Bulletin October 17, 2002


 

1. Real Property Transfer Report (“RP-5217") in New York City 

Effective January 1, 2003, the City of New York will require the filing of State Board of Real Property Services Form RP-5217 in addition to the City’s Real Property Transfer Tax Return (“NYC-RPT”). In addition, as of that date, the City will not be authorized to charge a $25.00 fee for the filing of its Real Property Transfer Tax Return (“NYC-RPT”). These changes were made by Chapter 259 of the Laws of 2002, which was signed into law on July 30. 

RP-5217, currently submitted with a deed being recorded in every county outside of New York City, is commonly referred to as the Equalization and Assessment Form. The fee to file the RP-5217 in New York City will be $25.00. 

The City’s Department of Finance advises that it will determine if a RP-5217 will be required in connection with a non-deed transfer, such as the transfer of a controlling interest, the granting of a leasehold or an easement. It will also determine if the City will require payment of the $25.00 NYC-RPT filing fee if a RP-5217 is not required for a non-deed transfer. 

Further information will be provided as it becomes available. 

2. Non-Judicial Foreclosures - At its Annual Meeting concluding August 2, the National Conference of Commissioners on Uniform State Laws approved its Uniform Nonjudicial Foreclosure Act providing for the foreclosure of a “security instrument” without a judicial proceeding. It contemplates foreclosures by means of either an auction sale, a negotiated sale to a third party purchaser, or by an appraisal, which latter procedure would transfer title directly to the foreclosing creditor mortgagee or its nominee as if there was being delivered a deed in lieu of foreclosure. The NCUSL WEB Site is at www.nccusl.org. 

3. The Lopez Bill: Lenders Prohibited from Designating Title Insurer 

On August 29, 2001, Governor Pataki signed Chapter 212 of the Laws of 2001 (a/k/a, the “Lopez Bill”) into law. The Lopez Bill amended Section 595-a of the Banking Law and made it illegal for mortgage bankers, mortgage brokers or exempt organization (defined in Section 590 of the Banking Law as insurance companies, banking organizations, foreign banking corporations, national banks, federal savings banks, federal and state chartered credit unions, trust companies, savings banks and savings and loan associations) “to require the use of a particular title insurance company, title insurance agency or title insurance agent” as condition for the approval of a mortgage loan. In addition to facing the possible loss of its license, a violator of the Lopez Bill is also subject to a $5,000.00 fine for each violation up to a maximum of $100,000.00 (See Banking Law Section 598).

Note: See enclosure from the State of New York Insurance Department.

4. The Property Condition Disclosure Act–Exemptions 

In an earlier Choice Abstract “Bulletin” we alerted you to the passage of the Property Condition Disclosure Act (the “PCDA”). The PCDA, which is codified as Article 14 of the Real Property Law, requires sellers of residential real property (four or fewer dwelling units) to provide a disclosure statement to prospective purchasers setting forth all known defects relating to the property. Although the PCDA does not create an encumbrance on title, real estate attorneys quite often inquire of us concerning its effect. Therefore, in the interest of clarification, the following is a list of real estate transactions which are not covered by, i.e. exempted from, PCDA: 

A.                  A transfer pursuant to a court order (surrogate, bankruptcy, condemnation, specific performance, etc.);

B.                  A transfer to, or by a lender or a mortgagee as a result of a foreclosure action or in satisfaction of a mortgage (including a transfer by a deed in lieu of foreclosure where the mortgage is satisfied);

C.                  A transfer to the beneficiary of a deed of trust;

D.                  A transfer under a power of sale that follows the default under a mortgage;

E.                  A transfer by a fiduciary;

F.                  A transfer from one co-owner to the other co-owner(s);

G.                 A transfer made to the transferor’s spouse or to his/her lineal descendants;

H.                  A transfer made as a result of a divorce, legal separation, or annulment;

I.                     A transfer to or from a governmental entity;

J.                   A transfer involving the first sale out of a newly constructed residential property;

K.                  A transfer by a sheriff; and

L.                   A transfer pursuant to a partition action.

Please keep in mind that the PCDA does not apply to condominium units, co-op units, or to vacant land. 

5. Mortgage Recording Tax-Clinton County 

Effective for mortgages recorded on or after November 1, 2002, Clinton County has elected to impose the “additional” mortgage recording tax provided for in Tax Law Section 253, subdivision 2 (a). The additional mortgage recording tax is at the rate of $.25 for each $100 and each remaining major fraction thereof of principal debt secured by the mortgage. 

For all mortgages to be recorded in Clinton County on or after November 1, 2002, regardless of the date of closing, the mortgage recording tax will be $1.00 for each $100.00 and each major fraction thereof of principal debt secured by the mortgage (i.e., one percent (1%) of the face amount of the mortgage rounded to the nearest $100.00) For example, the mortgage tax on a mortgage in the face amount of $150.00 is calculated as if the mortgage was for $100.00, while the mortgage tax on a mortgage in the face amount of $150.01 is calculated as if the mortgage was for $200.00. 

Please note that if the property is principally improved by a 1 or 2 family residence or dwelling, the first $10,000.00 of the amount of the mortgage is not subject to the “additional” mortgage tax. (The so-called $25.00 exemption.) 

Note: Clinton County now joins Broome County in the upstate region and the five (5) counties comprising New York City, and the municipalities of Mt. Vernon and Yonkers in Westchester which imposes additional mortgage tax fees. 

6. Mortgage Innovations 

Please find enclosed a recently published article written by Kenneth Harney regarding innovative mortgage financing. 

If anyone is interested in discussing any of the aforementioned in greater detail please do not hesitate to contact David Gorenstein at (212) 391-0800 or by E-mail David@choicefamily.com.