BILL NUMBER: S69
SPONSOR: KAVANAGH
 
TITLE OF BILL:
An act to amend the real property tax law, in relation to certain inter-
est rates imposed on late payment of taxes and delinquencies and redemp-
tion of certain property subject to more than one tax lien
 
PURPOSE OR GENERAL IDEA OF BILL:
The bill provides relief for owners of owner-occupied one-, two- and
three-family residential properties who fall behind on their taxes by
waiving a 5% penalty that currently applies, providing for lower inter-
est rates, and enabling them to more easily delay and ultimately prevent
foreclosure and sale of their properties by making partial payments of
their outstanding liabilities as their finances permit. The bill will
also give counties the flexibility to set lower rates of interest on
unpaid taxes on other types of properties to enable them to respond to
the economic circumstances of their communities.
 
SUMMARY OF PROVISIONS:
Section 1 amends subdivision 1 of section 924-a of the real property tax
law to establish that the amount of interest added onto late property
tax payments received after the interest-free period and all delinquent
taxes can be different than the amount determined pursuant to subdivi-
sion two and two-a of section 924-a of the real property tax law as
provided by a local law adopted by a county; this provision extends to
counties an authority that is already available to cities.
Section 2 amends section 936 of the real property tax law to remove
subsection two and establish that a five percent charge that is other-
wise added to unpaid taxes shall not be applied to owner-occupied one-,
two-, or three-family residential property as defined by Real Property
Law.
Section 3 amends subdivision 1 and paragraph a of subdivision 2 of
section 1112 of the real property law to establish that liens shall be
redeemed in chronological order so that the earliest lien is redeemed
first and that the enforcement process shall otherwise continue as long
as at least one lien remains unredeemed for three or more years.
Section 4 amends subdivision 2 of section 924-a to establish that the
12% minimum interest rate otherwise applicable to late property tax
payments shall not apply to owner-occupied one-, two-, and three-family
residential property; instead, a lower minimum rate of 7.5% shall be
prescribed.
Section 5 establishes the effective date.
 
JUSTIFICATION:
Under current law, property owners who fall behind on their property
taxes must pay a high rate of interest, plus a 5% penalty. The interest
rate is set by the Commissioner of Tax and Finance but may not be less
than 12%. This amount may have seemed more reasonable in the 1970s when
the prime rate was above 10%, but today, with the prime rate hovering in
the low single digits, a minimum of 12% is a very high rate. While
cities are permitted to adopt a local law to set a different interest
rate, counties cannot. Moreover, when tax liens are issued for delin-
quent taxes, any payments property owners make are required to be
applied to the most recent tax lien, but the age of the oldest pending
lien determines whether they will lose their property for non-payment of
taxes. These provisions apply equally to large commercial or residential
properties and small owner-occupied residential dwellings.
This bill gives counties the option of setting interest rates for all
late or delinquent taxes at a level different from the statewide rate,
including a rate lower than the 12% minimum. This will increase the
ability of county governments to respond to the economic circumstances
of their communities.
In addition, the bill provides relief for owners of owner-occupied one,
two and three-family residential properties who fall behind in their
taxes. For such small residential properties, the bill waives the 5%
penalty mentioned above, provides for a lower interest rate (with a 7.5%
minimum rather than 12%), and requires that any payments made for delin-
quent taxes will be applied to the oldest pending lien rather than the
most recent. This last provision would mean that owners of small owner
occupied residential properties would not need to pay all back taxes in
order to save their home from being foreclosed upon and sold. Those who
are able to recover from financial hardships enough to pay their current
year's taxes and one additional year will gain additional time to satis-
fy any remaining liens and increase the likelihood that they can remain
in their home.
 
PRIOR LEGISLATIVE HISTORY:
2024: S606 (Kavanagh) - REFERRED TO LOCAL GOVERNMENT
2023: S606 (Kavanagh) - REFERRED TO LOCAL GOVERNMENT
2022: S2845 (Kavanagh) - REFERRED TO LOCAL GOVERNMENT
2021: S2845 (Kavanagh) - REFERRED TO LOCAL GOVERNMENT
2020: S4676B (Kavanagh) - REFERRED TO LOCAL GOVERNMENT
2019: S4676B (Kavanagh) - ADVANCED TO THIRD READING
 
FISCAL IMPLICATIONS:
None.
 
EFFECTIVE DATE:
This act shall take effect on the ninetieth day after it shall have
become a law.

Statutes affected:
S69: 924-a real property tax law, 924-a(1) real property tax law