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The commissioner of finance shall, prior to the execution of a deed conveying full and complete title of any parcel of class one or class two real property to a third party pursuant to subdivision c of section 11-412.1 of this chapter, notify the council of the proposed conveyance. Within forty-five days of such notification, the council may act by local law disapproving the proposed conveyance. In the event the council does not act by local law within such forty-five day period, the council shall be deemed to have approved the proposed conveyance. During such forty-five day period or, if the city council acts by local law pursuant to this section, during the period of time from the notification of the council to the presentation to the mayor of such local law and during any additional period of time prescribed in section 37 of the charter, the eight-month period provided in subdivisions c and i of section 11-412.1 of this chapter shall be tolled.
Editor's note: For related unconsolidated provisions, see Appendix A at L.L. 1996/037.
Arm’s length transaction. The term “arm’s length transaction” means a sale or a transfer of a fee interest in property or in a dwelling unit in good faith and for valuable consideration, that reflects the fair market value of such property or such dwelling unit, in the open market, between two informed and willing parties, where neither is under any compulsion to participate in the transaction, unaffected by any unusual conditions indicating a reasonable possibility that the sale or transfer was made for the purpose of permitting the original owner to avoid the effect of the limitation on the number of times that the department of finance may remove a tax lien or tax liens from the tax lien sale pursuant to subdivision b of this section. The following sales or transfers shall be presumed not to be arm's length transactions unless adequate documentation is provided demonstrating that the sale or transfer was not conducted, in whole or in part, for the purpose of permitting the original owner to avoid the effect of the limitation on the number of times that the department of finance may remove a tax lien or tax liens from the tax lien sale pursuant to subdivision b of this section:
1. a sale or transfer between relatives; or
2. a sale or transfer between a related corporate entity or partners or principals of a business or corporate entity; or
3. a sale or transfer affected by other facts or circumstances that would indicate that such sale or transfer is entered into for the primary purpose of permitting the original owner to avoid the effect of the limitation on the number of times that such department may remove a tax lien or tax liens from the tax lien sale pursuant to subdivision b of this section.
City note. The term “city note” means: (i) a note provided to the city of New York by a qualified preservation purchaser in the amount of the outstanding tax liens on a property as of the date immediately preceding the date of the delivery of the deed conveying full and complete title to such property to such qualified preservation purchaser pursuant to subdivision j of section 11-412.5 of this chapter, other than outstanding sewer rents, sewer surcharges, or water rents, as such terms are defined in section 11-301 of this title, on such property; and (ii) a note provided to the New York city water board by a qualified preservation purchaser in the amount of the outstanding sewer rents, sewer surcharges, or water rents, as such terms are defined in section 11-301 of this title, as of such date.
Department. The term “department” means the department of finance.
Dwelling unit. The term “dwelling unit” means a dwelling unit in a condominium.
Income. The term “income” means the adjusted gross income for federal income tax purposes as reported on an owner’s federal or state income tax return for the most recent calendar year or fiscal year for which an owner filed a federal or state income tax return, subject to any subsequent amendments or revisions; provided that if no such return was filed during the previous five calendar years, “income” means the adjusted gross income that would have been so reported if such a return had been filed.
Limited equity property. The term “limited equity property” means a real property that is subject to all of the restrictions contained in the regulatory agreement described in paragraph (1) of subdivision a of section 11-412.4 of this chapter.
Owner. The term “owner” means a natural person who has a fee interest in a property or a dwelling unit.
Property. The term “property” means real property classified as class one pursuant to section 1802 of the real property tax law, except any such property held in the cooperative or condominium form of ownership.
Qualified preservation purchaser. The term “qualified preservation purchaser” means a housing development fund company, as defined in section 572 of the private housing finance law.
Real property classified as class one, class two or class four property. The term “real property classified as class one, class two or class four property” means property classified as class one, class two or class four property, as such classes of property are defined in subdivision 1 of section 1802 of the real property tax law.
Sales price equity. The term “sales price equity” means the difference, if any, after subtracting: (i) the sum of: (A) any lien on such property created by the execution of a note for the purpose of obtaining financing to be used solely to repair or rehabilitate such property as of the date the sales price equity is paid to the tenant; (B) the city note; (C) administrative costs, as specified in the regulatory agreement described in paragraph (1) of subdivision a of section 11-412.4 of this chapter; and (D) any other outstanding liens, charges or fees, including but not limited to rent charges, due to a qualified preservation purchaser under a lease for such property, or pursuant to the terms of such regulatory agreement, as of such date, from (ii) the price for which such property has been sold by such qualified preservation purchaser as a limited equity property, in accordance with such regulatory agreement, provided that if such property has not been sold by such qualified preservation purchaser as a limited equity property, the price shall be the price for which such property could be sold as a limited equity property in accordance with such regulatory agreement.
Synthetic equity. The term “synthetic equity” means the difference, if any, after subtracting: (i) the sum of: (A) any lien on such property created by the execution of a note for the purpose of obtaining financing to be used solely to repair or rehabilitate such property as of the date the synthetic equity is paid to the tenant; (B) the city note; (C) administrative costs, as specified in the regulatory agreement described in paragraph (1) of subdivision a of section 11-412.4 of this chapter; and (D) any other outstanding liens, charges or fees, including but not limited to rent charges, due to a qualified preservation purchaser under a lease for such property, or pursuant to the terms of such regulatory agreement, as of such date; from (ii) the market value of such property, as reflected on the final assessment roll delivered most recently by the department to the city council pursuant to section 11-218 of this title, as of the date of the delivery of the deed conveying full and complete title to the qualified preservation purchaser pursuant to subdivision j of section 11-412.5 of this chapter.
Tax lien. The term “tax lien” has the same meaning as provided in section 11-301 of this title.
Tenant. The term “tenant” means the owner, as of the date and time on which title for the property in which such owner had a fee interest was conveyed to the qualified preservation purchaser pursuant to the summary foreclosure action set forth in section 11-412.5.
b. Removal from the tax lien sale. Notwithstanding any inconsistent provision of section 11-319 of this title to the contrary, the tax lien or tax liens on a property or on a dwelling unit shall not be sold pursuant to such section when the owner of such property or such dwelling unit requests that such tax lien or tax liens be removed from a sale of tax liens, provided that such property or dwelling unit satisfies the requirements described in paragraphs 1 through 3 of subdivision c of this section, and provided, further, that the department may remove a tax lien or tax liens from a sale of tax liens, pursuant to this subdivision, no more than three times and that such department shall not remove any such tax lien later than thirty-six months after the date of sale immediately succeeding the date such department has removed such tax lien or such tax liens for the first time, provided that such thirty-six month period shall be tolled for the duration of time in which such property is subject to an installment agreement that is not in default pursuant to sections 11-322 or 11-322.1 or is subject to any exemption, credit or other benefit that would operate to exclude the property from a tax lien sale. Where such property or dwelling unit has been sold pursuant to an arm’s length transaction or all tax liens on such property or such dwelling unit have been satisfied, the tax lien or tax liens on such property or on such dwelling unit shall not be sold pursuant to section 11-319 when the owner of such property or such dwelling unit requests that such tax lien or tax liens be removed from a sale of tax liens, provided that such property or dwelling unit satisfies the requirements described in the preceding sentence. Any removals of a tax lien or tax liens on such property or such dwelling unit pursuant to this subdivision prior to such transaction or prior to the satisfaction of such liens shall not be considered in determining whether the department may remove a tax lien or tax liens on a property or on a dwelling unit from a sale of tax liens pursuant to this subdivision. The department of finance shall review any request to be removed from a sale of tax liens pursuant to this subdivision that is submitted prior to the date of sale of any such tax lien or tax liens, provided that if the department of finance determines, after the date of such a sale, that a property, for which a request was submitted prior to such a sale, satisfies the requirements described in paragraphs 1 through 3 of subdivision c of this section, then such tax lien or tax liens shall be deemed defective.
c. Requirements for removal of a tax lien or tax liens from a sale of tax liens. Eligibility for removal of a tax lien or tax liens on a property or on a dwelling unit from a sale of tax liens pursuant to subdivision b of this section requires that an owner of such property or such dwelling unit demonstrates the following:
1. The owner:
(a) has used such property or such dwelling unit as their primary residence for an uninterrupted period of 12 months immediately preceding the request by such owner for removal of a tax lien or tax liens from a sale of tax liens, provided that a hospitalization or temporary stay in a nursing home or rehabilitation facility for a period of not more than three years shall not be considered a change in primary residence; or
(b) has received a real property tax exemption pursuant to section 425 of the real property tax law or a school tax relief credit pursuant to subsection (eee) of section 606 of the tax law for such property or such dwelling unit for the fiscal year immediately preceding the fiscal year in which such owner requested removal of a tax lien or tax liens from a sale of tax liens;
2. The income of the household of such owner, as defined by rule of the department considering the purposes of tax collection and the procedures described in subdivision b of this section and in section 11-412.4, shall be no greater than the applicable income standard as established by paragraph (b) of subdivision 4 of section 425 of the real property tax law; and
3. The owner of such property or such dwelling unit does not own any real property classified as class one, class two or class four property in the city of New York other than the property or dwelling unit on which the tax lien or tax liens are sought to be removed from the sale of tax liens.
d. The department shall promulgate rules establishing procedures for requesting that a tax lien or tax liens on a property or a dwelling unit be removed from a sale of tax liens and appealing a denial of a request that a tax lien or tax liens on a property or a dwelling unit be removed from a sale of tax liens. Such rules may include a time period within which the department will respond to a request, by an owner of a property or a dwelling unit, that such tax lien or tax liens be removed, a time period within which an owner could appeal a denial of such request, and a time period within which such department will respond to such appeal.
(L.L. 2024/082, 7/30/2024, eff. 10/28/2024)
Editor's note: For related unconsolidated provisions, see Appendix A at L.L. 2024/082.
a. Summary foreclosure, conveyance of title to qualified preservation purchaser. No later than 6 months, after the date of sale, as defined in subdivision e of section 11-320 of this title, of a tax lien or tax liens on a property, as defined in section 11-412.3 of this chapter, the owner of such property may elect to subject such tax lien or tax liens on such property to the summary foreclosure action set forth in section 11-412.5 of this chapter, provided that the criteria described in paragraphs 1 through 5 of subdivision b of this section are satisfied at the time of such election, and, provided further, that upon selection of the qualified preservation purchaser, such owner and such qualified preservation purchaser agree that, upon the delivery of a deed conveying to such qualified preservation purchaser full and complete title to such property, pursuant to subdivision j of section 11-412.5 of this chapter, such qualified preservation purchaser shall lease such property to the tenant for a period of at least 99 years, and the qualified preservation purchaser further agrees:
1. to enter into a regulatory agreement with the department of housing preservation and development requiring operation of the property as housing for low income persons and families, as provided under article 11 of the private housing finance law, and such other conditions as such department may require;
2. to execute a city note and to record the lien created by such note, in a first priority position, against such property, provided that such lien may be subordinated to a lien created by a note executed subsequent to the date of delivery of such deed for the purpose of obtaining financing to be used solely to repair or rehabilitate such property;
3. to execute a note to the tenant in an amount equal to the sales price equity of such property and record the lien created by such note, in a second priority position, against such property, provided that:
(a) in the event the restrictions contained in the regulatory agreement between the qualified preservation purchaser and the department of housing preservation and development requiring operation of the property as housing for low income persons and families, as provided under article 11 of the private housing finance law, have been voided, nullified or otherwise made inapplicable to such property, the amount of such note shall be adjusted to reflect the synthetic equity;
(b) such lien may be subordinated to a lien created by a note executed subsequent to the date of delivery of such deed for the purposes of obtaining financing to be used solely to repair or rehabilitate such property; and
(c) the amount payable on such note may be reduced upon agreement between the tenant and the qualified preservation purchaser and subject to the conditions in such regulatory agreement; and
4. to take the following actions, upon written direction by the tenant and after such tenant has vacated the property: (i) terminate the lease of such tenant; and (ii) pay the amount due on the note executed to the tenant and pay the amount due on any note that was executed subsequent to the date of delivery of such deed for the purpose of obtaining financing to be used solely to repair or rehabilitate such property, or authorize a person to pay such notes on behalf of such qualified preservation purchaser, provided that the department of housing preservation and development may require the satisfaction of any other note executed by such qualified preservation purchaser that has created a lien against such property.
b. Requirements to subject a tax lien or tax liens to the summary foreclosure action set forth in section 11-412.5 of this chapter. Eligibility to subject a tax lien or tax liens on a property to the summary foreclosure process set forth in section 11-412.5 of this chapter requires that the owner of such property demonstrates the following:
1. The property has served as the primary residence of such owner for an uninterrupted period of 12 months immediately preceding the date such owner signs the form described in paragraph 1 of subdivision d of this section indicating their electing to subject the tax lien or tax liens on such property to the summary foreclosure action set forth in section 11-412.5, provided that a hospitalization or temporary stay in a nursing home or rehabilitation facility for a period of not more than three years shall not be considered a change in primary residence;
2. The income of the household of such owner, as defined by rule of the department considering the purposes of tax collection and the procedures described in subdivision b of section 11-412.3 and this section, shall be no greater than the applicable income standard as established by paragraph (b) of subdivision 4 of section 425 of the real property tax law;
3. The owner of such property does not own any real property classified as class one, class two, or class four property in the city of New York other than the property for which such owner seeks to subject the tax lien or tax liens to the summary foreclosure action set forth in section 11-412.5;
4. The owner of such property certifies that there are no mortgages, liens or encumbrances on such property other than the tax lien or tax liens on such property; and
5. The owner of such property certifies that such owner has consulted with an attorney regarding their election of the summary foreclosure action.
c. Subject to appropriations, the department, or another agency designated by the mayor, shall make available the services of an attorney to an owner of property who elects to subject the tax lien or tax liens on such property to the summary foreclosure action for the purpose of satisfying the requirement described in paragraph 5 of subdivision b of this section and shall make available such services at no cost to such owner.
d. The department, in consultation with the department of housing preservation and development, shall notify the owner of a property about the option to elect to subject the tax lien or tax liens on such property to the summary foreclosure action set forth in section 11-412.5 within 30 days after the date of sale, as defined in subdivision e of section 11-320 of this title, of such tax lien or tax liens on such property. Such notification shall include, but not be limited to, the following:
1. information about the consequences of the tax lien sale for such owner;
2. information about eligibility requirements to elect the summary foreclosure action, including the requirement that such owner consult with an attorney prior to certifying their election to subject the tax lien or tax liens on such property to such summary foreclosure action, and the consequences of such summary foreclosure action for such owner;
3. information about the lease that a qualified preservation purchaser would make available to a tenant, after such property would be conveyed to such qualified preservation purchaser pursuant to subdivision j of section 11-412.5, including but not limited to, the affordability of such lease to such tenant and to the heirs of such tenant and the ability of a tenant or the heirs of such tenant to terminate such lease and to be paid the amount due on the note executed to such tenant by such qualified preservation purchaser; and
4. this statement: “PLEASE READ THIS NOTIFICATION CAREFULLY. YOU SHOULD IMMEDIATELY CONTACT AN ATTORNEY OR YOUR LOCAL LEGAL AID OFFICE TO GET ADVICE ON HOW TO PROTECT YOURSELF. YOU SHOULD SPEAK WITH AN ATTORNEY TO UNDERSTAND THE SUMMARY FORECLOSURE ACTION AND TO EVALUATE WHETHER IT IS IN YOUR INTEREST TO ELECT THIS OPTION. IN ADDITION TO SEEKING ASSISTANCE FROM AN ATTORNEY OR YOUR LOCAL LEGAL AID OFFICE, THERE ARE GOVERNMENT AGENCIES AND NON-PROFIT ORGANIZATIONS THAT YOU MAY CONTACT FOR INFORMATION ABOUT THE CONSEQUENCES OF THE TAX LIEN SALE AND THE SUMMARY FORECLOSURE ACTION. THE CITY OF NEW YORK MAY BE ABLE TO ASSIST WITH EXPENSES ASSOCIATED WITH CONSULTING WITH AN ATTORNEY. PLEASE CONTACT THE DEPARTMENT OF FINANCE FOR MORE INFORMATION.”
e. The department shall develop forms in which:
1. the owner of a property shall certify: (i) their election to subject the tax lien or tax liens on such property to the summary foreclosure action set forth in section 11-412.5 of this chapter; (ii) that such election has been made after consultation with an attorney; (iii) their election to forego the option to interpose an answer to such action; and (iv) their decision to forego any further option to pay all unpaid tax lien or tax liens on such property together with interest thereon;
2. the qualified preservation purchaser, as designated by the commissioner of housing preservation and development, shall commit to lease the property to the tenant after such property has been conveyed to such qualified preservation purchaser pursuant to subdivision j of section 11-412.5 of this chapter;
3. such qualified preservation purchaser shall commit to enter into a regulatory agreement with the department of housing preservation and development requiring the operation of such property as housing for low income persons and families, as provided under article 11 of the private housing finance law, and to execute a city note and to record the lien created by such note against such property; and
4. such qualified preservation purchaser shall commit to execute a note to the tenant in an the amount equal to the sales price equity of such property and to record the lien created by such note against such property, provided that in the event the restrictions contained in the regulatory agreement between the qualified preservation purchaser and the department of housing preservation and development requiring operation of the property as housing for low income persons and families, as provided under article 11 of the private housing finance law, have been voided, nullified or otherwise made inapplicable to such property, the amount of such note shall be adjusted to reflect the synthetic equity.
f. Selection of qualified preservation purchaser for a property. The department of housing preservation and development shall select a qualified preservation purchaser by any method it determines will best meet the purposes of such selection process, including, without limitation, selection by a request for qualifications process, a request for proposals process, a pre-qualified list, a request for offer process, or by direct selection of an entity determined by such department to be qualified. Such selected qualified preservation purchaser shall: (i) be seized of an estate in fee simple absolute in such property upon the delivery of a deed conveying to such qualified preservation purchaser full and complete title to such property, pursuant to subdivision j of section 11-412.5 of this chapter; (ii) lease such property to the tenant; (iii) enter into a regulatory agreement with the department of housing preservation and development requiring operation of the property as housing for low income persons and families, as provided under article 11 of the private housing finance law, and such other conditions as such department may require; (iv) execute a city note and record the lien created by such note, in a first priority position, against such property; and (v) execute a note to the tenant in an the amount equal to the sales price equity of such property, and record the lien created by such note, in a second priority position, against such property, provided that in the event the restrictions contained in the regulatory agreement between the qualified preservation purchaser and the department of housing preservation and development requiring operation of the property as housing for low income persons and families, as provided under article 11 of the private housing finance law, have been voided, nullified or otherwise made inapplicable to such property, the amount of such note shall be adjusted to reflect the synthetic equity. The criteria for selection of a qualified preservation purchaser shall include: financial capacity, ability to work with governmental and community organizations, experience owning and managing residential property, including experience with affordable housing, ability to ensure that such property is used for affordable housing, and such other criteria as the department may provide by rule and, may include the preference of such tenant.
g. Subsequent to an election, pursuant to subdivision a of this section, by an owner to subject the tax lien or tax liens on a property to the summary foreclosure action set forth in section 11-412.5 of this chapter, the department of housing preservation and development shall make efforts to select a qualified preservation purchaser for a period not less than 12 months commencing on the date of such election. During such 12-month period, a purchaser of a tax lien or tax liens on a property for which an owner has made such an election shall not maintain an action to foreclose upon such tax lien or tax liens. Upon selection of a qualified preservation purchaser by the department of housing preservation and development, any sale of such tax lien or tax liens shall be deemed defective.
(L.L. 2024/082, 7/30/2024, eff. 10/28/2024)
Editor's note: For related unconsolidated provisions, see Appendix A at L.L. 2024/082.
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