ADDRESSING ZOMBIE HOMES

Effective as of December 18, a new section 1392 of the real property actions and proceedings law has been enacted which authorizes local governments to commence judicial proceedings in courts of competent jurisdiction to compel mortgagees to either complete mortgage foreclosure actions or to issue certificates of discharge for the mortgage for properties that have been certified as abandoned pursuant to real property actions and proceedings law section 1971.

This legislation is designed to financially benefit municipalities in allowing them to reclaim and redevelop "zombie properties"in order to return them to the property tax rolls.

ON ZOMBIE HOMES

Section 1308 of the Real Property Actions and Proceedings Law imposes a duty to inspect, secure and maintain vacant and abandoned properties on mortgagees or their servicing agents.

The New York State Department of Financial Services has created a web site page to advise and inform on the proper rules for these properties entitled "Zombie Property Maintenance Home Page"

See http://www.dfs.ny.gov/banking/zombie_prop_maintenance.htm

ZOMBIE HOME REGULATIONS

This year, New York enacted Part Q of Chapter 73 of the Laws of 2016, Real Property Actions and Proceedings Law (“RPAPL”) in which Section 1308 requires certain holders of first lien mortgages to inspect, secure, and maintain vacant and abandoned one to four family residential real property. In addition, Section 1310 establishes a statewide vacant and abandoned property registry in the form of an electronic database to be maintained by the Department of Financial Services.

RPAPL Sections 1308(12) and 1310(4) authorize the Superintendent of Financial Services  to issue the rules and regulations necessary to implement RPAPL Sections 1308 and 1310.

The regulations go into effect December 20, 2016 and can be viewed at this link:

http://www.dfs.ny.gov/legal/regulations/proposed/rp422t.pdf

PRESS RELEASE ON ZOMBIE HOME LEGISLATION AND OTHER NEW FORECLOSURE RULES

https://www.governor.ny.gov/news/governor-cuomo-signs-sweeping-legislation-combat-blight-vacant-and-abandoned-properties

NEW YORK'S ZOMBIE HOME LEGISLATION

As now reported in many state newspapers, new state legislation, passed in the early hours of Saturday morning, has to do with homes that have become so-called zombie properties – empty houses stuck in sometimes-lengthy foreclosure and prone to falling into disrepair.

In a press release issued by the Assembly on June 17:

" The legislation addressing zombie properties, an effort spearheaded by Assemblymember Helene Weinstein, would avoid the cancerous blight of vacant and abandoned properties by facilitating earlier detection and maintenance of these properties as well as:

• impose a statewide duty of a mortgage lender or bank owner, or their agent, to maintain vacant one to four family residential real property, even while a foreclosure action is pending;
• require periodic inspections to determine whether properties have been abandoned;
• create penalties against mortgage lenders of up to $500 per property per day for failure to maintain these "Zombie" properties;
• authorize municipalities to enforce the maintenance provisions of the law;
• create a statewide registry for abandoned residential property under the supervision of the state Department of Financial Services, and a toll-free hotline for community residents to report the presence of such properties;
• make available to public officials of local governments the information in the zombie property registry, in order to help them better evaluate and remedy blight in their neighborhoods; and
• require the court to give homeowners in foreclosures a consumer bill of rights that the department of financial services would publish in consultation with all stakeholders."

TOWN OF HEMPSTEAD AND ZOMBIE HOME UPKEEP BILL

As reported by numerous sources, Town Board members of the Town of Hempstead on Tuesday voted unanimously on a measure requiring banks and lenders to post a $25,000 security deposit each time a home in the Town of Hempstead goes into foreclosure.

A copy of the bill that was proposed (May 24, 2016) can be found on the Town's website: https://toh.li/files/tbdocuments/20160524-resolutions.pdf

However - it appears to be limited to foreclosure actions that are commenced against homes that are already vacant. Although there are no studies that I am aware of, it appears to me, in my experience, that most homeowners abandon their homes well after the foreclosure process has been in process, not before. Thus, the method of rolling upkeep costs to the foreclosed homeowner’s property taxes years later may probably continue to be the main upkeep approach with new foreclosures.