NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A909
TITLE OF BILL:
An act to amend the administrative code of the city of New York, in
relation to foreclosure by action in rem
PURPOSE OR GENERAL IDEA OF BILL:
The bill requires a municipality intending to foreclose upon a residen-
tial property through an action in rem and then transfer it to a third
party to notify both the owners and tenants.
SUMMARY OF PROVISIONS:
Section one amends section 11-404 of the administrative code of the city
of New York by adding a new subdivision which requires municipalities to
notify the owners, tenants, and property managers of properties before
the municipality attempts an in rem foreclosure. It would also prohibit
a municipality from pursing an in rem foreclosure if the notice require-
ments have not been met.
In New York City, residential buildings that have a certain number of
violations and have fallen behind on taxes owed to the city are subject
to foreclosure in rem. At the city's discretion, instead of seizing the
property directly, the city can have the property transferred directly
to a third party who is supposed to maintain the residential building,
in a process known as Third Party Transfer. While Third Party Transfer
is supposed to be a method to improve residential buildings facing
mismanagement or neglect by landlords shirking their duty. The process
has faced significant criticism for both stripping equity from residents
who were unaware of issues or the impending foreclosure,and foreclosing
on buildings that are not eligible.
Residents are often not aware that their building is facing Third Party
Transfer and only find out when a new owner shows up. When the residents
are also the owners, such as cooperatives, then Third Party Transfer
strips the residents of the ownership and equity they have worked so
hard to attend. To lose your homeownership because a lackluster board is
not addressing violations is heartbreaking, and potentially unnecessary.
Increased notice to not just the owners, but also the residents would
give the residents the opportunity to challenge improper foreclosure and
address the violations that have brought their homes to this situation.
PRIOR LEGISLATIVE HISTORY:
02/08/21 referred to judiciary
01/05/22 referred to judiciary
New bill for 2020.
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
This bill shall take effect on the ninetieth day after it shall have
STATE OF NEW YORK
2023-2024 Regular Sessions
January 11, 2023
Introduced by M. of A. JOYNER -- read once and referred to the Committee
AN ACT to amend the administrative code of the city of New York, in
relation to foreclosure by action in rem
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Section 11-404 of the administrative code of the city of
2 New York is amended by adding a new subdivision c to read as follows:
3 c. (1) If the city shall intend for a property defined in subdivision
4 b of this section to be conveyed to a third party pursuant to subdivi-
5 sion b of section 11-412.1 of this chapter the city or supervising agen-
6 cy shall first do the following to address outstanding issues with such
8 (i) Notify the owner or board of a company that owns the property, if
9 there is one, and the property management entity, if there is one, of
10 any and all matters that could result in a significant action; and
11 (ii) Notify residents, individually and separately from attempts to
12 notify the owner or the board, that significant adverse actions against
13 the company or its real estate are imminent and describe the deficien-
14 cies that have made such adverse actions possible.
15 (2) Failure to meet the requirements of this subdivision shall prevent
16 the property from being conveyed to a third party.
17 (3) If an owner or board of a company that owns the property receives
18 notice from a city or supervising agency it shall notify the property
19 management entity and all tenants and shareholders separately from any
20 notification by the city or supervising agency. If the property manage-
21 ment entity receives notice, it shall notify the owner or board.
22 § 2. This act shall take effect on the ninetieth day after it shall
23 have become a law.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
 is old law to be omitted.