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.