BILL NUMBER: S2082

SPONSOR: KAVANAGH
 
TITLE OF BILL:

An act to amend the real property actions and proceedings law and the
real property tax law, in relation to requiring the court in a foreclo-
sure action to provide notice to the former owner of the real property
of the right to apply for surplus moneys from the sale of such property

 
PURPOSE:

This bill will require that those who formerly owned foreclosed property
are notified that they may be entitled to a portion of the surplus of
funds remaining after an in rem foreclosure sale.

 
SUMMARY OF PROVISIONS:

Section 1 of the bill adds a new subdivision 5 to section 1354 of the
real property actions and proceedings law to require that after the
surplus monies resulting from an in rem foreclosure tax sale are
provided to the court, the court shall provide notice to the former
              

owner or owners of the property of their right to file a written notice
of claim to all or a portion of such proceeds.

Section 2 of the bill adds a new subdivision 4 to section 1136 of the
real property tax law to require that a court that has vested title to
in rem foreclosed property to a municipal entity shall notify the former
property owner or owners that they may be entitled to file a claim for
any surplus funds which may result from a tax sale of such property.

Section 3 of the bill sets for the effective date.

 
JUSTIFICATION:

Currently, there is no state requirement that former owners of a proper-
ty foreclosed upon for failure to pay taxes are notified of their poten-
tial entitlement to any surplus funds which may result when the property
is sold. This can lead to such former owners missing out on the opportu-
nity to claim a portion of the surplus.

For example, as of 2015, the city of Buffalo retained approximately
$11.6 million in auction proceeds after in rem foreclosure sales, which
had never been claimed. Many former owners and other property lien hold-
ers had never been made aware that the sale of their former property
resulted in a surplus to which they might have been legally entitled.

This bill would require that a former owner be notified that there may
be a potential surplus when the title is vested in the municipality and
again after the property has been sold by the municipality. This process
would afford former owners notice of the existence of a surplus and of
the process available under existing law by which they can file a claim
for a portion of those funds.

 
LEGISLATIVE HISTORY:

2022: S3130 (Kavanagh) / A7579 (O'Donnell) - Reported and Committed to
Finance / Referred to Judiciary

2021: S3130 (Kavanagh) / A7579 (O'Donnell) - Reported and Committed to
Finance / Referred to Judiciary

2020: S4683 (Kavanagh) / A7160 (O'Donnell) - Reported and Committed to
Finance / Referred to Judiciary

2019: S4683 (Kavanagh) / A7160 (O'Donnell) - Delivered to Assembly /
Referred to Judiciary

2019: S882 (Young) - Enacting clause stricken.

2018: S3948 (Young) / A10168 (O'Donnell) - Passed Senate/Referred to
Judiciary

2017: S3948 (Young) - Passed Senate

2016: S6259 (Young) - Passed Senate

 
FISCAL IMPLICATIONS:

None.

 
EFFECTIVE DATE:
This act shall take effect immediately.