From the time a homeowner is served with a summons and complaint in a foreclosure action until the property is sold at a foreclosure sale, borrowers often vacate their homes, leaving properties to deteriorate. Recent legislation has been passed to help condominium boards, homeowners associations and their attorneys deal with the issues surrounding these vacant and abandoned properties (also referred to as “zombie properties”). The following paragraphs will explain how newly enacted Sections 1308, 1309 & 1310 of the NYS Real Property Actions and Proceedings Law address these concerns.
First, RPAPL § 1308 creates a post-foreclosure timeline for returning vacant and abandoned properties back to the market. Section 1308 imposes a duty to inspect, secure, and maintain abandoned properties on the mortgagee (the mortgage creditor) or their servicing agents. Within 90 days of the date on which the loan for the property becomes delinquent, the mortgagee or its agent must complete an exterior inspection of the subject property to determine occupancy. Afterwards, follow-up inspections must be conducted every 25-35 days. If at any time the mortgagee or its agent determines that the property is vacant and abandoned, as defined in RPAPL § 1309 (c), then it must, within seven business days of the determination, post notice on an easily accessible part of the property that would be reasonably visible to the borrower, property owner or occupant. The mortgagee or its agent must also monitor the property for any change in occupancy and ensure that the notice stays posted. If the posted notice is not responded to or persists for 7 consecutive days, the mortgagee or its servicing agent must secure the property.
Subsection 4 of RPAPL § 1308 defines certain measures the mortgagee or its agents must take in order to secure the property. In addition to posting notice on the property, the mortgagee or servicing agent must assume maintenance obligations for the property and provide pertinent information regarding the property to the Department of Financial Services for inclusion in the Department’s newly established vacant and abandoned property registry established under RPAPL Section 1310. With regard to maintenance obligations, the mortgagee/lender must perform tasks such as replacing door locks to provide subsequent access to the property; securing, replacing or boarding up broken doors and windows; winterizing the applicable plumbing and heating systems; providing basic utilities including, water, electricity, natural gas, propane and sewer service; and responding to government inquiries regarding property conditions.
Violations of RPAPL § 1308 may be heard before a hearing officer or a court of competent jurisdiction. If it shall appear to the satisfaction of the hearing officer or the court that § 1308 has been violated, a civil penalty may be issued by the hearing officer or the court in the amount of up to five hundred ($500) dollars per day per property for each day the violation persists. The Superintendent of Financial Services may, as appropriate and in his or her sole discretion, pursue any suspected violation of this section. In addition to the authority granted to the Department of Financial Services, the municipality in which such residential real property is located shall have the right to enforce the obligations described in this section in any court of competent jurisdiction after at least seven days’ notice to the lender, assignee or mortgage loan servicer.
Second, RPAPL § 1309 addresses the judicial foreclosure process by reducing the amount of time properties remain vacant and abandoned by allowing plaintiffs to seek expedited judgments of foreclosure and sale. Specifically, the plaintiff in any foreclosure proceeding may make an application by notice of motion or order to show cause for a judgment of foreclosure and sale on the grounds that the subject property is vacant and abandoned. Additional legislation requires a foreclosing party to move to auction within 90 days of obtaining a foreclosure judgment and to take action to ensure that the property is reoccupied within 180 days of taking title.
Ultimately, these laws target the zombie property epidemic and help those impacted by the burdens of vacant and abandoned properties by reducing the time of vacancy and expediting the foreclosure process for plaintiffs seeking judgments of foreclosure and sale.
