BILL NUMBER: S2122A
SPONSOR: FAHY
 
TITLE OF BILL:
An act to amend the real property actions and proceedings law, in
relation to authorizing municipalities and the department of financial
services to seek civil penalties for violations of the duty to maintain
a foreclosed property
 
PURPOSE OR GENERAL IDEA OF BILL:
Authorizes municipalities and the department of financial services to
seek civil penalties for violations of the duty to maintain a foreclosed
property.
This bill would extend the authority of the department of financial
services and municipalities to prosecute zombie properties beyond judg-
ment of foreclosure by amending Real Property Actions and Proceedings
Law 1307 to include the same remedies available under Real Property
Actions and Proceedings Law 1308; which allow the department of finan-
cial services and municipalities to sue for $5001 per violation per day
after a judgment of foreclosure has been issued.
 
SUMMARY OF SPECIFIC PROVISIONS:
Section 1: Amends Section 1307 of the real property actions and
proceedings law by adding a new subdivision 3-a:
a. Provides that violations of this section may be brought before a
hearing officer or a court by the Department of Financial Services and
municipalities, as authorized by paragraph b or c of this subdivision.
Sets the civil penalty for violation of this section at $650 per day of
the violation.
b. Authorizes the superintendent of financial services to pursue
violations of this section by a plaintiff in a mortgage foreclosure
action. Sets the minimum time to give notice to the plaintiff at seven
days.
c. Authorizes municipalities to enforce obligations described in this
section provided that sufficient notice is given to the plaintiff in the
mortgage foreclosure for such property, unless such property requires
emergency repairs under certain circumstances, in which case, the muni-
cipality may enter and maintain such property to cure such emergency
provided that such plaintiff is notified as soon as practicable.
Further, this paragraph requires the municipality to provide the Depart-
ment of Financial Services with at least ten days notice prior to bring-
ing an action pursuant to this subdivision.
d. Authorizes the department of financial services to adopt rules and
regulations as necessary for the implementation, administration, opera-
tion, and enforcement of this section.
Section 2: Sets the effective date.
 
JUSTIFICATION:
This bill allows for the Department of Financial Services ("DFS" or the
"Department") and municipalities to undertake additional enforcement
activities relating to zombie properties. Zombie properties are mort-
gage-delinquent properties that the homeowner has abandoned, which typi-
cally languish for years in a state of disrepair and neglect until the
mortgagee completes the foreclosure process.
Currently, the Department and municipalities are contained from initiat-
ing action against mortgage lenders who fail to maintain a property to
code after they are awarded a judgment of foreclosure. Properties may
sit in limbo for years after a judgment is issued before being sold at
auction, and the inability to prosecute zombie property law violations
for this category of buildings allows these property owners to abdicate
their responsibilities to the community. As a result, the Department has
not prosecuted zombie properties in recent years and left enforcement of
zombie property laws up to municipalities, many of which do not have the
resources to pursue these cases.
This bill broadens the window during the foreclosure process when these
cases may be filed to include the period beyond when a judgment of fore-
closure is issued.
 
PRIOR LEGISLATIVE HISTORY:
A5890 (2023-24)
 
FISCAL IMPLICATION:
To be determined.
 
EFFECTIVE DATE:
This act shall take effect immediately.

Statutes affected:
S2122: 1307 real property actions and proceedings law
S2122A: 1307 real property actions and proceedings law