S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   7514
 
                        2023-2024 Regular Sessions
 
                             I N  S E N A T E
 
                               June 2, 2023
                                ___________
 
 Introduced  by  Sen.  RYAN  --  read twice and ordered printed, and when
   printed to be committed to the Committee on Rules
 
 AN ACT to amend the real property tax law, in relation  to  distribution
   of surplus in tax enforcement proceedings
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. The real property tax  law  is  amended  by  adding  a  new
 section 989 to read as follows:
   §  989.  DISTRIBUTION  OF  SURPLUS IN TAX ENFORCEMENT PROCEEDINGS.  1.
 NOTWITHSTANDING THE PROVISIONS OF ANY GENERAL, SPECIAL OR LOCAL  LAW  TO
 THE  CONTRARY,  WHEN  A  PROPERTY  OWNER IS DIVESTED OF TITLE DUE TO THE
 FORECLOSURE OF A DELINQUENT REAL PROPERTY TAX LIEN ON THE PROPERTY,  AND
 THE  PROPERTY  IS SOLD TO A THIRD PARTY, THE PROCEEDS OF SUCH SALE SHALL
 BE DISTRIBUTED AS FOLLOWS:
   (A) IF THE PROCEEDS OF THE SALE ARE LESS THAN OR EQUAL  TO  THE  TOTAL
 TAXES  DUE  ON  THE  PROPERTY PLUS INTEREST, PENALTIES AND OTHER CHARGES
 DULY IMPOSED UPON THE PROPERTY, INCLUDING THE ADMINISTRATIVE COSTS ASSO-
 CIATED WITH THE FORECLOSURE PROCESS, THE ENTIRE PROCEEDS SHALL  BE  PAID
 TO THE LOCAL GOVERNMENT.
   (B)  IF  THE  PROCEEDS  OF  THE SALE EXCEED THE TOTAL TAXES DUE ON THE
 PROPERTY PLUS INTEREST, PENALTIES AND OTHER CHARGES  DULY  IMPOSED  UPON
 THE  PROPERTY,  INCLUDING  THE  ADMINISTRATIVE COSTS ASSOCIATED WITH THE
 FORECLOSURE PROCESS, THE EXCESS SHALL BE DISTRIBUTED AS FOLLOWS:
   (I) IF THE PROPERTY IS NOT SUBJECT TO OTHER LIENS, THE EXCESS PROCEEDS
 SHALL BE PAID TO THE PRIOR OWNER OR OWNERS OF THE PROPERTY.
   (II) IF THE PROPERTY IS SUBJECT TO OTHER LIENS, THE LIENHOLDERS  SHALL
 BE  PAID  FROM  THE  EXCESS  PROCEEDS  IN THE SAME ORDER AND TO THE SAME
 EXTENT AS THEY WOULD BE IN AN ACTION TO FORECLOSE A MORTGAGE PURSUANT TO
 ARTICLE THIRTEEN OF THE REAL PROPERTY ACTIONS AND PROCEEDINGS  LAW.  ANY
 PROCEEDS  REMAINING  AFTER THE OTHER LIENHOLDERS HAVE BEEN SO PAID SHALL
 BE PAID TO THE PRIOR OWNER OR OWNERS OF THE PROPERTY.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD10302-01-3
              

 S. 7514                             2
 
   2. THE PROVISIONS OF THIS SECTION SHALL APPLY WHETHER PROPERTY IS SOLD
 THROUGH A PUBLIC AUCTION OR OTHERWISE.
   3.  WHEN A FORECLOSURE CONCLUDES WITH THE TAX DISTRICT TAKING TITLE TO
 PROPERTY, THE PROVISIONS OF THIS SECTION  SHALL  NOT  APPLY  UNLESS  AND
 UNTIL  THE  TAX  DISTRICT  SELLS THE PROPERTY TO A THIRD PARTY; PROVIDED
 THAT IN SUCH A CASE, IF THERE ARE EXCESS PROCEEDS  TO  BE  PAID  TO  THE
 PRIOR  OWNER  OR  OWNERS OF THE PROPERTY, SUCH PROCEEDS SHALL BE PAID TO
 THE OWNER OR OWNERS OF THE PROPERTY PRIOR TO ITS ACQUISITION BY THE  TAX
 DISTRICT.
   4.  THE  PROVISIONS OF THIS SECTION SHALL NOT APPLY TO THE ENFORCEMENT
 OF TAX LIENS ON ABANDONED REAL PROPERTY. FOR PURPOSES OF  THIS  SECTION,
 REAL PROPERTY SHALL BE DEEMED ABANDONED IF IT:
   (A)  HAS  BEEN INCLUDED ON A LOCAL MUNICIPAL ROLL, REGISTRY OR LIST OF
 VACANT AND ABANDONED RESIDENTIAL PROPERTY  PURSUANT  TO  SECTION  ELEVEN
 HUNDRED ELEVEN-A OF THIS CHAPTER, OR
   (B)  HAS  BEEN  CERTIFIED  AS  ABANDONED COMMERCIAL OR INDUSTRIAL REAL
 PROPERTY PURSUANT TO ARTICLE NINETEEN-A OF THE REAL PROPERTY ACTIONS AND
 PROCEEDINGS LAW, OR
   (C) HAS BEEN INCLUDED ON THE STATEWIDE REGISTRY OF  VACANT  AND  ABAN-
 DONED  PROPERTY  PURSUANT  TO  SECTION  THIRTEEN HUNDRED TEN OF THE REAL
 PROPERTY ACTIONS AND PROCEEDINGS LAW.
   5. A MUNICIPALITY SHALL NOTIFY A PROPERTY OWNER WHEN THE OWNER'S PROP-
 ERTY NETTED A SURPLUS AT A TAX FORECLOSURE AUCTION THAT WAS HELD  ON  OR
 AFTER THE EFFECTIVE DATE OF THIS SECTION. THE NOTIFICATION SHALL BE MADE
 AS  DIRECTED  BY  THE  COURT AND SHALL STATE THE POSSIBLE EXISTENCE OF A
 SURPLUS, HOW TO OBTAIN THE SURPLUS AND THE STEPS THE PROPERTY OWNER MUST
 TAKE TO OBTAIN THE SURPLUS.
   6. THIS SECTION SHALL BE CONSTRUED TO SUPERSEDE ALL  GENERAL,  SPECIAL
 AND  LOCAL LAWS RELATING TO TAX ENFORCEMENT TO THE EXTENT THAT SUCH LAWS
 WOULD OTHERWISE ALLOW THE PROCEEDS OF A SALE  TO  BE  DISTRIBUTED  IN  A
 MANNER  OTHER  THAN  AS  SET  FORTH IN THIS SECTION. THIS SECTION IS NOT
 INTENDED TO SUPERSEDE SUCH LAWS IN OTHER RESPECTS.
   § 2. Subdivision 2 of section 1104 of the real property  tax  law,  as
 amended  by  chapter 532 of the laws of 1994, paragraph (iii) as further
 amended by subdivision (b) of section 1 of part W of chapter 56  of  the
 laws of 2010, is amended to read as follows:
   2. The provisions of this article shall not be applicable to a county,
 city or town which: (i) on January first, nineteen hundred ninety-three,
 was authorized to enforce the collection of delinquent taxes pursuant to
 a county charter, city charter, administrative code or special law; (ii)
 adopted  a local law, no later than July first, nineteen hundred ninety-
 four, providing that the collection of taxes in  such  county,  city  or
 town  shall  continue  to  be enforced pursuant to such charter, code or
 special law, as such charter, code or special law may from time to  time
 be  amended;  and  (iii) filed a copy of such local law with the commis-
 sioner  no  later  than  August  first,  nineteen  hundred  ninety-four.
 PROVIDED,  HOWEVER,  THAT NOTHING CONTAINED HEREIN SHALL BE CONSTRUED TO
 EXEMPT ANY SUCH COUNTY, CITY OR TOWN FROM THE PROVISIONS OF SECTION NINE
 HUNDRED EIGHTY-NINE OF THIS CHAPTER.
   § 3. Subdivision 1 of section 1166 of the real property  tax  law,  as
 amended  by  chapter  500  of  the  laws  of 2015, is amended to read as
 follows:
   1. Whenever any tax district shall become vested  with  the  title  to
 real  property by virtue of a foreclosure proceeding brought pursuant to
 the provisions of this article, such tax district is  hereby  authorized
 to  sell  and  convey the real property so acquired, which shall include
 S. 7514                             3
 
 any and all gas, oil or mineral rights associated with such real proper-
 ty, either with or without advertising  for  bids,  notwithstanding  the
 provisions  of any general, special or local law.  THE PROCEEDS OBTAINED
 FROM  ANY  SUCH  SALE  SHALL  BE  DISTRIBUTED  IN THE MANNER PROVIDED BY
 SECTION NINE HUNDRED EIGHTY-NINE OF THIS CHAPTER.
   § 4. This act shall take effect October 1, 2023, and  shall  apply  to
 all tax foreclosure proceedings commenced on and after such date.