  act.
    19    5. Appointment. (a) If the court determines after a hearing  that  the
    20  property  has met the conditions outlined in the definition of abandoned
    21  building in section three of this act, the court may appoint a receiver,
    22  certify the schedule of encumbrances, and grant other relief as  may  be
    23  just and appropriate. The certification shall be binding with respect to
    24  all mortgages, liens, and encumbrances, including municipal liens, aris-
    25  ing or attaching to the property prior to the date of the petition.
    26    (b)  The  court  shall  give  first  consideration  for appointment as
    27  receiver to the most senior nongovernmental lienholder on the property.
    28    (c) In the event that the senior lienholder is found to be not  compe-
    29  tent  or  declines  the  appointment,  the court may appoint a nonprofit
    30  corporation or other competent entity. In  appointing  a  receiver,  the
    31  court shall:
    32    (i)  consider  any recommendations contained in the petition or other-
    33  wise presented by a party in interest; and
    34    (ii) give preference to the appointment of a nonprofit corporation  or
    35  governmental unit over an individual.
    36    6. Conditional relief. (a) If the court finds after a hearing that the
    37  conditions  for receivership set forth in section three of this act have
    38  been  established,  but  the  owner  represents  that  the   conditions,
    39  violations  or  nuisance,  or  emergency  condition  will be abated in a
    40  reasonable period, the court may allow the owner to  proceed  to  remedy
    41  the conditions.
    42    (b)  If  the conditions set forth in paragraph (a) of this subdivision
    43  have been satisfied, the court shall enter an order providing  that,  in
    44  the  event  that  the violations or nuisance or emergency conditions are
    45  not abated by the owner by a specific date or that other specified reme-
    46  dial activities have not occurred by a specific date or dates, an  order
    47  granting the relief specified in in the petition shall be entered.
    48    (c)  The  court  shall  also  require  the owner to post a bond in the
    49  amount of the repair costs estimated in the petition as a  condition  of
    50  retaining possession of the building.
    51    (d) Upon a finding that:
    52    (i) the petition states conditions for receivership; or
    53    (ii) the owner elects to either:
    54    (A) remedy all violations and nuisance or emergency conditions; or
    55    (B)  sell  the  property  subject to the receivership, the owner shall
    56  reimburse the petitioner for all costs incurred  by  the  petitioner  in

        S. 640                              6
 
     1  preparing and filing the petition in accordance with the requirements of
     2  section four of this act and the receiver or developer's fee.
     3    7.  Receiver's lien. The receiver may file a lien against the property
     4  in an amount equal  to  the  costs  incurred  during  the  receivership,
     5  including,  but  not limited to, costs of rehabilitation, attorney fees,
     6  and court costs. The lien amount may be adjusted from time to time.
     7    8. Immediate possession. The receiver shall promptly  take  possession
     8  of the building and other property subject to the receivership and shall
     9  immediately be authorized to exercise all powers of this act.
    10    9. Removal by the court. A receiver may be removed by the court at any
    11  time  upon  the  request of the receiver or upon a showing by a party to
    12  the action that the receiver is not carrying  out  its  responsibilities
    13  under this act.
    14    § 6. Powers and duties of the receiver. 1. Full powers and duties. The
    15  receiver shall have all powers and duties necessary or desirable for the
    16  efficient  operation,  management,  and  improvement  of the building in
    17  order to bring it into compliance with all municipal building and  hous-
    18  ing  code  requirements  and  to fulfill the receiver's responsibilities
    19  under this act. Such powers and duties shall include, but not be limited
    20  to, the power to:
    21    (a) take possession and control of the building, appurtenant land  and
    22  any  personal  property  of the owner used with respect to the building,
    23  including any bank or operating account for the building;
    24    (b) collect outstanding accounts receivable;
    25    (c) pursue all claims or causes of action of the owner with respect to
    26  the building and all other property subject to the receivership;
    27    (d) contract for the repair  and  maintenance  of  the  building.  The
    28  contracts  shall be appropriately documented and included in the reports
    29  and accounting which the receiver is required to submit  or  file  under
    30  the  provisions of this act. The receiver shall make a reasonable effort
    31  to solicit three bids for contracts valued at more than  $25,000  except
    32  when  the  receiver  or  developer provides or obtains financing for the
    33  receivership;
    34    (e) borrow money and incur credit in accordance with section eight  of
    35  this act;
    36    (f)  contract and pay for the maintenance and restoration of utilities
    37  to the building;
    38    (g) purchase materials, goods, and supplies to accomplish repairs  and
    39  operate the building;
    40    (h)  with  the  court's  approval, enter into new rental contracts and
    41  leases for a period not to exceed one year;
    42    (i) affirm, renew, or enter into  contracts  providing  for  insurance
    43  coverage on the building;
    44    (j)  engage  and  pay  legal,  accounting, appraisal and other profes-
    45  sionals to aid the receiver in the conduct of the receivership;
    46    (k) when the building has been designated a historic property, consult
    47  with the preservation board of the city of Buffalo  for  recommendations
    48  on preserving the property's historic character;
    49    (l) apply for and receive public grants or loans;
    50    (m) sell the building in accordance with section nine of this act; and
    51    (n) exercise all authority that an owner of the building would have to
    52  improve,  maintain,  and  otherwise  manage  the building, including the
    53  extent to which rehabilitation will satisfy the goals of  the  receiver-
    54  ship.
    55    2. Affirmative duty. While in possession of the building, the receiver
    56  shall:

        S. 640                              7
 
     1    (a) maintain, safeguard and insure the building;
     2    (b)  apply all revenue generated from the building consistent with the
     3  provisions of this act;
     4    (c) develop a final plan for abatement of the conditions which  caused
     5  the  petition  to  be  granted or, if no such feasible final plan can be
     6  developed, to develop alternatives, including the closing,  sealing,  or
     7  demolition of all or part of the building;
     8    (d)  when  the  building  has  been designated as a historic property,
     9  rehabilitate architectural features that define the property's  historic
    10  character;
    11    (e) when demolition of a property in a historic district is necessary,
    12  design  any replacement construction on the site to comply with applica-
    13  ble standards under current law;
    14    (f) implement the final plan referred to  in  paragraph  (c)  of  this
    15  subdivision upon approval by the court;
    16    (g)  submit  a  status  report  to the court and parties to the action
    17  annually or more frequently as  the  court  may  deem  appropriate.  The
    18  status report shall include:
    19    (i)  a copy of any contract entered into by the receiver regarding the
    20  improvement of the building;
    21    (ii) an account of the disposition of all revenue generated  from  the
    22  building;
    23    (iii) an account of all expenses and improvements;
    24    (iv) the status of developing and implementing the final plan pursuant
    25  to this subdivision; and
    26    (v)  a description of any proposed actions to be taken in the next six
    27  months to improve the building.
    28    3. Hearing on receiver's final plan for abatement. (a) At the time the
    29  court appoints a receiver, the receiver may present and  the  court  may
    30  approve  the  final  plan for abatement. If no plan is presented at that
    31  hearing, a hearing date on the receiver's final plan for abatement shall
    32  be set within 120 days of the appointment.
    33    (b) 30 days prior to the date  of  the  hearing,  the  receiver  shall
    34  submit the plan to the court, and to all parties to the action.
    35    (c)  The  plan  shall  include  a cost estimate, a financing plan, and
    36  either a description of the work to be done for  the  rehabilitation  of
    37  the  building,  or if rehabilitation is not feasible, a proposal for the
    38  closing, sealing, or demolition of the building.
    39    (d) The plan shall conform with all  existing  municipal  codes,  duly
    40  adopted plans for the area, and historic preservation requirements.
    41    (e)  At  the  time  of  the  hearing,  all parties shall be allowed to
    42  comment on the plan, and the court shall take all comments into  consid-
    43  eration  when  assessing  the  feasibility  of the plan and the proposed
    44  financing.  In making its assessment, the court  shall  give  reasonable
    45  regard  to  the  receiver's  determination of the scope and necessity of
    46  work to be done for the rehabilitation or demolition of the building  in
    47  approving  the final plan and in approving the costs of receivership and
    48  sale of the property.
    49    (f) Within 15 days of the hearing, the court shall  issue  a  decision
    50  approving the plan or requiring that the plan be amended.
    51    (g) If the court decision requires that the plan be amended, a hearing
    52  date shall be set within 60 days from the date of the decision.
    53    4.  Accounting.  Upon the implementation of the final plan approved by
    54  the court, the receiver shall file with the court a full  accounting  of
    55  all income and expenditures during the period of time it took to approve
    56  the final plan.

        S. 640                              8
 
     1    §  7.  Ownership of property. 1. Ownership interest of the receiver. A
     2  receiver appointed under section five of this act  shall  be  deemed  to
     3  have  an ownership interest in and legal control of the property for the
     4  purposes of filing plans with public agencies and  boards,  seeking  and
     5  obtaining construction permits and other approvals and submitting appli-
     6  cations for financing or other assistance to public or private entities.
     7    2.  Liability  of owner. Notwithstanding the appointment of a receiver
     8  under section five of this act, nothing in this act shall  be  construed
     9  to  relieve the owner of any civil or criminal liability or of any obli-
    10  gation to pay taxes, municipal liens  and  charges,  mortgages,  private
    11  liens  or  other  fees  or charges, whether incurred before or after the
    12  appointment of the receiver and no such liability shall  be  transferred
    13  to the receiver.
    14    3.  Limitation of the receiver's environmental liability. (a) Notwith-
    15  standing any law to the contrary, the receiver shall not be held  liable
    16  for  any  environmental damage to the building or the real property upon
    17  which the building is located that existed prior to the  appointment  by
    18  the court of the receiver.
    19    (b)  Paragraph (a) of this subdivision shall not apply to the owner or
    20  any other person or entity regarding the building and its real  property
    21  that is subject to an appointed receiver under this act.
    22    §  8.  Incurring  indebtedness.  1.  Borrowing.  From  time to time, a
    23  receiver may borrow money or incur indebtedness in order  to  cover  the
    24  costs  of rehabilitation or otherwise fulfill the receiver's obligations
    25  under this act.
    26    2. Liens. In order to facilitate the borrowing of funds for the  costs
    27  of  rehabilitation,  the court may grant priority status to a lien given
    28  to secure payment on a debt incurred for purposes authorized under  this
    29  act, provided that:
    30    (a)  the  receiver  sought  to obtain the necessary financing from the
    31  senior, nongovernmental  lienholder,  but  the  lienholder  declined  to
    32  provide financing for reasonable improvements or other costs of rehabil-
    33  itation on reasonable terms; and
    34    (b)  lien  priority  is necessary in order to induce another lender to
    35  provide financing on reasonable terms.
    36    3. Lien status of rehabilitation expenses. Should the senior lienhold-
    37  er agree to provide financing for the costs of rehabilitation, any funds
    38  lent to cover the costs shall be  deemed  to  be  added  to  the  senior
    39  lienholder's preexisting first lien.
    40    4.  Approval  of  financing.  The  court may approve financing for the
    41  costs of rehabilitation, the terms of which may include deferred  repay-
    42  ment  and  use  restrictions. The terms of the financing may remain with
    43  the property after the receivership has ended and be assumed by  any  of
    44  the following:
    45    (a)  the  owner, if the owner regains possession of the property under
    46  section ten of this act; or
    47    (b) the buyer who takes title under section nine of this act.
    48    § 9. Sale of property. 1. Sale by owner or lienholder. If  a  property
    49  subject  to  receivership  is  sold by the owner or foreclosed upon by a
    50  lienholder or if any interest therein is transferred, such  sale,  fore-
    51  closure, or transfer shall be subject to the receivership.
    52    2.  Sale  by receiver. Upon application of the receiver, the court may
    53  order the sale of the property if the court finds that:
    54    (a) notice and an opportunity to provide  comment  to  the  court  was
    55  given to each record owner of the property and each lienholder;

        S. 640                              9
 
     1    (b)  the  receiver  has  been in control of the building for more than
     2  three months and the owner has not successfully petitioned to  terminate
     3  the receivership under section ten of this act; and
     4    (c)  the  terms and conditions of the sale are acceptable to the court
     5  and the buyer has a reasonable likelihood of maintaining the property.
     6    3. Sale free and clear. (a) The court may authorize  the  receiver  to
     7  sell the building free and clear of all liens, claims, and encumbrances,
     8  provided  that  the  proceeds  of  the  sale are distributed pursuant to
     9  subdivision four of this section at settlement.
    10    (b) In the event that the proceeds of the sale are insufficient to pay
    11  all existing liens, claims, and  encumbrances,  the  proceeds  shall  be
    12  distributed according to the priorities set forth in subdivision four of
    13  this  section  and  all unpaid liens, claims, or encumbrances which have
    14  not been assumed under subdivision four of section  eight  of  this  act
    15  shall be extinguished.
    16    4.  Distribution. The proceeds of the sale shall be applied in accord-
    17  ance with the following priorities to:
    18    (a) all court costs;
    19    (b) liens of the state, liens for unpaid property taxes  and  properly
    20  recorded municipal liens;
    21    (c) costs and expenses of sale;
    22    (d)  principal  and interest on any borrowing or incurrence of indebt-
    23  edness granted priority over existing liens and security interests under
    24  subdivision two of section eight of this act;
    25    (e) costs incurred by the petitioner in preparing and filing the peti-
    26  tion in accordance with the requirements of section four of this act;
    27    (f) costs of rehabilitation and any fees and expenses incurred by  the
    28  receiver in connection with the sale or the safeguarding of the property
    29  for which the lien authorized under subdivision seven of section five of
    30  this act was filed;
    31    (g) valid liens and security interests in accordance with their prior-
    32  ity;
    33    (h) any unpaid obligations of the receiver; and
    34    (i) the owner.
    35    5.  Owner's  proceeds  as  unclaimed  property. In the event the owner
    36  cannot be located, any proceeds from the sale which belong to the  owner
    37  shall  be presumed to be abandoned and unclaimed and shall be subject to
    38  the custody and control of the New York state  comptroller's  office  of
    39  unclaimed funds pursuant to the abandoned property law.
    40    §  10.  Termination  of  the  receivership. Upon request of a party in
    41  interest or the receiver, the court may order  the  termination  of  the
    42  receivership if it determines:
    43    1. The conditions that were the grounds for the petition and all other
    44  code  violations  have  been  abated  or corrected, and the obligations,
    45  expenses, and improvements of the receivership, including all  fees  and
    46  expenses  of  the receiver, have been fully paid or provided for and the
    47  purposes of the receivership have been fulfilled;
    48    2. The owner, mortgagee, or lienholder has requested that the  receiv-
    49  ership  be  terminated and has provided adequate assurances to the court
    50  that the conditions that constituted grounds for the  petition  will  be
    51  promptly  abated,  all  obligations,  expenses,  and improvements of the
    52  receivership including all fees and expenses of the receiver, have  been
    53  fully  paid  or  provided  for and the purposes of the receivership have
    54  been fulfilled;

        S. 640                             10
 
     1    3. The building has  been  sold  by  the  receiver  and  the  proceeds
     2  distributed  in accordance with subdivision four of section nine of this
     3  act; or
     4    4.  The  receiver has been unable, after diligent effort, to present a
     5  plan that could be approved under paragraph (c) of  subdivision  two  of
     6  section  six  of this act or to implement a previously approved plan, or
     7  for any reason, the purpose of the receivership cannot be fulfilled.
     8    § 11. Applicability. 1. General inapplicability. This  act  shall  not
     9  apply to commercial and residential buildings, structures, or land owned
    10  by  or  held in trust for the federal government and regulated under the
    11  United States Housing Act of 1937 (42 U.S.C. § 1437 et. seq.) and  regu-
    12  lations promulgated under such act.
    13    2. Inapplicability to service members. This act shall not apply if the
    14  property  owner  has  vacated  the property in order to perform military
    15  service in time of war, armed conflict,  or  in  order  to  assist  with
    16  relief  efforts during a declared federal or state emergency as a member
    17  of the United States armed forces or its reserve component.
    18    § 12. This act shall take effect on the ninetieth day after  it  shall
    19  have become a law.
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