BILL NUMBER: S9411

SPONSOR: KAVANAGH
 
TITLE OF BILL:

An act to amend chapter 375 of the laws of 1999, amending the real prop-
erty actions and proceedings law relating to new owners of buildings for
which administrators have been appointed pursuant to article 7-A of such
law, in relation to the effectiveness thereof

 
SUMMARY OF PROVISIONS::

Subdivision 10 of section 778 of the Real Property Actions and
Proceedings Law (the "RPAPL") grants the City of New York ("the City")
authority to "evaporate" (reduce to zero) liens on Article 7-A proper-
ties for municipally-financed repairs. This authority will expire on
June 30, 2024, unless it is extended. Section one of this bill would
extend this authority to June 30, 2027, and section two would provide
that this act takes effect immediately and will be deemed to be in full
force and effect on and after June 30, 2024.

 
REASONS FOR SUPPORT::
              

Pursuant to Article 7-A of the RPAPL, the Civil Court of the City of New
York appoints administrators to operate privately-owned buildings that
have been effectively abandoned by their owners and have created condi-
tions dangerous to the life, health and safety of tenants still living
in such buildings. Administrators act under court order to collect
rents, which are used for providing essential services to tenants and
for making necessary repairs. In many instances, City capital funds are
utilized to repair or replace major systems or to make other necessary
improvements,

All money expended by the City for such purposes becomes a lien on the
property. Subdivision 10 of section 778 of the RPAPL provides that a new
owner of an Article 7-A property may take advantage of lien evaporation
only if he or she enters into a regulatory agreement with the New York
City Department of Housing Preservation and Development ("HPD"). This
regulatory agreement may provide that, upon transfer of the property to
the new owner, any outstanding liens filed with and recorded by New York
City pursuant to section 778 of the RPAPL or section 309 of the Multiple
Dwelling Law shall be immediately reduced to zero, provided that the new
owner offer adequate, safe and sanitary housing accommodations for
persons of low income for a period of not less than 30 years. The regu-
latory agreement also requires that the new owner certify that the prior
owner of the property has no direct or indirect interest in the property
and that the prior owner has no direct or indirect interest in the new
owner.

Article 7-A has enabled the City to encourage not-for-profit and for-
profit entitles to purchase 7-A buildings, allowing such properties to
be developed into a source of permanent affordable housing for families
and individuals. The Article 7-A evaporation is limited exclusively to
the transfer of a building to a new owner who has no business or other
interests with the original owner. This will prevent a prior owner of an
Article 7-A administered building from benefiting from lien evaporation.
New owners must comply with all provisions of the regulatory agreement
entered into with HPD in order for lien evaporation to be utilized.

This legislation will allow the City to continue to transform effective-
ly-abandoned buildings, often in dangerous disrepair, into a source of
permanent affordable housing.

Accordingly, the Mayor urges the earliest possible favorable consider-
ation of this proposal by the Legislature.