NY State Senate Bill 2015-S3921

Senate Bill S3921

2015-2016 Legislative Session

Establishes requirements for purchase agreements for residential real property by which the buyer must maintain the property while full payment is outstanding

download bill text pdf

Archive: Last Bill Status - In Senate Committee Rules Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

View Actions

	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jun 17, 2016	recommitted to rules
Jun 01, 2016	ordered to third reading cal.1231 committee discharged and committed to rules
Jan 06, 2016	referred to judiciary returned to senate died in assembly
Jun 09, 2015	referred to judiciary delivered to assembly passed senate
Jun 08, 2015	ordered to third reading cal.1358 committee discharged and committed to rules
Feb 20, 2015	referred to judiciary

Votes

- Jun 9, 2015 - Floor Vote
  S3921
  
  61
  
  Aye
  
  1
  
  Nay
  
  0
  
  Absent
  
  1
  
  Excused
  
  0
  
  Abstained
  - - Floor Vote: Jun 9, 2015
      
      aye (61)
      
      Addabbo Jr.
      
      Amedore
      
      Avella
      
      Bonacic
      
      Boyle
      
      Breslin
      
      Carlucci
      
      Comrie
      
      Croci
      
      DeFrancisco
      
      Diaz
      
      Dilan
      
      Farley
      
      Felder
      
      Flanagan
      
      Funke
      
      Gallivan
      
      Gianaris
      
      Golden
      
      Griffo
      
      Hamilton
      
      Hannon
      
      Hassell-Thompson
      
      Hoylman-Sigal
      
      Kennedy
      
      Klein
      
      Krueger
      
      LaValle
      
      Lanza
      
      Larkin
      
      Latimer
      
      Little
      
      Marcellino
      
      Marchione
      
      Martins
      
      Montgomery
      
      Murphy
      
      Nozzolio
      
      O'Mara
      
      Ortt
      
      Panepinto
      
      Parker
      
      Peralta
      
      Perkins
      
      Ranzenhofer
      
      Ritchie
      
      Rivera
      
      Robach
      
      Sampson
      
      Sanders Jr.
      
      Savino
      
      Serino
      
      Serrano
      
      Seward
      
      Skelos
      
      Squadron
      
      Stavisky
      
      Stewart-Cousins
      
      Valesky
      
      Venditto
      
      Young
      
      nay (1)
      
      Espaillat
      
      excused (1)
      
      Libous
  Jun 1, 2016 - Rules Committee Vote
  S3921
  
  23
  
  Aye
  
  0
  
  Nay
  
  2
  
  Aye with Reservations
  
  0
  
  Absent
  
  0
  
  Excused
  
  0
  
  Abstained
  - - Rules Committee Vote: Jun 1, 2016
      
      aye (23)
      
      Bonacic
      
      Breslin
      
      Carlucci
      
      DeFrancisco
      
      Dilan
      
      Espaillat
      
      Farley
      
      Flanagan
      
      Gianaris
      
      Hannon
      
      Hassell-Thompson
      
      Krueger
      
      Lanza
      
      Larkin
      
      Little
      
      Marcellino
      
      Montgomery
      
      Nozzolio
      
      Parker
      
      Robach
      
      Seward
      
      Stewart-Cousins
      
      Valesky
      
      aye wr (2)
      
      LaValle
      
      Perkins
  Jun 8, 2015 - Rules Committee Vote
  S3921
  
  22
  
  Aye
  
  1
  
  Nay
  
  2
  
  Aye with Reservations
  
  0
  
  Absent
  
  0
  
  Excused
  
  0
  
  Abstained
  - - Rules Committee Vote: Jun 8, 2015
      
      aye (22)
      
      Bonacic
      
      Breslin
      
      Carlucci
      
      DeFrancisco
      
      Dilan
      
      Farley
      
      Flanagan
      
      Hannon
      
      Hassell-Thompson
      
      LaValle
      
      Larkin
      
      Little
      
      Marcellino
      
      Montgomery
      
      Nozzolio
      
      Parker
      
      Perkins
      
      Seward
      
      Skelos
      
      Stewart-Cousins
      
      Valesky
      
      Young
      
      nay (1)
      
      Espaillat
      
      aye wr (2)
      
      Gianaris
      
      Krueger

2015-S3921 (ACTIVE) - Details

Current Committee:: Senate Rules
Law Section:: Real Property Law
Laws Affected:: Add §246-a, RP L
Versions Introduced in Other Legislative Sessions:: 2011-2012: S7011
2013-2014: S3504
2017-2018: S551
2019-2020: S908

2015-S3921 (ACTIVE) - Summary

Establishes requirements for purchase agreements for residential real property by which the buyer must maintain the property while full payment is outstanding.

2015-S3921 (ACTIVE) - Sponsor Memo

                                BILL NUMBER:S3921

TITLE OF BILL:  An act to amend the real property law, in relation to
establishing requirements for land contracts

PURPOSE:

To afford notice to and additional protections for homeowners who
purchase their residence pursuant to a land contract.

SUMMARY OF PROVISIONS:

Section 1. Adds a new section 246-a to establish requirements for the
use of land contracts in New York State. Specifically the bill defines
a land contract as a written agreement which requires that the
property buyer make installment payments to the seller which results
in the transfer of the property at the end of the installment term.
The definition includes contracts with a deposit of $1000 or more for
a term beyond 90 days in which the buyer is required to make any
necessary repairs to the property. The bill requires that the land
contract seller shall provide a written "Land contract Consumer
Caution and Counseling Notice" by certified mail to the purchaser not
less than 10 days before contract execution. This notice must include
information notifying the consumer that they may lose the property if
other individuals or entities have a legal interest or claim to the
property or if they fail to make payments or perform as mandated by

the contract terms. The notice must also include information as to the
existence of any mortgages or recorded liens, unpaid property taxes or
assessments against the property. Additionally the bill mandates that
every land contract contain specific terms including the requirement
that the seller maintain escrow funds required under the contract in a
separate account and provide the buyer with an annual accounting and
proof of taxes paid.  The buyer must also record the land contract
within five days of execution or be subject to a right of recovery for
payments made by the purchaser. Land contracts are also prohibited
from containing certain provisions such as the imposition of excessive
late fees and an automatic waiver of judicial intervention or a waiver
of equity in the event of buyer default.

Section 2. Provides for a 120 day effective date.

JUSTIFICATION:

The distinct characteristic of a land contract is that the transfer of
title to the property does not take place until all the payments on
the property have been made. The buyer under a land contract does not
receive the deed to the property until the end of the contract term.
In contrast, in a traditional real property purchase, which is usually
financed by a mortgage, the buyer gets a deed at the onset at the
closing. A mortgage is then held by the seller, or the financing
entity as a lien against the property. Because a land contract buyer
does not receive a deed until the end of the contract term, the
buyer's home and investment are at a greater risk. These risks include
potential foreclosure actions against the seller, or the seller
actually encumbering the property after the land contract is signed.
This risk can extend through the life of a land contract which usually
spans form 10-20 years. Land contracts are typically entered into by


low-income buyers who have poor credit, or lack the funds for a down
payment. Often the housing they are purchasing under a land contract
is in poor condition and is in need of repairs. Land contract buyers
currently have the worst of both worlds in terms of statutory
protection. Land contract buyers lack the statutory protections
provided to tenants, such as right to repairs, rent notices, and
defined procedures in the event of default. Land contract buyers also
lack the statutory protection of homeowners who are purchasing by
mortgage, such as recording requirements, regulation of escrow
accounting, limits on late fees and requiring foreclosure in the event
of default. This gap in statutory protection has serious practical
consequences for land contract buyers. Land contract buyers wishing to
become homeowners will often scrape up, at great sacrifice, a down
payment for the land contract and then invest substantial funds in
repairing the property. Buyers then make payments month after month
for years with the full expectation of receiving the deed to the
property. Many problems often occur due to the lack of oversight of
land contracts. These include the jeopardizing the investments made by
the buyer due to the seller's failure to make his required mortgage
payments resulting in foreclosure proceedings against the seller. Land
contracts will often afford buyers little redress by containing
clauses that impose excessive late fees or will allow the purchaser to
enforce forfeiture terms in a summary proceeding. The seller can also
sometimes fail to deliver the deed at the end of the contract term.
Also, because land contracts are not typically recorded, buyers are
unable to financial assistance from agencies for desperately needed
repairs. This bill will provide a number of minimum mandatory notice
requirements for those wishing to enter a land contract and will as
well provide a minimum number of statutory land contract terms to help
address these inequities.

LEGISLATIVE HISTORY:

2013,2014: Referred to Judiciary
2012: S.7011 Referred to Judiciary

FISCAL IMPLICATIONS:

None.

EFFECTIVE DATE:

This act shall take effect 120 days after becoming a law.

2015-S3921 (ACTIVE) - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  3921

                       2015-2016 Regular Sessions

                            I N  S E N A T E

                            February 20, 2015
                               ___________

Introduced  by  Sen.  YOUNG  -- read twice and ordered printed, and when
  printed to be committed to the Committee on Judiciary

AN ACT to amend the real  property  law,  in  relation  to  establishing
  requirements for land contracts

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. The real property law is amended by adding  a  new  section
246-a to read as follows:
  S  246-A.  REQUIREMENTS  FOR  LAND  CONTRACTS.  1. DEFINITION. FOR THE
PURPOSES OF THIS SECTION, "LAND CONTRACT" MEANS  ANY  WRITTEN  AGREEMENT
EXECUTED  BETWEEN  A  BUYER AND SELLER OF RESIDENTIAL REAL PROPERTY OR A
PARCEL OF REAL PROPERTY FOR RESIDENTIAL USE,  BY  INSTALLMENT  PAYMENTS,
WITH  A  DEPOSIT  OF  ONE THOUSAND DOLLARS OR MORE, AND A TERM OF NINETY
DAYS OR MORE, PURSUANT TO  WHICH  SUCH  BUYER  IS  RESPONSIBLE  FOR  ALL
REPAIRS  UPON  THE  REAL  PROPERTY AND WILL BE GRANTED TITLE TO THE REAL
PROPERTY UPON THE FULL PAYMENT OF THE STATED PURCHASE PRICE.  SUCH  TERM
SHALL  NOT  INCLUDE A MORTGAGE PURSUANT TO WHICH THE SELLER EXECUTES AND
RECORDS A DEED TO THE REAL  PROPERTY  UPON  THE  BUYER'S  EXECUTION  AND
RECORDING  OF  A  MORTGAGE  UPON  THE REAL PROPERTY; NOR SHALL SUCH TERM
INCLUDE A LEASE OF REAL PROPERTY PURSUANT TO WHICH THE LESSOR  IS  OBLI-
GATED  TO  MAKE  REPAIRS AND PAY REAL PROPERTY TAXES UPON SUCH  PROPERTY
UNTIL THE LESSEE TENDERS THE STATED PURCHASE PRICE.
  2. DISCLOSURE NOTICE. NOT LESS THAN TEN DAYS PRIOR TO THE EXECUTION OF
A LAND CONTRACT, THE SELLER SHALL PROVIDE TO THE BUYER A WRITTEN  NOTICE
DELIVERED  BY  CERTIFIED  MAIL.  SUCH  NOTICE  SHALL  BE  ENTITLED "LAND
CONTRACT-CONSUMER CAUTION AND COUNSELING NOTICE" AND SHALL  INCLUDE  THE
FOLLOWING NOTICES:
  (A)  "YOU  CAN LOSE THIS PROPERTY IF YOU FAIL TO MAKE THE PAYMENTS AND
MEET THE OTHER REQUIREMENTS OF THE LAND CONTRACT.";
  (B) "YOU CAN LOSE THIS PROPERTY IF THE SELLER OF THIS  PROPERTY  LOSES
TITLE TO THIS PROPERTY DUE TO THE FORECLOSURE OF AN EXISTING MORTGAGE OR

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD09337-01-5

S. 3921                             2

OTHER  LIEN,  OR  OTHER  LEGAL  ACTIONS WHICH MAY BE BROUGHT AGAINST THE
SELLER BY CREDITORS OR OTHERS.";
  (C) "YOU CAN LOSE THIS PROPERTY IF OTHER PERSONS HAVE A LEGAL INTEREST
OR CLAIM AGAINST THE PROPERTY.";
  (D)  "UNDER THE TERMS OF THIS CONTRACT YOU ARE RESPONSIBLE FOR REPAIRS
TO THIS PROPERTY AND THEREFORE YOU SHOULD HAVE THE  PROPERTY  ADEQUATELY
INSPECTED BEFORE ENTERING INTO THIS CONTRACT.";
  (E)  THE  NAME  AND  ADDRESSES  OF THE HOLDERS OF ANY MORTGAGES ON THE
PROPERTY WHOSE CONSENT IS REQUIRED BEFORE THE PROPERTY CAN BE SOLD;
  (F) THE EXISTENCE OF ANY MORTGAGES OR LIENS OF RECORD ON THE PROPERTY;
AND
  (G) THE UNPAID PROPERTY TAXES OR ASSESSMENTS ON SUCH PROPERTY, IF ANY.
  3. MANDATORY PROVISIONS. EVERY LAND CONTRACT SHALL PROVIDE:
  (A) THAT IF THE SELLER IS TO PROVIDE THE BUYER WITH  ESCROW  PAYMENTS,
THE  SELLER  MUST  MAINTAIN  THE  ESCROW FUNDS IN A SEPARATE ACCOUNT AND
PROVIDE THE BUYER WITH AN ANNUALIZED ACCOUNTING AND PROOF OF TAXES PAID;
  (B) THAT IF THE SELLER DOES NOT RECORD THE LAND CONTRACT  WITHIN  FIVE
DAYS  OF  THE  EXECUTION  OF SUCH CONTRACT, THE BUYER SHALL BE GRANTED A
RIGHT OF RECOVERY AGAINST THE SELLER FOR ALL  PAYMENTS  MADE  UNDER  THE
LAND CONTRACT;
  (C)  THAT  THE  BUYER  MUST BE PROVIDED WITH A COPY OF THE RECEIPT FOR
FILING THE LAND CONTRACT WITH THE COUNTY CLERK; AND
  (D) THAT THE SELLER MUST PROVIDE THE BUYER WITH WRITTEN  RECEIPTS  FOR
ANY PAYMENTS MADE UNDER THE LAND CONTRACT, INCLUDING DOWN PAYMENTS.
  4.   RECORDING  REQUIREMENT.  WITHIN  FIVE  BUSINESS  DAYS  AFTER  THE
EXECUTION OF A LAND CONTRACT, SUCH CONTRACT SHALL  BE  RECORDED  BY  THE
SELLER  IN  THE  COUNTY  CLERK'S  OFFICE IN THE COUNTY IN WHICH THE REAL
PROPERTY IS LOCATED. THE SELLER SHALL PROVIDE THE BUYER WITH A  COPY  OF
THE RECEIPT ISSUED FOR SUCH RECORDING.
  5. PROHIBITED TERMS. NO LAND CONTRACT SHALL CONTAIN THE FOLLOWING:
  (A) A PROVISION WHICH IMPOSES EXCESSIVE LATE FEES;
  (B) A PROVISION IN WHICH THE BUYER CONSENTS TO HIS OR HER REMOVAL FROM
THE CONTRACT BY THE BUYER WITHOUT THE OPTION OF JUDICIAL INTERVENTION OR
A  PROVISION  IN  WHICH  THE  BUYER  AUTOMATICALLY  CONSENTS  TO SUMMARY
PROCEEDINGS BY THE SELLER;
  (C) A PROVISION IN WHICH THE BUYER FORFEITS EQUITY  IN  THE  EVENT  OF
DEFAULT; OR
  (D) A PROVISION WHICH WAIVES ANY OF THE PROVISIONS OF THIS SECTION.
  6.  ENFORCEMENT.  THE  ATTORNEY  GENERAL MAY COMMENCE AN ACTION IN THE
NAME OF THE PEOPLE OF THE STATE OF NEW YORK TO ENFORCE THE TERMS OF THIS
SECTION. A COURT MAY GRANT INJUNCTIVE, DECLARATORY  OR  OTHER  EQUITABLE
RELIEF  IN  ANY  SUCH  ACTION  BROUGHT TO ENFORCE THE PROVISIONS OF THIS
SECTION.
  S 2. This act shall take effect on the one hundred twentieth day after
it shall have become a law.

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