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Chapter 582 of the Laws of 2002, effective January 1, 2003, amends the procedure to obtain the discharge of mechanics liens for work done and materials furnished for private and public improvements by posting a bond. The provisions for public and private mechanics liens in Chapter 582 are substantially the same. (A mechanics lien for a public improvement cannot be enforced against real property)

Subdivision 4 of Lien Law, Section 19 (“Discharge of lien for private improvement”) currently provides that a mechanics lien can be discharged once a court determines the amount of the bond, approves the bond or undertaking, and orders the lien discharged. Chapter 582, replacing Subdivision 4 of Section 19, Statutorily sets the amount of the bond at 110% of the amount of the mechanics lien, and the bond may be filed and the lien discharged without a court order.

A bond or undertaking of a fidelity or surety company authorized to transact business in the State of New York, is effective without a court order when filed the County Clerk office where the mechanics lien is filed, subject to certain conditions. A certified copy of the resolution of the Board of Direction of the fidelity or surety company authorizing the bond or undertaking is required to be filed with the bond or undertaking. In addition, if a Certificate of Qualification under Insurance Law Section 1111 is not filed with the bond or undertaking, the mechanics lienor may except to the sufficiency of a surety. If there is no objection to the surety, or if the Court dismisses the exceptions taken, the bond or undertaking is deemed effective. The Chapter sets forth provisions as to notice and service.

When the surety is not a fidelity or a surety company authorized to transact business in New York State, a Court in the County where the property is located must approve the bond or undertaking on not less than five days notice to the mechanics lienor. When the Court approves the bond or undertaking it issues an order discharging the lien. Chapter 582 is at http://assembly.state.ny.us/leg/?ch=582.

A long, long time ago in a place far, far away, lenders used to hold on to the mortgages which they made. Now, before the borrower’s signature is even dry, the lender has assigned the mortgage. This initial assignment may be followed up by several more. With each assignment, the likelihood that a gap would arise in the assignment chain becomes more and more probable. Of course, a gap in the assignment chain makes it more and more difficult to satisfy the mortgage or record because the County Clerks and the City Register are extremely reluctant to record a satisfaction if there was a break in the assignment chain. At least in the four boroughs of the City of New York which come under the jurisdiction of the City Register (Kings, Queens, New York and the Bronx), some assistance is at hand.

The City Register has agreed to record a satisfaction even though there is a break in the assignment chain if the last mortgage holder of record executes an Affidavit in the attached form. Note that the Affidavit must be executed by the last record holder of the mortgage. In other words, the Affidavit cannot be used where there is no assignment of record into the current reputed mortgage holder. Also, and most importantly, the Affidavit (for obvious reasons) should be made available only to institutional lenders and not to private lenders. To emphasize, the Affidavit is not to be used in situations where (and Choice Abstract will not insure where) the last mortgage holder of record is a private, non-institutional lender. Because the City Register will record the Affidavit with the Satisfaction, we must collect an additional recording fee when you use the attached Affidavit.

The attached Affidavit is not a cure-all, but it may go a long way assisting the title industry to record satisfactions where the assignment chain is broken.

New York’s statue regarding carbon monoxide detectors has, to say the least, generated a great deal of confusion. With the intention of dispelling some of the fog and hopefully not adding to the confusion, we offer the following:

1. The Affidavit is not required for recording in any county of the state. The Affidavit only runs between the seller and the buyer and does not have any impact upon title.

2. There is a very good argument that the Affidavit is not yet required. Under the statute, a carbon monoxide detector must meet standards established by the state fire prevention and building code council. The council has not as of yet established the standards. Therefore, the argument is that because no one can state that they are in compliance with standards which do not yet exist, sellers are not required to give the Affidavit at closing.

3. There is also a very good argument that the requirement for an Affidavit does not apply in New York City. Section 383 of the Executive Law provides that in the case of a city having one million inhabitants or more (New York City), the state’s standards would have precedent over the city’s only if the state’s standards are more strict than the City’s. Since the State does not have any standards, the City’s standards must govern. The problem is that the City does not have any standards either. You can see where this is going. Since there are no standards, some will argue that there is no need to comply.

There is one problem with the arguments against providing the Affidavit. Suppose a seller does not give an Affidavit and the worst happens-a buyer is killed or harmed by a carbon monoxide leak? How long do you think it would take for the injured party’s attorney to bring suit against the seller for damages because a seller violated public policy by not providing a Carbon Monoxide Affidavit at closing? Even if the seller wins the suit, given the cost of litigation, the victory may be very pyrrhic indeed. A seller would be foolhardy to depend upon the lack of a state-wide standard to prevail in a wrongful death action . Despite the lack of State and New York City standard, spending $30.00 to purchase a carbon monoxide detector in order to avoid a very expensive and embarrassing lawsuit may be one of the best investment a seller could make.

Please not that a revised Affidavit is attached. The attached form corrects statutory reference from 378(5)(d) to 378(5)(a). It also removes the compliance language.

4. New York City’s Equalization Form: Part II

We have now obtained more information regarding the City’s implementation of its new Equalization Form (the RP-5217NYC) which we would like to share with you.

           1. The Form will cost $25.00 to file. In instances where an RPT is
             required and the$25.00 fee is paid to file the RPT, the City will not
             charge an additional $25.00 to file the Equalization Form. In other
             words, the City will charge only one $25.00 filing fee.

2. The RP-5217NYC must be filed whenever a deed is recorded. In addition to the normal purchase-sale conveyances, transactions involving court-ordered conveyances, sheriff’s deeds, referee’s deeds, etc. also require the filling of an Equalization Form. Transfers of an interest in a co-operative unit, easements, leaseholds, or zoning rights will not require the filling of an Equalization Form. However, an Equalization Form will be required to record an interest in a Qualified Leasehold Condominium, the best known of which are the units in Battery Park City.

3. For the time being, the City Register will accept Equalization Forms filled in by hand so long as the handwriting is legible. However, when Phase 2 of ACRIS goes on line (now anticipated to occur during the latter half of 2003), do not be surprised if the City Register requires that both the RPT and the RP-5217NYC be prepared on line with the document cover sheets. When this occurs, ACRIS will automatically carry over information from the cover sheet to both the RPT and to the RP-5217NYC. As a result, you staff will only have to enter the information once.

4. In the four boroughs which come under the jurisdiction of the City Register (Kings, Queens, New York and the Bronx), we will be required to submit only one copy of the Equalization Form with each deed. However, although it will accept the City Form, Richmond County (Staten Island) will require that the original form and a copy be submitted there. This may change. We will keep you informed.

5. As a reminder, an Equalization Form must be filed with every deed which goes to record after January 1, 2003. Any conveyancing packages submitted to the City Register after January 1, 2003, which do not include an Equalization Form (and the filing fee therefore) will be returned to the title company.

We fully understand that you may have additional questions regarding the City’s new Equalization Form. Therefore, do not hesitate to contact our office. (See enclosed)

5. Acknowledgments: Uniform Acknowledgment Out-of State Form:

Pursuant to Chapter 609 of the Laws of New York for 2002, Real Property Law section 309-b (Uniform forms of certificates or acknowledgment or proof without this state) has been amended effective December 31, 2002. The purpose of the amendment was to conform the uniform out-of-state acknowledgment to the uniform in-state acknowledgment.

The use of the following form of acknowledgment if taken outside of New York, on or after December 31, 2002, is authorized:

State of

County of ss:

On the day of in the year before me, the undersigned,

personally appeared

personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signatures(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.

_______________________________________________

(signature and office of individual taking acknowledgment)

The amendment to the statute also provides, in effect, that the “old” uniform New York out-of-state acknowledgment may continue to be used on or after December 31, 2002.

Remember, if the acknowledgment is taken outside of New York and neither the new nor the old form of New York’s statutory uniform out-of-state acknowledgment is used, the instrument to be recorded using that non-conforming acknowledgment must be accompanied by a Certificate of Conformity pursuant to Real Property Law section 299-a.

The in-state form of uniform acknowledgment has not been changed.