Three “New” New York Foreclosure Laws Effective December 20, 2016

The number of New York vacant and abandoned houses in foreclosure has skyrocketed in the past few years as a result of the incredibly long foreclosure process in New York, causing a blight on residential neighborhoods and prompting outrage from local municipalities. (See my article - Zombie Foreclosures: Are They Coming For You?

In an effort to rectify the situation, last year the New York State Legislature enacted a series of new statutes and amended others, all of which became effective on December 20th, 2016. Three of these new statutes, intended to monitor and reduce the number of vacant and abandoned houses being foreclosed in New York, are RPAPL 1308, RPAPL 1309 and RPAPL 1310; a summary of each is described below: 

RPAPL 1308 provides the duty to inspect and maintain vacant properties. It requires a physical inspection of each and every property securing a loan in default, within 90 days of the default, to determine whether or not the property is vacant and abandoned, and thereafter every 25 to 35 days, at different times during the day. 

The servicer is presumed to know that the property is vacant and abandoned if three consecutive inspections reveal: 

  1. No occupant present at the property; 

  2. No evidence of occupancy; and

  3. The property is not being maintained in accordance with the New York State Property Maintenance Code.

Within seven (7) days of determining that the property is vacant and abandoned, the servicer must post a notice on the premises, providing a toll-free number for people to call, so if the property is in fact occupied, the owner can notify them. If there is no response to that notice within seven days, the servicer must then secure and maintain the property according to specific standards. For example, only one door lock may be changed, so that if the property is in fact occupied, it will not prevent the owner from re-entering their property and no personal property may be removed, unless it poses a health or safety hazard. Failure to comply with these requirements can result in penalties of up to $500 per day, per property and this may be enforced not only by The Department of Financial Services but also by the municipalities themselves!

RPAPL 1309 provides an “expedited” procedure for the foreclosure of vacant and abandoned properties. Upon the expiration of the defendant’s time to answer, provided the plaintiff can establish the premises are vacant and abandoned (photos and utility bills, if available, must be submitted), and the foreclosure is not being contested in any way, the plaintiff may immediately submit a motion for Judgment of Foreclosure, bypassing the motion to appoint a Referee and the Referee’s Hearing. Before rushing to do so, however, it should be noted that the courts have not yet “adapted” to this new law, and it may be some time before the “expedited procedure” can, in fact, be utilized.

RPAPL 1310 requires the New York state Department of Financial Services to maintain a statewide vacant and abandoned property registry. In order to do so, they promulgated Part 422 containing rules and regulations to implement RPAPL 1310. These rules provide the specifics of how the property is to be inspected and maintained as well as the reporting and record-keeping requirements. 

Within twenty-one (21) days of determining that a property is vacant and abandoned, the servicer must report the following information to the Department of Financial Services: 

  1. Address of property

  2. Name, address and contact info of Servicer

  3. Whether foreclosure has been commenced, and if so, the date foreclosure was commenced and its current status

  4. Name, last known address and contact information of the mortgagors

  5. Any additional information requested by NYS 

Within thirty (30) days of the end of each calendar quarter, servicers must provide the following information regarding ALL delinquent loans: 

  1. Property address

  2. Date of each inspection required by RPAPL 1308

  3. Date of determination that property was vacant and abandoned

  4. Date notice required by RPAPL (3) was posted

  5. Date and nature of actions taken to secure and maintain property

  6. Whether foreclosure has been commenced, and if so, the date foreclosure was commenced and its current status

These are only three of the new statutes, effective December 20, 2016.

If you have any questions regarding them or of the others, please contact me at peter.roach@roachlawfirm.com.

Peter Roach

Peter T. Roach & Associates, P.C.

peter.roach@roachlawfirm.com