A. 407 2
3. FOR PURPOSES OF THIS SECTION, "MEZZANINE DEBT" AND "PREFERRED EQUI-
TY INVESTMENTS" SHALL NOT INCLUDE DEBT ON COOPERATIVE OR COMMON SHARES
OF A RESIDENTIAL DWELLING WHERE THE UNIT OWNER OF A COOPERATIVE APART-
MENT IS A SHAREHOLDER OF THE OWNERSHIP ENTITY, HAS EXCLUSIVE OCCUPANCY
OF SUCH DWELLING UNIT, AND HAS ESTABLISHED AND DELIMITED RIGHTS UNDER A
PROPRIETARY LEASE.
4. NO REMEDY OTHERWISE AVAILABLE TO A SECURED PARTY UNDER ARTICLE NINE
OF THE UNIFORM COMMERCIAL CODE SHALL BE AVAILABLE TO ENFORCE A SECURITY
AGREEMENT PERTAINING TO MEZZANINE DEBT FINANCING AND/OR PREFERRED EQUITY
INVESTMENTS IN RELATION TO REAL PROPERTY UPON WHICH A MORTGAGE INSTRU-
MENT IS FILED THAT IS EVIDENCED BY A FINANCING STATEMENT, UNLESS THAT
FINANCING STATEMENT IS FILED AND THE TAX IMPOSED PURSUANT TO THE AUTHOR-
ITY OF SUBDIVISION FOUR OF SECTION TWO HUNDRED FIFTY-THREE OF THE TAX
LAW, HAS BEEN PAID.
§ 2. Section 9-601 of the uniform commercial code is amended by adding
a new subsection (h) to read as follows:
(H) SECURITY INTEREST PERFECTED BY FINANCING STATEMENT. 1. NOTWITH-
STANDING ANY PROVISION OF LAW TO THE CONTRARY, A SECURITY INTEREST IN
MEZZANINE DEBT AND/OR PREFERRED EQUITY INVESTMENTS RELATED TO THE REAL
PROPERTY UPON WHICH A MORTGAGE INSTRUMENT IS FILED, MAY ONLY BE
PERFECTED BY THE FILING OF A FINANCING STATEMENT UNDER SUBPART 1 OF PART
5 OF THIS ARTICLE AND ONLY AFTER THE PAYMENT OF ANY TAXES DUE PURSUANT
TO SECTION TWO HUNDRED NINETY-ONE-K OF THE REAL PROPERTY LAW.
2. FOR PURPOSES OF THIS SECTION, THE TERMS "MEZZANINE DEBT" AND
"PREFERRED EQUITY INVESTMENTS" SHALL HAVE THE SAME MEANING AS PROVIDED
IN SECTION TWO HUNDRED NINETY-ONE-K OF THE REAL PROPERTY LAW.
3. THIS SECTION SHALL NOT BE APPLICABLE TO ANY DEBT ON COOPERATIVE OR
COMMON SHARES OF A RESIDENTIAL DWELLING WHERE THE UNIT OWNER OF A COOP-
ERATIVE APARTMENT IS A SHAREHOLDER OF THE OWNERSHIP ENTITY, HAS EXCLU-
SIVE OCCUPANCY OF SUCH DWELLING UNIT, AND HAS ESTABLISHED AND DELIMITED
RIGHTS UNDER A PROPRIETARY LEASE.
§ 3. Paragraph (a) of subdivision 2 of section 250 of the tax law, as
amended by section 1 of part Q of chapter 60 of the laws of 2004, is
amended to read as follows:
(a) (1) The term "mortgage" as used in this article includes every
mortgage or deed of trust which imposes a lien on or affects the title
to real property, notwithstanding that such property may form a part of
the security for the debt or debts secured thereby. An assignment of
rents to accrue from tenancies, subtenancies, leases or subleases of
real property, within any city in the state having a population of one
million or more, given as security for an indebtedness, shall be deemed
a mortgage of real property for purposes of this article. Executory
contracts for the sale of real property under which the vendee has or is
entitled to possession shall be deemed to be mortgages for the purposes
of this article and shall be taxable at the amount unpaid on such
contracts. A contract or agreement by which the indebtedness secured by
any mortgage is increased or added to, shall be deemed a mortgage of
real property for the purpose of this article, and shall be taxable as
such upon the amount of such increase or addition.
(2) Notwithstanding anything in this section or section two hundred
fifty-five of this article to the contrary, a contract or agreement
whereby the proceeds of any indebtedness secured by a mortgage of real
property in any city in the state having a population of one million or
more are used to reduce all or any part of a mortgagee's equity interest
in a wraparound or similar mortgage of such real property shall be
deemed a mortgage of real property for the purposes of this article and
A. 407 3
shall be taxable as such to the extent of the amount of such proceeds so
used, without regard to whether the aggregate amount of indebtedness
secured by mortgages of such real property is increased or added to.
(3) NOTWITHSTANDING ANY PROVISION TO THE CONTRARY IN THIS SECTION OR
SECTION TWO HUNDRED FIFTY-FIVE OF THIS ARTICLE, "MEZZANINE DEBT" AND
"PREFERRED EQUITY INVESTMENTS" AS SUCH TERMS ARE DEFINED IN SUBDIVISION
FOUR OF THIS SECTION, SHALL BE TAXABLE AND SHALL APPLY TO TAXES IN
SUBDIVISIONS ONE, ONE-A AND TWO OF SECTION TWO HUNDRED FIFTY-THREE OF
THIS ARTICLE, BUT SHALL NOT APPLY TO ANY OTHER TAXES IN THIS ARTICLE ON
OR AFTER THE EFFECTIVE DATE OF THIS SUBPARAGRAPH.
§ 4. Section 250 of the tax law is amended by adding a new subdivi-
sion 4 to read as follows:
4. THE TERM "MEZZANINE DEBT" AND "PREFERRED ABILITY INVESTMENT" SHALL
HAVE THE SAME MEANING AS PROVIDED IN SECTION 291-K OF THE REAL PROPERTY
LAW.
§ 5. Section 253 of the tax law as amended by adding a new subdivi-
sion 4 to read as follows:
4. (A) A TAX, MEASURED BY THE AMOUNT OF PRINCIPAL DEBTOR OBLIGATION
WHICH IS UNDER ANY CONTINGENCY MAY BE SECURED AT THE DATE OF THE
EXECUTION THEREOF, OR AT ANY TIME THEREAFTER, BY A SECURITY AGREEMENT
PERTAINING TO MEZZANINE DEBT FINANCING AND/OR PREFERRED EQUITY INVEST-
MENTS IN RELATION TO REAL PROPERTY UPON WHICH A MORTGAGE INSTRUMENT IS
FILED, AS EVIDENCED BY A FINANCING STATEMENT, IS IMPOSED ON THE FILING
OF THE FINANCING STATEMENT.
(B) THE RATE AND INCIDENCE OF THE TAX SHALL BE DETERMINED PURSUANT TO
THIS SECTION.
(C) EXCEPT AS OTHERWISE PROVIDED IN THIS SUBDIVISION, ALL THE
PROVISIONS OF THIS ARTICLE RELATING TO OR APPLICABLE TO THE ADMINIS-
TRATION, COLLECTION, DETERMINATION AND DISTRIBUTION OF THE TAX IMPOSED
BY THIS SECTION SHALL APPLY TO THE TAX IMPOSED UNDER THE AUTHORITY OF
THIS SUBDIVISION WITH SUCH MODIFICATION AS MAY BE NECESSARY TO ADAPT
SUCH LANGUAGE TO THE TAX SO AUTHORIZED. ANY REFERENCE TO A MORTGAGE WILL
BE DEEMED TO BE A REFERENCE TO A FINANCING STATEMENT THAT EVIDENCES A
SECURITY AGREEMENT. SUCH PROVISIONS SHALL APPLY WITH THE SAME FORCE AND
EFFECT AS IF THOSE PROVISIONS HAD BEEN SET FORTH IN THIS SUBDIVISION
EXCEPT TO THE EXTENT THAT ANY PROVISION IS EITHER INCONSISTENT WITH A
PROVISION OF THIS SUBDIVISION OR NOT RELEVANT TO THE TAX AUTHORIZED BY
THIS SUBDIVISION.
(D) NO REMEDY OTHERWISE AVAILABLE TO A SECURED PARTY UNDER ARTICLE
NINE OF THE UNIFORM COMMERCIAL CODE SHALL BE AVAILABLE TO ENFORCE A
SECURITY AGREEMENT PERTAINING TO MEZZANINE DEBT FINANCING AND/OR
PREFERRED EQUITY INVESTMENTS IN RELATION TO REAL PROPERTY UPON WHICH A
MORTGAGE INSTRUMENT IS FILED THAT IS EVIDENCED BY A FINANCING STATEMENT,
UNLESS THAT FINANCING STATEMENT IS FILED AND THE TAX IMPOSED PURSUANT TO
THE AUTHORITY OF THIS SUBDIVISION HAS BEEN PAID.
(E) FOR THE PURPOSES OF THIS SUBDIVISION:
(1) "MEZZANINE DEBT" AND "PREFERRED EQUITY INVESTMENTS" SHALL HAVE THE
SAME MEANING AS PROVIDED IN SECTION TWO HUNDRED NINETY-ONE-K OF THE REAL
PROPERTY LAW.
(2) "FINANCING STATEMENT" MEANS A RECORD OR RECORDS COMPOSED OF AN
INITIAL FINANCING STATEMENT AND ANY FILED RECORD RELATING TO THE INITIAL
FINANCING STATEMENT.
(3) "SECURITY AGREEMENT" MEANS AN AGREEMENT THAT CREATES OR PROVIDES
FOR A SECURITY INTEREST.
(F) COUNTIES OR CITIES AUTHORIZED UNDER THIS ARTICLE TO IMPOSE A TAX
ARE AUTHORIZED AND EMPOWERED TO ADOPT AND AMEND LOCAL LAWS TO IMPOSE IN
A. 407 4
SUCH COUNTY OR CITY A TAX ON THE FILING OF FINANCING STATEMENTS PERTAIN-
ING TO MEZZANINE DEBT FINANCING AND/OR PREFERRED EQUITY INVESTMENTS IN
RELATION TO REAL PROPERTY UPON WHICH A MORTGAGE INSTRUMENT IS FILED. ANY
TAX THAT HAS BEEN IMPOSED BY A COUNTY OR CITY UNDER THE AUTHORITY OF
THIS ARTICLE SHALL BE DEEMED TO INCLUDE THE AUTHORITY TO IMPOSE AND
COLLECT THE TAX ON THE RECORDING OF A FINANCING STATEMENT PERTAINING TO
MEZZANINE DEBT FINANCING AND/OR PREFERRED EQUITY INVESTMENTS IN RELATION
TO REAL PROPERTY UPON WHICH A MORTGAGE INSTRUMENT IS FILED IN THE SAME
MANNER AS THE LOCAL MORTGAGE RECORDING TAX.
§ 6. Subdivision 1 and paragraph (a) of subdivision 2 of section 253-a
of the tax law, as amended by chapter 343 of the laws of 1990, are
amended to read as follows:
1. Any city in this state having a population of one million or more,
acting through its local legislative body, is hereby authorized and
empowered to adopt and amend local laws imposing in any such city (A)
prior to February first, nineteen hundred eighty-two a tax of fifty
cents, (B) on or after February first, nineteen hundred eighty-two and
before July first, nineteen hundred eighty-two with respect to (i) one,
two or three-family houses, individual cooperative apartments and indi-
vidual residential condominium units, and (ii) real property securing a
principal debt or obligation of less than five hundred thousand dollars,
a tax of fifty cents, and with respect to all other real property a tax
of one dollar and twelve and one-half cents, (C) on and after July
first, nineteen hundred eighty-two and before August first, nineteen
hundred ninety with respect to real property securing a principal debt
or obligation of less than five hundred thousand dollars, a tax of fifty
cents, with respect to one, two or three-family houses, individual coop-
erative apartments and individual residential condominium units securing
a principal debt or obligation of five hundred thousand dollars or more,
a tax of sixty-two and one-half cents, and with respect to all other
real property a tax of one dollar and twenty-five cents, and (D) on and
after August first, nineteen hundred ninety with respect to real proper-
ty securing a principal debt or obligation of less than five hundred
thousand dollars, a tax of one dollar, with respect to one, two or
three-family houses and individual residential condominium units secur-
ing a principal debt or obligation of five hundred thousand dollars or
more, a tax of one dollar and twelve and one-half cents, and with
respect to all other real property a tax of one dollar and seventy-five
cents, for each one hundred dollars and each remaining major fraction
thereof of principal debt or obligation which is or under any contingen-
cy may be secured at the date of execution thereof, or at any time ther-
eafter, by a mortgage on such real property situated within such city
and recorded on or after the date upon which such tax takes effect and a
tax of one dollar on such mortgage if the principal debt or obligation
which is or by any contingency may be secured by such mortgage is less
than one hundred dollars. In each instance where the tax imposed pursu-
ant to this subdivision is one dollar and twenty-five cents for each one
hundred dollars and each remaining major fraction thereof of such prin-
cipal debt or obligation, fifty percent of the total amount of such tax,
including fifty percent of any interest or penalties thereon, shall be
set aside in a special account by the commissioner of finance of such
city. In each instance where the tax imposed pursuant to this subdivi-
sion is one dollar and seventy-five cents for each one hundred dollars
and each remaining major fraction thereof of such principal debt or
obligation, thirty-five and seven-tenths percent of the total amount of
such tax, including thirty-five and seven-tenths percent of any interest
A. 407 5
or penalties thereon, shall also be set aside in such special account.
Moneys in such account shall be used for payment by such commissioner to
the state comptroller for deposit in the urban mass transit operating
assistance account of the mass transportation operating assistance fund
of any amount of insufficiency certified by the state comptroller pursu-
ant to the provisions of subdivision six of section eighty-eight-a of
the state finance law, and, on the fifteenth day of each month, such
commissioner shall transmit all funds in such account on the last day of
the preceding month, except the amount required for the payment of any
amount of insufficiency certified by the state comptroller and such
amount as he deems necessary for refunds and such other amounts neces-
sary to finance the New York city transportation disabled committee and
the New York city paratransit system as established by section fifteen-b
of the transportation law, provided, however, that such amounts shall
not exceed six percent of the total funds in the account but in no event
be less than two hundred twenty-five thousand dollars beginning April
first, nineteen hundred eighty-six, and further that beginning November
fifteenth, nineteen hundred eighty-four and during the entire period
prior to operation of such system, the total of such amounts shall not
exceed three hundred seventy-five thousand dollars for the administra-
tive expenses of such committee and fifty thousand dollars for the
expenses of the agency designated pursuant to paragraph b of subdivision
five of such section, and other amounts necessary to finance the operat-
ing needs of the private bus companies franchised by the city of New
York and eligible to receive state operating assistance under section
eighteen-b of the transportation law, provided, however, that such
amounts shall not exceed four percent of the total funds in the account,
to the New York city transit authority for mass transit within the city.
THE TAX IMPOSED UNDER THE AUTHORITY OF PARAGRAPH (D) OF THIS SUBDIVISION
IS DEEMED TO INCLUDE A TAX IMPOSED ON THE FILING OF FINANCING STATEMENTS
EVIDENCING A SECURITY AGREEMENT PERTAINING TO MEZZANINE DEBT FINANCING
AND/OR PREFERRED EQUITY INVESTMENTS IN RELATION TO REAL PROPERTY UPON
WHICH A MORTGAGE INSTRUMENT IS FILED.
(a) For the purpose of determining whether a mortgage is subject to
the tax authorized to be imposed by paragraph (B) or (C) of subdivision
one of this section at a rate in excess of fifty cents, or by paragraph
(D) of subdivision one of this section at a rate in excess of one
dollar, for each one hundred dollars and each remaining major fraction
thereof of principal debt or obligation, the principal debt or obli-
gation which is or under any contingency may be secured at the date of
execution thereof, or at any time thereafter, by such mortgage shall be
aggregated with the principal debt or obligation which is or under any
contingency may be secured at the date of execution thereof, or at any
time thereafter, by any other mortgage, where such mortgages form part
of the same or related transactions and have the same or related mortga-
gors OR RELATED DEBTORS IN THE CASE OF A FINANCING STATEMENT EVIDENCING
A SECURITY AGREEMENT PERTAINING TO MEZZANINE DEBT FINANCING AND/OR
PREFERRED EQUITY INVESTMENTS IN RELATION TO REAL PROPERTY UPON WHICH A
MORTGAGE INSTRUMENT IS FILED. If the commissioner of taxation and
finance finds that a mortgage transaction or mortgage transactions have
been formulated for the purpose of avoiding or evading a rate of tax
authorized to be imposed under subdivision one of this section in excess
of the lowest such authorized rate, rather than solely for an independ-
ent business or financial purpose, such commissioner shall treat all of
the mortgages forming part of such transaction or transactions as a
single mortgage for the purpose of determining the applicable rate of
A. 407 6
tax. For purposes of this subdivision, there shall be a presumption that
all mortgages offered for recording within a period of twelve consec-
utive months having the same or related mortgagors OR RELATED DEBTORS
are part of a related transaction, and such presumption may be rebutted
only with clear and convincing evidence to the contrary. The commission-
er of taxation and finance may require such affidavits and forms, and
may prescribe such rules and regulations, as he determines to be neces-
sary to enforce the provisions of this subdivision. ANY REFERENCE TO A
MORTGAGE IN THIS SUBDIVISION INCLUDES A FINANCING STATEMENT EVIDENCING A
SECURITY AGREEMENT PERTAINING TO MEZZANINE DEBT FINANCING AND/OR
PREFERRED EQUITY INVESTMENTS IN RELATION TO REAL PROPERTY UPON WHICH A
MORTGAGE INSTRUMENT IS FILED.
§ 7. Paragraph (a) of subdivision 1 of section 255 of the tax law is
amended by adding a new subparagraph (iii) to read as follows:
(III) NOTWITHSTANDING THE PROVISIONS OF SUBPARAGRAPH (I) OF THIS PARA-
GRAPH, THE TAXES IMPOSED BY THE AUTHORITY UNDER SUBPARAGRAPH THREE OF
PARAGRAPH (A) OF SUBDIVISION TWO OF SECTION TWO HUNDRED FIFTY OF THIS
ARTICLE SHALL APPLY TO MEZZANINE DEBT AND/OR PREFERRED EQUITY INVEST-
MENTS AS SUCH TERMS ARE DEFINED BY SUBDIVISION FOUR OF SUCH SECTION.
§ 8. Section 257 of the tax law is amended to read as follows:
§ 257. Payment of taxes. The taxes imposed by this article shall be
payable on the recording of each mortgage of real property subject to
taxes [thereunder] UNDER THIS ARTICLE AND TO TAXES IMPOSED BY SUBPARA-
GRAPH THREE OF PARAGRAPH (A) OF SUBDIVISION TWO OF SECTION TWO HUNDRED
FIFTY OF THIS ARTICLE ON AND AFTER THE EFFECTIVE DATE OF SUCH SUBPARA-
GRAPH. Such taxes shall be paid to the recording officer of any county
in which the real property or any part thereof is situated. It shall be
the duty of such recording officer to indorse upon each mortgage AND ANY
MEZZANINE DEBT INCLUDED WITH SUCH MORTGAGE a receipt for the amount of
the tax so paid. Any mortgage so indorsed may thereupon or thereafter be
recorded by any recording officer and the receipt for such tax indorsed
upon each mortgage shall be recorded therewith. The record of such
receipt shall be conclusive proof that the amount of tax stated therein
has been paid upon such mortgage, INCLUDING ANY MEZZANINE DEBT.
§ 9. Subdivision 1 of section 258 of the tax law, as amended by chap-
ter 241 of the laws of 1989, is amended to read as follows:
1. No mortgage of real property shall be recorded by any county clerk
or register, unless there shall be paid the taxes imposed by and as in
this article provided. No mortgage of real property which is subject to
the taxes imposed by this article shall be released, discharged of
record or received in evidence in any action or proceeding, nor shall
any assignment of or agreement extending any such mortgage be recorded
unless the taxes imposed thereon by this article shall have been paid as
provided in this article. FOR PURPOSES OF THE TAXES IMPOSED AND AUTHOR-
IZED BY SUBPARAGRAPH THREE OF PARAGRAPH (A) OF SUBDIVISION TWO OF
SECTION TWO HUNDRED FIFTY OF THIS ARTICLE, UNLESS SUCH TAXES SHALL HAVE
BEEN PAID, NO MORTGAGE OF REAL PROPERTY SHALL BE RECORDED BY ANY COUNTY
CLERK OR REGISTER, NOR SHALL SUCH MORTGAGE BE RELEASED, DISCHARGED,
RECORDED OR RECEIVED IN EVIDENCE IN ANY ACTION OR PROCEEDING, NOR SHALL
ANY ASSIGNMENT OF AGREEMENT EXTENDING SUCH MORTGAGE BE RECORDED.
Provided, however, except as otherwise provided in subdivision two of
this section, in order to obtain a release or discharge of record where
the mortgagor is not liable for the special additional tax imposed under
subdivision one-a of section two hundred fifty-three of this chapter,
such mortgagor or any subsequent owner of the mortgaged property or a
part thereof may pay the tax imposed under such subdivision one-a and
A. 407 7
penalty, and may either apply for the credit allowable under this chap-
ter for payment of such additional tax or may maintain an action to
recover the amounts so paid against any person liable for payment of the
tax or any subsequent assignees or owners of such mortgage or consol-
idated mortgage of which such mortgage is a part, as if such amounts of
tax and penalty were a debt personally owed by such persons to the mort-
gagor or subsequent owner. No judgment or final order in any action or
proceeding shall be made for the foreclosure or the enforcement of any
mortgage which is subject to any tax imposed by this article or of any
debt or obligation secured by any such mortgage, unless the taxes,
INCLUDING TAXES AUTHORIZED BY SUBPARAGRAPH THREE OF PARAGRAPH (A) OF
SUBDIVISION TWO OF SECTION TWO HUNDRED FIFTY OF THIS ARTICLE imposed by
this article shall have been paid as provided in this article; and,
except AS otherwise provided in subdivision two of this section, whenev-
er it shall appear that any mortgage has been recorded without payment
of a tax imposed by this article there shall be added to the tax a sum
equal to one-half of one per centum thereof for each month or fraction
of a month for the period that the tax remains unpaid except where it
could not be determined from the face of the instrument that a tax was
due, or where an advance has been made on a prior advance mortgage or a
corporate trust mortgage without payment of the tax, in which case there
shall be added to the tax a sum equal to one per centum thereof for each
month or fraction of a month for the period that the tax remains unpaid.
In any case where a mortgage of real property subject to a tax imposed
by this article has heretofore been recorded or is hereafter recorded in
good faith, and the county clerk or register has held such mortgage
nontaxable or taxable at one amount, and it shall later appear that it
was taxable or taxable at a greater amount, the commissioner of taxation
and finance may remit the penalties in excess of one-half of one per
centum per month.
§ 10. This act shall take effect on the ninetieth day after it shall
have become a law.