§ 1138. Withdrawal of parcels from foreclosure. 1. Grounds. The
enforcing officer of any tax district may at any time prior to final
judgment withdraw any parcel of real property from a foreclosure
proceeding under this title for one or more of the following reasons:

(a) there is reason to believe that there may be a legal impediment to
the enforcement of the tax lien affecting such parcel;

(b) the tax has been cancelled or is subject to cancellation pursuant
to section five hundred fifty-eight of this chapter, or, in the case of
a tax district to which such section does not apply, the tax would be
subject to cancellation if such section were applicable to the tax
district;

(c) the enforcement of the lien has been stayed by the filing of a
petition pursuant to the Bankruptcy Code of 1978 (Title Eleven of the
United States Code);

(d) if the tax district were to acquire the parcel, there is a
significant risk that it might be exposed to a liability substantially
in excess of the amount that could be recovered by enforcing the tax
lien;

(e) the owner of the parcel has entered into an agreement to pay the
taxes in installments pursuant to section eleven hundred eighty-four of
this article, and has not defaulted thereon;

(f) in a tax district which has extended the redemption period for
residential or farm property, (i) the parcel has been included on a
petition for foreclosure, (ii) it has since been demonstrated to the
satisfaction of the enforcing officer that the parcel is residential or
farm property, and (iii) being residential or farm property, the parcel
is not yet subject to inclusion on such a petition;

(g) in a tax district which has extended the redemption period for
residential property for certain persons deployed by the military (i)
the parcel has been included on a petition for foreclosure, (ii) has
been demonstrated to the satisfaction of the enforcing officer that the
parcel is residential, (iii) the property is eligible for the extended
redemption period pursuant to section eleven hundred thirteen of this
article, and as such is not yet subject to inclusion of such a petition;
or

(h) the tax lien has been or is to be sold pursuant to title five of
this article.

2. Procedure. (a) Upon the withdrawal from foreclosure of any parcel
of real property, the enforcing officer shall issue a certificate of
withdrawal, setting forth the facts which render the parcel eligible for
withdrawal from foreclosure. The certificate shall be filed with the
clerk of the governing body of the tax district.

(b) If the parcel has been included on a list of delinquent taxes that
has been filed pursuant to section eleven hundred twenty-two of this
title, the enforcing officer shall file a copy of the certificate of
withdrawal with the county clerk within ten business days from the
issuance of the certificate. The county clerk shall note the word
"withdrawn" and the date of such filing opposite the description of such
parcel on the list.

3. Effect. The filing of such a certificate shall have the effect of
withdrawing the affected parcel from foreclosure; provided, that (a) the
filing shall have no effect upon the tax lien or liens against the
affected parcel, nor, if the parcel has been included on a list of
delinquent taxes that has been filed pursuant to section eleven hundred
twenty-two of this article, upon the notice of pendency with respect to
any such parcel, unless the lien should be cancelled pursuant to
subdivision six of this section or such other law as may be applicable;
and (b) if the lien is not cancelled, the foreclosure proceeding may be
reinstated in the manner provided in subdivision four of this section,
or a supplementary proceeding to enforce collection of the delinquent
tax may be commenced in the manner provided in subdivision five of this
section.

4. Reinstatement. (a) The enforcing officer shall reinstate a
withdrawn foreclosure proceeding if (i) he or she determines that the
parcel is no longer eligible for withdrawal from foreclosure, or (ii)
the governing body of the tax district adopts a resolution directing the
enforcing officer to reinstate such proceeding.

(b) The enforcing officer shall issue a certificate of reinstatement
setting forth the reasons for the reinstatement of the proceeding.

(c) If the parcel has been marked "withdrawn" on a list of delinquent
taxes that has been filed pursuant to section eleven hundred twenty-two
of this title, the enforcing officer shall file a copy of the
certificate with the county clerk within ten business days from the
issuance of the certificate. The county clerk shall note the word
"reinstated" and the date of the filing of the certificate of
reinstatement opposite the description of such parcel on the list.

(d) The enforcing officer shall file a petition of foreclosure
pertaining to the affected parcel as soon thereafter as is practicable.
In no event, however, shall such petition be filed sooner than
twenty-one months after lien date, or, in the case of property which is
subject to a three or four year redemption period, sooner than
thirty-three or forty-five months after lien date, respectively.

5. Supplementary proceedings. After a foreclosure proceeding has been
withdrawn, the enforcing officer shall commence a supplementary
proceeding to collect the delinquent taxes in the manner provided by
section nine hundred ninety of this chapter if (a) he or she determines
that doing so would be an effective means to enforce collection of the
delinquent tax, or (b) the governing body of the tax district adopts a
resolution directing the enforcing officer to commence such a
proceeding. Such a proceeding may be commenced within one year from the
issuance of a certificate of withdrawal, notwithstanding the fact that
the enforcing officer may have previously proceeded pursuant to the
provisions of this article.

6. Cancellation. (a) After a foreclosure proceeding has been
withdrawn, the governing body of the tax district may cancel the
delinquent tax lien if it determines that there is no practical method
to enforce the collection of the delinquent tax lien and that a
supplementary proceeding to enforce collection of the tax would not be
effective. A copy of the resolution directing the cancellation of the
lien shall be filed with the enforcing officer.

(b) If the parcel has been included on a list of delinquent taxes that
has been filed with the county clerk, the enforcing officer shall issue
a certificate of cancellation, setting forth the relevant facts, and
file a copy of the same with the county clerk within ten business days
from the issuance of the certificate. The county clerk shall note the
word "cancelled" and the date of the filing of the certificate of
cancellation opposite the description of such parcel on the list. The
filing of such a certificate of cancellation shall operate to cancel the
notice of pendency with respect to the parcel.

(c) A tax district shall not be required to credit or otherwise
guarantee to any municipal corporation the amount of any delinquent tax
lien which has been cancelled in the manner provided by this section. If
such a credit or guarantee shall have been given before the cancellation
of the lien, the tax district shall be entitled to charge back to the
municipal corporation the amount so credited or guaranteed.

(d) If the governing body should determine that there is no practical
method to enforce the collection of delinquent tax liens arising
thereafter against the parcel, it may direct the enforcing officer to
issue a certificate of prospective cancellation, setting forth the
relevant facts. The enforcing officer shall file a copy of the
certificate with the assessor of the assessing unit in which the parcel
is located and with the county director of real property tax services.
The parcel shall thereby become exempt from taxation notwithstanding any
other provision of law. The parcel shall remain exempt until the
governing body determines that the parcel should be restored to the
taxable portion of the assessment roll, and the enforcing officer files
a certificate of restoration, setting forth the relevant facts, with the
assessor and county director of real property tax services.