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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.
a. Preparation of notification of summary foreclosure action. Upon receipt by the commissioner of finance of signed and notarized copies of the forms described in subdivision e of section 11-412.4 of this chapter, and upon the completion of reasonable efforts by the commissioner of finance to confirm that there are no mortgages, liens or encumbrances on the property that is the subject of the summary foreclosure action, the commissioner of finance shall prepare a notice of the summary foreclosure action. Such notice shall bear a caption containing the number of such summary foreclosure action, the borough or the section of a tax map or portion of a section of a tax map in which such property is located, the class of such property, and a statement of the rate at which interest will be computed for the liens it includes. Such notification shall include (i) a brief description of such property to be known as “description of property”, in a manner sufficient to identify the property, including block and lot number, street and street number, or in the absence of such information the parcel or tract identification number shown on a tax map or on a map filed in the county clerk’s or register’s office; and (ii) a statement of the amounts and dates of all unpaid tax liens that are subject to foreclosure as of the date of receipt by the commissioner of the forms described in subdivision d of section 11-412.4 of this chapter.
b. Filing of notice of summary foreclosure action. Two duplicate originals of the notice of the summary foreclosure action, prepared pursuant to subdivision a of this section, verified by the commissioner of finance or a subordinate designated by the commissioner, shall be filed in the office of the clerk of the county in which the property is situated. Such filing shall constitute and have the same force and effect as the filing and recording in such office of a notice of pendency of action and as the filing in the supreme court in such county of a complaint by the city as to the property described in such notice, to enforce the payment of the delinquent taxes, assessments or other lawful charges that have accumulated and become liens against such property.
c. Docketing of property by county clerk. Each county clerk with whom such a notice of the summary foreclosure action is filed shall, on the date of said filing, place and thereafter maintain one duplicate original copy thereof, as separately and permanently bound by the commissioner of finance, adjacent to and together with the block index of notices of pendency of action and each county clerk shall, on the date of said filing or as soon thereafter as with due diligence is practicable, docket the property described in said block index of notices of pendency of action, which shall constitute due filing, recording and indexing of the notice constituting such delinquent taxes in lieu of any other requirement under rule 6511 of the civil practice law and rules or otherwise.
d. Filing by commissioner of finance. The commissioner of finance shall file a copy of each notice of the summary foreclosure action, certified as such copy by him or her or a subordinate designated by the commissioner, in the borough office of the department of finance in the borough in which the property listed therein is situated and in the office of the corporation counsel. The validity of any proceeding hereunder shall not be affected by any omission or error of the commissioner of finance in the designation of a street or street number or by any other similar omission or error.
e. Public notice of summary foreclosure. Upon the filing of a notice of the summary foreclosure action in the office of the county clerk, the commissioner of finance forthwith shall cause a notice of foreclosure to be posted on the department’s website for 6 successive weeks and published at least once a week for 6 successive weeks in the City Record and, subject to section 91 of the judiciary law, in 1 newspaper, which may be a law journal, to be designated by the commissioner of finance, which is published in and is circulated throughout the county in which the affected property is located. If there are no newspapers published in such county, the commissioner of finance may designate a newspaper published in the city of New York which is circulated throughout the affected county.
1. Such notice of foreclosure shall clearly indicate that it is a notice of a summary foreclosure action of the tax liens on the property subject to the summary foreclosure action; the borough or the section of a tax map or portion of a section of a tax map in which the property subject to the summary foreclosure action is located, the class of such property, and a brief description of such property, sufficient to identify such property, including the block and lot number, street and street number, or in the absence of such information the parcel or tract identification number shown on a tax map or on a map filed in the county clerk’s or register’s office; where and when the notice of the summary foreclosure action was filed; the general nature of the information contained in such notice; that the filing of the notice of the summary foreclosure action constitutes commencement of a foreclosure action by the city in the supreme court for the particular county and a notice of pendency of action against the property subject to such summary foreclosure action; that such action is against the property only and no personal judgment will be entered; that such notice of the summary foreclosure action will be available for inspection at the borough office of the department of finance in the borough in which said property is located and on the department’s website until a specified date at least 10 weeks after the date of first publication; that until such date such property may be redeemed by any person, other than the owner of such property, claiming to have an interest in such property by paying all taxes and charges contained in such notice of the summary foreclosure action together with interest thereon; that during said period of redemption and for an additional period of 20 days after said last date for redemption any person, other than the owner of the property, having an interest in such property may file with the appropriate county clerk and serve upon the corporation counsel a verified answer setting forth in detail the full name of said answering party, the nature and amount of their interest or lien and any legal defense against foreclosure; and that in the absence of redemption or answer a judgment of foreclosure may be taken by default.
2. The commissioner of finance shall cause a copy of such notice of foreclosure to be posted in the office of the commissioner of finance, in the county courthouse of the county in which the property subject to the summary foreclosure action is situated and at 3 other conspicuous places in the borough in which the affected property is located.
f. Redemption.
1. After the filing of a notice of the summary foreclosure action and until a date at least 10 weeks after the first publication of the public notice of foreclosure, as determined by the commissioner of finance and specified in the said notice, a person, other than the owner of the property, claiming to have an interest in such property may redeem it by paying all taxes and charges contained in said notice of foreclosure together with interest thereon.
2. Upon such redemption the commissioner of finance shall deliver to the corporation counsel a certificate of redemption. The corporation counsel shall file such certificate with the clerk of the county in which said notice of the summary foreclosure action was filed. The filing of such certificate shall constitute and be deemed a discontinuance of the summary foreclosure action, and the county clerk shall thereupon note such redemption and discontinuance in the copy of such notice of the summary foreclosure action maintained by such clerk adjacent to the county clerk's block index of notices of pendency of action and shall cancel and discharge any notations of the filing of such notice of the summary foreclosure action that may appear in any other books, records, indices and dockets maintained in said clerk's office. The commissioner of finance shall also deliver a duplicate original certificate of redemption to the person who has redeemed.
3. When the time to redeem in the summary foreclosure action has expired, any person, other than the owner of the property, claiming to have an interest in the property included in said action shall have the right to make a late redemption payment to the commissioner of finance. Such late redemption payment shall consist of all taxes and charges owing on said property and the lawful interest thereon to the date of payment. Such late redemption payment shall be made in cash, by certified check, or by another means authorized by rule of the department and shall be accepted by the commissioner of finance at any time after the last day to redeem up to the date on which the commissioner is advised by the corporation counsel that the preparation of the judgment of foreclosure in the summary foreclosure action has been commenced. Upon receipt of such late redemption payment, the commissioner of finance shall issue a certificate of discontinuance of the summary foreclosure action pursuant to the provisions of section 11-412.6.
g. Stay where answer is interposed; installment agreements authorized. If a duly verified answer is served upon the corporation counsel by any interested party, other than the owner, not later than 20 days after the last date for redemption, such party shall have the right to a stay of the summary foreclosure action upon written demand therefor filed with or made a part of such answer. The corporation counsel shall have a right to a stay of such action upon written demand to the owner of the property that is the subject of the summary foreclosure action and to the answering party and filed with the court.
1. When such answer is interposed, the court shall summarily hear and determine the issues raised by the complaint and answer in the manner as it hears and determines other actions, except as otherwise provided herein. Proof that the taxes which made said property subject to the summary foreclosure action hereunder together with interest thereon, were paid before filing of the summary foreclosure action or that the property was not subject to tax shall constitute a complete defense.
2. No counterclaim may be asserted in an answer interposed in an action brought pursuant to this section. Where a counterclaim is asserted in an answer brought pursuant to this subdivision, the city may disregard that portion of the answer and shall suffer no legal penalty or impediment in the prosecution of its summary foreclosure action for its failure to reply or respond thereto. Where an answer contains only a counterclaim and no other defenses the city may proceed with the summary foreclosure action without the need for moving against the answer.
3. Where a verified answer alleges a substantial equity over the city’s lien for taxes, the interested party who has interposed such answer may demand additional time in which to pay the taxes and interest or to have the property sold with all taxes and interest to be paid out of the proceeds of such sale. Upon such demand such interested party shall have the right to an extension of time for such purpose not in excess of 6 months from the last day to interpose an answer. Where a mortgagee or lienor who has interposed such answer commences a proceeding to foreclose their mortgage or lien and it appears that with due diligence such proceeding cannot be concluded in time to allow the payment of taxes within the aforesaid 6 month period, the court may, on application before the end of said 6 month period, authorize an additional period during which such proceeding may be concluded and the taxes, together with interest, paid.
4. Where an answer of the type described in paragraph 3 of this subdivision is interposed and taxes are paid within the period set forth in such paragraph, the commissioner of finance shall issue a certificate of discontinuance as to the property on which such payment has been made pursuant to the provisions of section 11-412.6. When taxes are not paid within the period set forth in such paragraph 3, it shall be deemed that there was no equity over the city’s tax lien and the answer shall be deemed to be without merit. The city in that event may proceed with the summary foreclosure action without moving against the answer interposed by the interested party.
5. All answers interposed in a summary foreclosure action and all affidavits and other papers pertaining to any litigation involving such answers or to any proceeding brought pursuant to this section shall bear a caption containing the number of the summary foreclosure action, the borough section of a tax map or portion of a section of a tax map affected, and the section, block and lot numbers of the parcel or parcels in issue.
6. Any interested party, other than the owner, who has interposed an answer as to the summary foreclosure action, or any other party interested in such property, shall have the right, at any time prior to the final disposition of a motion to strike such answer, to pay all taxes, assessments and other legal charges and interest owing on such property. Where all delinquent taxes, assessments and other legal charges together with lawful interest thereon, where required, are paid, the commissioner of finance shall issue a certificate of discontinuance as to such property pursuant to the provisions of section 11-412.6. Such party may also pay such taxes, assessments and other legal charges and interest by an installment agreement. The terms of such agreement shall be consistent with the provisions of subparagraphs (a) and (b) of this paragraph. The request of an answering party for an installment agreement shall constitute a withdrawal of such party’s answer. An installment agreement requested by an interested party other than the answering party shall require the consent of said answering party which shall also constitute a withdrawal of such party’s answer. The stay provided for in subparagraph (c) of this paragraph shall be continued during the term of all installment agreements entered into pursuant to this paragraph. Where a default has occurred as to a property that was the subject of a summary foreclosure action which has been stayed pursuant to subparagraph (c) of this paragraph, the corporation counsel shall cause to be entered a supplemental judgment of foreclosure as to such property immediately on notification by the commissioner of finance of such default. Where such installment agreement is paid in full, the commissioner of finance shall discontinue the summary foreclosure action by issuing a certificate of discontinuance pursuant to the provisions of section 11-412.6.
(a) The first installment of an installment agreement entered into pursuant to this paragraph shall be paid upon the filing of the installment agreement with the commissioner and shall be in an amount equal to not less than fifteen percent of the total amount of the delinquent taxes, assessments or other legal charges and interest. The remaining installments shall be payable quarterly on the first day of July, October, January and April over a period that shall not exceed ten years.
(b) As a condition of entering into any agreement under this paragraph or under paragraph 4 of subdivision j of this section, the commissioner shall have received from the party requesting to pay such taxes, assessments and other legal charges and interest by an installment agreement an affidavit stating that each tenant located on the property has been notified by certified mail that an application for an installment agreement will be made and that a copy of a standard agreement form has been included with such notification. Any false statement in such affidavit shall not be grounds to cancel the agreement or affect its validity in any way.
(c) The corporation counsel shall have the right to a stay of the summary foreclosure action as to any property as to which, before the final judgment authorizing the award of possession of such property was entered, pursuant to subdivision j of this section, an agreement was duly made, executed and filed by any interested party, other than the owner, with the commissioner of finance for the payment of the delinquent taxes, assessments or other legal charges and interest thereon, in installments.
h. Preference over other actions.
1. Any summary foreclosure action brought pursuant to section 11-412.5 shall be given preference over all other causes and actions arising pursuant to state or local law.
2. Actions brought pursuant to section 11-412.5 shall take precedence over any proceeding brought to foreclose a mortgage or other lien involving the same property. A property described in a notice of summary foreclosure action which is sold in a mortgage foreclosure sale held after such notice is filed may not be sold subject to taxes even if judgment has not yet been entered in the summary foreclosure action. All unpaid taxes and interest thereon must be paid, in full or by installment agreement pursuant to the provisions of this section, out of the proceeds of such sale regardless of whether the mortgage foreclosure lis pendens was filed before or after the filing of the notice of summary foreclosure action, regardless of whether any party to the mortgage foreclosure proceeding has interposed an answer in the summary foreclosure action and regardless of any terms to the contrary in the judgment in the mortgage foreclosure proceeding.
i. Presumption of validity. It shall not be necessary for the city to plead or prove the various steps, procedures and notices for the assessment and levy of the taxes, assessments or other lawful charges against the property and all such taxes, assessments or other lawful charges and the lien thereof shall be presumed to be valid. A defendant alleging any jurisdictional defect or invalidity in such taxes, assessments or other lawful charges or in the foreclosure thereof must particularly specify in his or her answer such jurisdictional defect or invalidity and must affirmatively establish such defense. A judgment of foreclosure granted in the summary foreclosure action brought pursuant to this section, which contains recitals that any acts were done or proceedings had which were necessary to give the court jurisdiction or power to grant such judgment of foreclosure, shall be presumptive evidence that such acts were duly performed or proceedings duly had, if such judgment of foreclosure shall have been duly entered or filed in the office of the clerk of the county in which the action was pending and wherein such judgment was granted. The provisions of this section shall apply to and be valid and effective with respect to all defendants even though one or more of them be infants, incompetents, absentees or non-residents of the state of New York.
j. Final judgment and release of property in exceptional circumstances. Notwithstanding any other provision of law to the contrary:
2. The court shall make a final judgment authorizing the award of possession of the property not redeemed as provided in this section and as to which no answer is interposed as provided herein, and authorizing the commissioner of finance to prepare, execute and cause to be recorded a deed conveying full and complete title to the qualified preservation purchaser that committed to lease such property to the tenant upon the delivery of such deed to such qualified preservation purchaser. Any such conveyance to a qualified preservation purchaser shall be for an existing use.
3. Following the expiration of the 4-month period prescribed in paragraph 4 of this subdivision, but not more than 8 months after the date on which, pursuant to paragraph 2 of this subdivision, the final judgment authorizing the award of possession of the property was entered, the commissioner of finance may execute a deed, pursuant to paragraph 2 of this subdivision, with respect to such property. The owner of said property shall continue to have all of the rights, liabilities, responsibilities, duties and obligations of an owner of such property, including, but not limited to, maintaining such property in compliance with the housing maintenance, building and fire codes, and all other applicable laws, unless and until the commissioner of finance has prepared and executed a deed conveying to the qualified preservation purchaser full and complete title to such property. Upon the execution of such deed, the qualified preservation purchaser shall be seized of an estate in fee simple absolute in such land and all persons, including the state of New York, infants, incompetents, absentees and non-residents who may have had any right, title, interest, claim, lien or equity of redemption in or upon such lands shall be barred and forever foreclosed of all such right, title, interest, claim, lien or equity of redemption. The appointment and tenure of receivers, trustees or any other persons, including administrators under article 7-A of the real property actions and proceedings law, appointed by an order of a court to manage real property, shall terminate when title to such property vests in the qualified preservation purchaser pursuant to the provisions of this section. After such termination, said receivers, trustees or administrators shall be accountable to the courts that appointed them for the faithful performance of their fiduciary obligations during the term of their appointment and to the qualified preservation purchaser for any rents and income received by them for any period subsequent to the date of the vesting of title in such qualified preservation purchaser.
4. Within 4 months after the date on which, pursuant to paragraph 2 of this subdivision, the final judgment authorizing the award of possession of the property was entered, any person, other than the owner, claiming to have an interest in such property shall have the right to make a payment to the commissioner of finance consisting of all taxes, assessments and other legal charges owing on said property, and the lawful interest thereon to the date of payment. Such payment shall be made in cash, by certified check, or by another means authorized by rule by the department. Within such 4 month period, such interested person may also request an installment agreement from the commissioner of finance. Such agreement shall require the payment at such time of a first installment equal to fifty percent of all taxes, assessments and other legal charges, and the lawful interest thereon, then owing on such property, and the payment of the balance of such taxes, assessments and other legal charges and interest in 4 equal quarterly installments together with all current taxes, assessments and other legal charges that accrue during such period. Upon receipt of payment in full of the amount specified in the first sentence of this paragraph, the commissioner of finance shall direct the corporation counsel to prepare and cause to be entered an order discontinuing the summary foreclosure action as to said property, cancelling the notice of pendency of such action as to said property and vacating and setting aside the final judgment. Upon the execution of an installment agreement and payment of the amounts due at the time such agreement is executed as provided in this paragraph, the commissioner of finance shall direct the corporation counsel to prepare and cause to be entered an order vacating and setting aside the final judgment. The entry of either such order shall restore all parties, including owners, mortgagees and any and all lienors, receivers and administrators and encumbrancers, to the status they held immediately before such final judgment was entered. Where the commissioner of finance approves an application requesting an installment agreement pursuant to this paragraph, the order vacating and setting aside the final judgment shall provide that in the event of any default as to the payment of either quarterly installments or current taxes, assessments or other legal charges during the term of such agreement, the corporation counsel, immediately upon notification by the commissioner of finance of such default, shall cause to be entered as to such property a supplemental judgment of foreclosure in the summary foreclosure action which authorizes the commissioner of finance to prepare, execute and cause to be recorded a deed conveying to the qualified preservation purchaser full and complete title to such lands. Upon the entry of such supplemental judgment, the provisions of paragraph 3 of this subdivision, this paragraph, and subdivisions k and l of this section shall apply in the same manner as such paragraphs and such subdivisions would have applied had no payment been made nor installment agreement executed during the 4-month period specified in this subdivision.
k. Every judgment entered pursuant to the provisions of this section shall be presumptive evidence that the action and all proceedings therein and all proceedings prior thereto from and including the assessment of the lands affected and all notices required by law were regular and in accordance with all provisions of law relating thereto. After 4 months from the date of entry of the final judgment authorizing the award of possession of the property pursuant to the provisions of this section, the presumption shall be conclusive. No action to vacate such judgment, or set aside a deed given pursuant to such judgment, may be maintained unless the action is commenced and a notice of pendency of the action is filed in the office of the proper county clerk prior to the time that the presumption becomes conclusive as aforesaid. Should a qualified preservation purchaser to whom the property has been conveyed pursuant to this section receive notice of a lawsuit or proceeding to vacate a judgment or set aside a deed, such qualified preservation purchaser shall send to the corporation counsel within 10 days of their receipt a copy of any papers served on such qualified preservation purchaser in such lawsuit or proceeding.
l. If the commissioner of finance does not execute a deed conveying to the qualified preservation purchaser the property within 8 months after the entry of final judgment authorizing the award of possession of such property pursuant to paragraph 2 of subdivision j of this section, the commissioner of finance shall direct the corporation counsel to prepare and cause to be entered an order discontinuing the summary foreclosure action as to said property, canceling the notice of pendency of such action as to said property and vacating and setting aside said final judgment. The entry of such order shall restore all parties, including owners, mortgagees and any and all lienors, receivers and administrators and encumbrancers, to the status they held immediately before such final judgment was entered.
m. The validity of any proceeding hereunder shall not be affected by any omission or error of the commissioner of finance in the designation of a street or street number or by any other similar omission or error.
(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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