S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   6577
 
                        2023-2024 Regular Sessions
 
                             I N  S E N A T E
 
                              April 27, 2023
                                ___________
 
 Introduced  by Sen. KAVANAGH -- read twice and ordered printed, and when
   printed to be committed to the Committee on Housing, Construction  and
   Community Development
 
 AN  ACT to amend the real property actions and proceedings law, the real
   property law, the criminal procedure law, and the civil  practice  law
   and  rules,  in relation to the theft of real property and protections
   for victims of real property theft
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. The real property actions and proceedings law is amended by
 adding a new section 756-a to read as follows:
   § 756-A. STAY OF ACTION OR PROCEEDING WHEN A PARTY'S CLAIM TO TITLE IS
 IN  DISPUTE. 1. (A) A FEDERAL, STATE OR LOCAL GOVERNMENT AGENCY MAY MOVE
 FOR A STAY OF ANY PROCEEDING TO RECOVER POSSESSION OF OR QUIET TITLE  TO
 REAL PROPERTY RELATING TO A RESIDENTIAL DWELLING UNIT OR PROPERTY, BASED
 ON  A  PENDING  GOOD  FAITH INVESTIGATION INTO THE THEFT OR FRAUD IN THE
 TITLE TO, OR THE FINANCING OF, THE PREMISES THAT IS THE SUBJECT  OF  ANY
 PROCEEDING.    UPON THE AGENCY'S SHOWING OF THE PENDENCY OF A GOOD FAITH
 INVESTIGATION, THE COURT SHALL ISSUE A STAY OF THE PROCEEDING, INCLUDING
 STAYING EXECUTION OF A WARRANT OF EVICTION OR ENFORCEMENT OF A  JUDGMENT
 SO LONG AS THE INVESTIGATION IS ONGOING.
   (B)  EVERY  SIX  MONTHS,  THE COURT SHALL SCHEDULE A STATUS CONFERENCE
 WITH THE GOVERNMENT AGENCY AND ANY OTHER PARTIES TO THE ACTION TO REVIEW
 ANY STAY AND TO DETERMINE IF THE INVESTIGATION IS  STILL  CONTINUING  IN
 GOOD  FAITH  AND  SHALL  CONTINUE  THE  STAY OF THE PROCEEDING UNTIL THE
 GOVERNMENT INVESTIGATION IS CLOSED.   IF IT  SHOULD  DEEM  NECESSARY,  A
 COURT MAY REVIEW ANY SUPPORTING DOCUMENTS FILED BY THE GOVERNMENT AGENCY
 IN  CAMERA AND TO BE FILED UNDER SEAL IF DEEMED NECESSARY BY THE GOVERN-
 MENT AGENCY.
   2. THE COURT SHALL STAY ALL PROCEEDINGS TO RECOVER  POSSESSION  OF  OR
 QUIET  TITLE TO REAL PROPERTY RELATING TO A RESIDENTIAL DWELLING UNIT OR
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD10874-02-3
              

 S. 6577                             2
 
 PROPERTY, WHERE A CHARGING INSTRUMENT IS FILED AGAINST A PARTY  TO  SUCH
 PROCEEDING  FOR  DEED  THEFT,  LARCENY,  OFFERING A FALSE INSTRUMENT FOR
 FILING, CRIMINAL POSSESSION OF STOLEN PROPERTY OR ANY OTHER LAW  ASSERT-
 ING  THEFT  OR  FRAUD  IN  OBTAINING TITLE TO PROPERTY AND SAID CHARGING
 INSTRUMENT RELATES TO THE PREMISES THAT ARE THE SUBJECT OF SUCH PROCEED-
 ING. THE STAY SHALL REMAIN IN EFFECT UNTIL RESOLUTION OF  SUCH  CRIMINAL
 ACTION.
   3.  THE  COURT  SHALL STAY ALL PROCEEDINGS TO RECOVER POSSESSION OF OR
 QUIET TITLE TO REAL PROPERTY RELATING TO A RESIDENTIAL DWELLING UNIT  OR
 PROPERTY,  WHERE  A  FEDERAL,  STATE  OR  LOCAL  GOVERNMENT  AGENCY  HAS
 COMMENCED A CIVIL ACTION OR PROCEEDING RELATING TO THE THEFT OR FRAUD IN
 THE TITLE TO, OR THE FINANCING OF, THE PREMISES THAT ARE THE SUBJECT  OF
 SUCH PROCEEDING.
   4.  THE  COURT  SHALL STAY ALL PROCEEDINGS UNDER SECTION SEVEN HUNDRED
 ELEVEN OR SEVEN HUNDRED THIRTEEN OF THIS  ARTICLE  FOR  NINETY  DAYS  TO
 ALLOW  A  PARTY  TO  FILE  A COMPLAINT IN THE APPROPRIATE FORUM WHEN THE
 COURT MAKES A DETERMINATION THAT THERE IS A BONA  FIDE  DISPUTE  BETWEEN
 PARTIES  PURPORTING  TO  OWN  THE  PROPERTY  THAT  IS THE SUBJECT OF THE
 PROCEEDING.
   (A) A REBUTTABLE PRESUMPTION THAT A BONA FIDE DISPUTE TO TITLE  EXISTS
 SHALL  BE  CREATED  WHEN THE PARTY DISPUTING PETITIONER'S TITLE, OWNS OR
 OWNED THE PROPERTY THAT IS THE SUBJECT OF THE  COURT  PROCEEDING  DURING
 THE  LAST  THREE  YEARS,  OR  IS A PERSON INTERESTED IN THE PROPERTY, AS
 DEFINED BY SECTION ONE HUNDRED THREE OF THE SURROGATE'S COURT  PROCEDURE
 ACT.
   (B)  A  PARTY MAY SEEK AN ADDITIONAL STAY OF THE PROCEEDING BEYOND THE
 INITIAL NINETY DAY STAY BY THE COURT IF  THEY  WERE  UNABLE  TO  FILE  A
 COMPLAINT OR SEEK A STAY FROM ANOTHER FORUM.  IN EXTENDING THE STAY, THE
 COURT  SHALL  CONSIDER,  WITHOUT LIMITATION, THE TOTALITY OF THE CIRCUM-
 STANCES INCLUDING STEPS THE PARTIES HAVE TAKEN TO RESOLVE  THE  DISPUTE,
 THE  HARM  TO  THE  PARTIES  OF  A  FURTHER STAY, AND THE ABILITY OF THE
 PARTIES TO ADVOCATE FOR THEMSELVES OR RETAIN COUNSEL.
   (C) THIS SECTION SHALL NOT APPLY TO ANY PROCEEDING COMMENCED  PURSUANT
 TO SUBDIVISION TEN OF SECTION SEVEN HUNDRED THIRTEEN OF THIS ARTICLE.
   5.  NOTHING  IN THIS SECTION SHALL DIMINISH THE COURT'S OWN DISCRETION
 TO FURTHER STAY A PROCEEDING IN THE INTERESTS OF JUSTICE.
   6. NOTHING IN THIS SECTION SHALL LIMIT A PARTY  FROM  SEEKING  RELIEF,
 INCLUDING A STAY OF A PROCEEDING UNDER THIS ARTICLE, IN ANOTHER COURT.
   7. FOR PURPOSES OF THIS SECTION, A PROCEEDING TO RECOVER POSSESSION OF
 OR  QUIET  TITLE  TO  REAL  PROPERTY  SHALL INCLUDE ANY PROCEEDING UNDER
 SECTION SEVEN HUNDRED ELEVEN OR SEVEN HUNDRED THIRTEEN OF THIS  ARTICLE,
 AN  EJECTMENT  ACTION  OR  A  WRIT OF ASSISTANCE PURSUANT TO SECTION TWO
 HUNDRED TWENTY-ONE OF THIS CHAPTER, A FORECLOSURE ACTION, AN  ACTION  TO
 ENFORCE  A  MORTGAGE  NOTE,  OR  ANY  OTHER ACTION AFFECTING TITLE TO OR
 ENCUMBRANCE UPON REAL PROPERTY, OR ANY OTHER JUDICIAL OR  ADMINISTRATIVE
 PROCEEDING TO RECOVER POSSESSION OF OR QUIET TITLE TO REAL PROPERTY.
   8. FOR PURPOSES OF THIS SECTION, A PARTY SHALL INCLUDE:
   (A)  A  CORPORATION,  LIMITED  LIABILITY COMPANY, PARTNERSHIP OR OTHER
 ENTITY WHERE A CHARGING INSTRUMENT HAS BEEN FILED AGAINST AN  INDIVIDUAL
 WHO  HAS  A  FINANCIAL  OR CONTROLLING INTEREST IN THE ENTITY THAT HOLDS
 TITLE TO THE PROPERTY; OR
   (B) WHERE A CHARGING INSTRUMENT HAS BEEN FILED AGAINST A SELLER OF THE
 PROPERTY, INCLUDING AN  INDIVIDUAL  OR  CORPORATION,  LIMITED  LIABILITY
 COMPANY, PARTNERSHIP OR OTHER ENTITY, OR WHERE A CHARGING INSTRUMENT HAS
 BEEN  FILED  AGAINST  AN  INDIVIDUAL  WHO HAS A FINANCIAL OR CONTROLLING
 INTEREST IN THE ENTITY THAT SOLD THE PROPERTY.
 S. 6577                             3
 
   § 2. Section 1501 of the real property actions and proceedings law  is
 amended by adding a new subdivision 6 to read as follows:
   6. WHERE A PERSON, AS DEFINED IN SUBDIVISION SEVEN OF SECTION 10.00 OF
 THE  PENAL  LAW,  HAS BEEN CONVICTED OF A CRIMINAL OFFENSE IN CONNECTION
 WITH A DEED THEFT OR FRAUDULENT TRANSACTION INVOLVING REAL PROPERTY, THE
 CONVICTION CREATES A REBUTTABLE PRESUMPTION THAT SUCH DEED TRANSFER  WAS
 FRAUDULENT.    THIS SECTION ALSO APPLIES WHERE A GRANTEE OF A FRAUDULENT
 DEED IS AN ENTITY THAT IS BENEFICIALLY OWNED BY SUCH CONVICTED PERSON. A
 DEFENDANT MAY IN SUCH ACTION PRODUCE PROOF TO ESTABLISH BY A  PREPONDER-
 ANCE OF THE EVIDENCE THAT SUCH DEED WAS NOT PROCURED THROUGH FRAUD.
   § 3. Paragraph (g) of subdivision 2 of section 265-a of the real prop-
 erty  law,  as  added  by chapter 308 of the laws of 2006, is amended to
 read as follows:
   (g) "Foreclosure" means that there is an active [lis  pendens]  NOTICE
 OF  PENDENCY  filed  in  court  pursuant to article thirteen of the real
 property actions and proceedings law, OR A FORECLOSURE  ACTION  PURSUANT
 TO  ARTICLE  ELEVEN  OR  THIRTEEN  OF  THE  REAL  PROPERTY  ACTIONS  AND
 PROCEEDINGS LAW HAS BEEN COMMENCED against the subject property,  OR  AN
 ACTION TO ENFORCE A MORTGAGE NOTE HAS BEEN COMMENCED AGAINST THE BORROW-
 ER WHOSE PROPERTY IS SECURED BY A MORTGAGE LOAN, or the subject property
 is on an active property tax OR UTILITY lien sale list.
   § 4. Paragraph (d) of subdivision 1 of section 265-b of the real prop-
 erty  law,  as  added  by chapter 472 of the laws of 2008, is amended to
 read as follows:
   (d) "Distressed home loan" means a home loan [that  is  in  danger  of
 being  foreclosed  because  the homeowner has one or more defaults under
 the mortgage that entitle the lender to accelerate full payment  of  the
 mortgage and repossess the property] FOR WHICH AN INSTALLMENT PAYMENT IS
 MORE  THAN  SIXTY  DAYS  PAST  DUE,  or a home loan where the lender has
 commenced a foreclosure action. For purposes of this paragraph, a  "home
 loan" is a loan in which the debt is incurred by the homeowner primarily
 for personal, family or household purposes, and the loan is secured by a
 mortgage  or  deed  of  trust on property upon which there is located or
 there is to be located a structure or  structures  intended  principally
 for  occupancy of from one to four families which is or will be occupied
 by the homeowner as the homeowner's principal dwelling.
   § 5. Section 266 of the real  property  law  is  amended  to  read  as
 follows:
   §  266. Rights of purchaser or incumbrancer for valuable consideration
 protected. This article does not in any  manner  affect  or  impair  the
 title  of  a  purchaser  or  incumbrancer  for a valuable consideration,
 unless it appears that [he] SUCH PURCHASER OR INCUMBRANCER had  previous
 notice,  WHETHER ACTUAL OR CONSTRUCTIVE, of the fraudulent intent of his
 immediate grantor, or of the fraud rendering  void  the  title  of  such
 grantor.    THERE  SHALL BE A REBUTTABLE PRESUMPTION THAT A PURCHASER OR
 INCUMBRANCER HAD NOTICE OF FRAUD OR FRAUDULENT INTENT IN THE CASE  OF  A
 TRANSFER  OF MORTGAGED REAL PROPERTY, BETWEEN A PURCHASER AND SELLER WHO
 ARE NOT ASSOCIATED PARTIES, THAT IS NOT  ACCOMPANIED  BY  THE  RECORDING
 WITH  THE CLERK OF THE COUNTY OR WITH THE COMMISSIONER OF DEEDS IN WHICH
 THE PROPERTY IS LOCATED, OF A STATEMENT, EXECUTED BY THE MORTGAGEE,  AND
 DULY  ACKNOWLEDGED, STATING, SUBSTANTIALLY, THAT (A) A PARTY IS ASSUMING
 THE SELLER'S INDEBTEDNESS SECURED BY  THE  MORTGAGE;  OR  (B)  THAT  THE
 INDEBTEDNESS SECURED BY THE MORTGAGE HAS BEEN SATISFIED.
   FOR  THE PURPOSES OF THIS SECTION, "ASSOCIATED PARTIES" MEANS SPOUSES,
 EX-SPOUSES, PARENTS AND CHILDREN, SIBLINGS, A HOMEOWNER AND  THAT  HOME-
 S. 6577                             4
 
 OWNER'S  FAMILY  TRUST, OR A HOMEOWNER AND THAT HOMEOWNER'S WHOLLY-OWNED
 LIMITED LIABILITY COMPANY.
   §  6.  Section 420.45 of the criminal procedure law, as added by chap-
 ter 167 of the laws of 2019, is amended to read as follows:
 § 420.45 Post-trial motion relating  to  certain  instruments  affecting
            residential real property.
   1. When a defendant has been convicted after a trial or pled guilty to
 [violating  either  section  175.30  or  175.35  of  the  penal  law  in
 connection to] ANY CRIME THAT AFFECTS THE TITLE TO, ENCUMBRANCE  OF,  OR
 THE  POSSESSION  OF, REAL PROPERTY AND WHERE THERE IS an instrument that
 is material to [the] SUCH ENCUMBRANCE, transfer or purchase of [residen-
 tial] SAID real property, the district attorney, THE  ATTORNEY  GENERAL,
 OR  ANY LAW ENFORCEMENT AGENCY may file a motion in the supreme court in
 the county where the property that is THE subject [to] OF the instrument
 is located OR THE PROSECUTION OCCURRED on behalf of the victim  to  void
 [the]  SAID instrument [that is the subject of such criminal information
 or indictment]. Such motion must be in writing and  [provide  reasonable
 notice  to  all persons who have an interest in the property affected by
 such instrument. The motion papers must] state the county or borough, if
 in the city of New York, and block, lot, street address of such  proper-
 ty,  and  a  description of such property[. The motion papers must state
 the grounds of the  motion,  must  contain  sworn  allegations  of  fact
 supporting  such grounds], and include a copy of the [guilty disposition
 attached to the document] JUDGMENT OF CONVICTION. NOTICE MUST  BE  GIVEN
 TO ALL PERSONS WHO HAVE AN INTEREST IN THE PROPERTY.
   2.  Within  ten days after filing a motion pursuant to subdivision one
 of this section, the [district attorney] AGENCY FILING THE MOTION  shall
 record  a copy of the notice of motion in the office of the clerk of the
 county in which the property is situated. The notice shall be indexed by
 the clerk in the manner prescribed by subdivision (c) of rule sixty-five
 hundred eleven of the civil practice law  and  rules  for  a  notice  of
 pendency of action and shall have the same effect as such notice.
   3.  The supreme court must conduct a hearing and make findings of fact
 essential  to  the  determination  whether  to  declare  the  instrument
 described  in  subdivision  one  of  this  section  void ab initio. [All
 persons providing factual information at such hearing must testify under
 oath.] There will be a rebuttable presumption  that  where  a  party  is
 convicted  after a trial [in criminal court] or a guilty plea to [either
 section 175.30 or section 175.35 of the penal law  in  connection  with]
 ANY  CRIME  THAT AFFECTS THE TITLE TO, ENCUMBRANCE OF, OR THE POSSESSION
 OF, REAL PROPERTY AND WHERE THERE IS an instrument that ENCUMBERS OR  is
 material  to  the  transfer or sale of [residential] real property, that
 such instrument is void ab initio.
   4. Upon the defendant's conviction  of  or  guilty  plea  [to  section
 175.30  or  section 175.35 of the penal law] as described in subdivision
 one of this section, and after conducting a hearing pursuant to subdivi-
 sion three of this section, a court shall make a  determination  and  if
 appropriate shall order that the instrument described in subdivision one
 of  this  section  be declared void ab initio or grant other appropriate
 relief to the victim.  The order of the court shall describe the  nature
 of  the  false  statement or false information contained in such instru-
 ment. A copy of such instrument shall be attached to the  order  of  the
 court.
   5.  If  the  order  relates to an instrument that has been filed with,
 registered, or recorded in a public office, [the district attorney shall
 record] a certified copy of such order SHALL BE RECORDED in  the  office
 S. 6577                             5
 
 of  the  recording officer of the county in which such property is situ-
 ated[, in the same manner as a conveyance duly  acknowledged  or  proved
 and certified so as to entitle it to be recorded. Such recording officer
 shall record the same in his or her said office].
   6.  For purposes of this section, "all persons who have an interest in
 the property affected by such instrument" shall  mean  all  parties  who
 have  recorded  an  instrument  affecting  the real property that is the
 subject of the instrument described in subdivision one of this  section,
 [including]  any  LAST  RECORD  OWNER AND ANYONE IN RESIDENCE DURING THE
 PENDENCY OF THE PROSECUTION AND  ANY  party  [or  entity]  WITH  A  LIEN
 AGAINST  THE  PROPERTY  THAT IS UNSATISFIED, OR ANY OTHER PARTY that may
 CLAIM TO have liens [of interest on] OR AN INTEREST IN the property, and
 any current residents of the property, as of the date of the  filing  of
 the criminal information or indictment.
   7.  Nothing  in this section shall be deemed to inhibit or prevent (A)
 RELIEF OTHERWISE PROVIDED BY LAW, OR (B) a party's right to appeal  such
 order.
   §  7.  Section 6501 of the civil practice law and rules, as amended by
 chapter 657 of the laws of 1993, is amended to read as follows:
   § 6501. Notice of pendency;  constructive  notice.  (A)  A  notice  of
 pendency  may  be  filed in any action in a court of the state or of the
 United States in which the judgment demanded would affect the title  to,
 INCUMBRANCE  OF,  or the possession, use or enjoyment of, real property,
 except in a summary proceeding brought to recover the possession of real
 property.  The pendency of such an action is constructive  notice,  from
 the  time  of  filing of the notice only, to a purchaser from, or incum-
 brancer against, any defendant named in a notice of pendency indexed  in
 a  block index against a block in which property affected is situated or
 any defendant against whose name a notice  of  pendency  is  indexed.  A
 person  whose  conveyance or incumbrance is recorded after the filing of
 the notice is bound by all proceedings taken in the  action  after  such
 filing to the same extent as a party.
   (B)  NOTWITHSTANDING  ANY PROVISION OF SUBDIVISION (A) OF THIS SECTION
 TO THE CONTRARY, A NOTICE OF PENDENCY MAY BE FILED BY A DISTRICT  ATTOR-
 NEY'S  OFFICE OR THE OFFICE OF THE ATTORNEY GENERAL UPON A DETERMINATION
 AFTER INVESTIGATION THAT THERE  IS  PROBABLE  CAUSE  THAT  A  CRIME  HAS
 OCCURRED  THAT  AFFECTS  THE  TITLE TO, INCUMBRANCE OF, OR POSSESSION OF
 REAL PROPERTY, IN THE COUNTY WHERE THE REAL PROPERTY  IS  LOCATED.  SUCH
 NOTICE OF PENDENCY SHALL REMAIN IN EFFECT FOR A PERIOD OF SIX MONTHS BUT
 MAY BE RENEWED TWICE.
   (C)  NOTWITHSTANDING  ANY PROVISION OF SUBDIVISION (A) OF THIS SECTION
 TO THE CONTRARY, A NOTICE OF PENDENCY MAY BE FILED BY A DISTRICT  ATTOR-
 NEY'S  OFFICE OR THE OFFICE OF THE ATTORNEY GENERAL UPON THE FILING OF A
 CRIMINAL COMPLAINT OR INDICTMENT THAT ALLEGE CHARGES AFFECTING THE TITLE
 TO, INCUMBRANCE OF OR POSSESSION OF REAL PROPERTY, IN THE  COUNTY  WHERE
 THE REAL PROPERTY IS LOCATED.  A NOTICE OF PENDENCY FILED WILL REMAIN IN
 EFFECT UNTIL THE PROSECUTION OF A  CRIMINAL CASE IS EITHER DISMISSED, OR
 OTHERWISE  DISPOSED  OF AT SENTENCING AND IS NOT SUBJECT TO A THREE YEAR
 PERIOD OF EXPIRATION UNDER SECTION SIX THOUSAND FIVE HUNDRED THIRTEEN OF
 THIS ARTICLE.
   § 8. This act shall take effect on the thirtieth day  after  it  shall
 have become a law.