New York State officials have enacted legislation to prevent foreclosures and curb the threat posed to communities by “zombie properties.”
The bill was passed as part of the 2016 Legislative Session and signed into law Thursday (June 23).
The new law imposes a pre-foreclosure duty on the banks to maintain vacant and abandoned properties.
Previously, a bank or mortgagee had the responsibility of maintaining a vacant property once a judgment of foreclosure and sale was obtained, creating zombie properties and blight in communities. Reports indicate that these blighted homes have cost millions of dollars in lost property values
The new legislation places the maintenance obligation on a mortgagee when the mortgagee becomes or should have become aware of the vacancy. Under the law, a bank has a duty to maintain and secure a residential real property where there is a reasonable basis to believe it is vacant and abandoned, and faces civil penalties up to $500 per violation, per property, per day for failing to do so.
The law also requires a foreclosing party to move to auction within 90 days of obtaining a foreclosure judgment. In addition, a foreclosing party would be required to take action to ensure that the property is reoccupied within 180 days of taking title.
Finally, the law will promote communication between local governments and mortgagees responsible for property maintenance.
The legislation takes effect immediately.
For more on the new law click here.