senate Bill S523

2013-2014 Legislative Session

Relates to the failure of auction and requirements for sale of real estate owned property

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Archive: Last Bill Status - In Committee


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor

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Actions

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Jan 08, 2014 referred to housing, construction and community development
Jan 09, 2013 referred to housing, construction and community development

S523 - Bill Details

Current Committee:
Law Section:
Real Property Actions and Proceedings Law
Laws Affected:
Add ยง1355-a, RPAP L
Versions Introduced in Previous Legislative Sessions:
2011-2012: S1697
2009-2010: S7688

S523 - Bill Texts

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Relates to the failure of auction and requirements for sale of real estate owned property; defines terms; describes requirements for sale and penalties.

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BILL NUMBER:S523

TITLE OF BILL:

An act
to amend the real property actions and proceedings law, in relation to
the failure of auction and requirements for sale of real estate owned
property

PURPOSE OR GENERAL IDEA:

To create a transparent process by which banks contract with service
providers for an REO transaction.

SUMMARY OF SPECIFIC PROVISIONS:

Section 1. Amends the Real Property Actions and Proceedings Law to
define real estate owned property, registered real estate owned
property lawyer, registered real estate owned property agent or
broker and registered real estate owned property maintenance company.

This section also requires the secretary of state to post and maintain
on its website or otherwise make available a list of registered real
estate owned property lawyers, a list of registered real estate owned
property agents or brokers and a list of registered real estate owned
property maintenance companies along with their contact information.
The secretary of state shall also consult with the Division of
Minority and Women's Business Development to ensure that businesses
certified under article fifteen-A of the executive law are included
on these lists.

It also amends the Real Property Actions and Proceedings Law by
creating a process by which the New York State Secretary of State
shall post a list of the registered real estate owned lawyers,
agents, brokers and maintenance companies and denote which
individuals or entities are minority- or women-owned, and amends the
Real Property Actions and Proceedings Law by requiring that any
state-chartered banks under the supervision of the New York State
Banking Department choose an attorney, agent, broker or maintenance
company to represent them in a transaction involving real estate
owned property from the list of registered real estate owned
lawyers, agents, brokers and maintenance companies.

Finally, this section amends the Real Property Actions and Proceedings
Law to impose penalties incurred for violation of this section,
including penalties incurred by repeat offenders.

Section 2. Provides for an effective date 90 days after it shall have
become law.

JUSTIFICATION:.
Real estate owned or REO is a class of property owned by a lender,
typically a bank or mortgage company, after an unsuccessful sale at a
foreclosure auction. A bank typically sets the opening bid at a
foreclosure auction for at least the outstanding loan amount; if
there are no bidders that are interested, then the bank will legally


repossess the property. As soon as the bank repossesses the property,
it is listed on their books as REO - Real Estate Owned - and is
categorized as an asset. Once a property has been repossessed and it
becomes classified as REO, the bank will go through the process of
trying to sell the property on its own. The bank will attempt to
remove some of the liens and other expenses on the home and try to
resell it to the public. Generally, bank REO properties are in poor
condition in terms of repairs and maintenance, but are nonetheless
appealing to real estate investors looking for an attractive deal
that compensates for the condition of the property

When an investor or purchaser contracts to buy a REO property, an
attorney is needed to represent the bank in a real estate
transaction, an agent or broker is needed to list the property and a
maintenance company is needed to maintain the condition of the
property under the new foreclosure laws. At the present time, no
guidelines exist to dictate the attorney chosen by the bank in these
transactions, and they are often funneled to an attorney the bank has
a pre-existing relationship with. This bill would create a more
transparent and accessible mechanism by which individuals and
businesses in New York State could become the contracted or
affiliated attorney, agent, broker or maintenance company assigned to
real estate transactions involving, REO property.

LEGISLATIVE HISTORY:.
05/03/10 REFERRED TO HOUSING, CONSTRUCTION AND COMMUNITY DEVELOPMENT
05/05/10 COMMITTEE DISCHARGED AND COMMITTED TO JUDICIARY
S.1697 of2010
01/11/11 REFERRED TO HOUSING, CONSTRUCTION AND COMMUNITY DEVELOPMENT
01/04/12 REFERRED TO HOUSING, CONSTRUCTION AND COMMUNITY DEVELOPMENT

FISCAL IMPLICATIONS:
To be determined.

EFFECTIVE DATE:
This act shall take effect ninety days after it shall have become a law.

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                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                   523

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                               (PREFILED)

                             January 9, 2013
                               ___________

Introduced  by  Sen. SAMPSON -- read twice and ordered printed, and when
  printed to be committed to the Committee on Housing, Construction  and
  Community Development

AN  ACT  to  amend  the  real  property  actions and proceedings law, in
  relation to the failure of auction and requirements for sale  of  real
  estate owned property

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. The real property actions and proceedings law is amended by
adding a new section 1355-a to read as follows:
  S 1355-A. FAILURE OF AUCTION: REQUIREMENTS FOR  SALE  OF  REAL  ESTATE
OWNED  PROPERTY.  1. DEFINITIONS. (A) "REAL ESTATE OWNED PROPERTY" SHALL
MEAN A CLASS OF PROPERTY OWNED BY A LENDER, TYPICALLY A BANK OR MORTGAGE
COMPANY, AFTER AN UNSUCCESSFUL SALE AT A FORECLOSURE AUCTION; THIS CLASS
OF PROPERTY IS CATEGORIZED AS AN ASSET.
  (B) "REGISTERED REAL ESTATE OWNED  PROPERTY  LAWYER"  SHALL  MEAN  ANY
ATTORNEY  WHO  HAS  REGISTERED  WITH  THE SECRETARY OF STATE PURSUANT TO
SUBDIVISION TWO OF THIS SECTION TO CONDUCT A SALE OR  OTHER  TRANSACTION
OF  REAL  ESTATE  OWNED PROPERTY; THIS SECTION SHALL NOT BE CONSTRUED TO
MEAN ANY ATTORNEY ON RETAINER BY THE BANK TO HANDLE REAL  ESTATE  TRANS-
ACTIONS OR ANYONE DEEMED IN-HOUSE COUNSEL.
  (C) "REGISTERED REAL ESTATE OWNED PROPERTY AGENT OR BROKER" SHALL MEAN
ANY  INDIVIDUAL INVOLVED IN REAL ESTATE BROKERAGE ACTIVITY AS DEFINED IN
SECTION FIVE HUNDRED NINETY-NINE-B OF THE BANKING LAW WHO HAS REGISTERED
WITH THE SECRETARY OF STATE PURSUANT TO SUBDIVISION TWO OF THIS  SECTION
TO  LIST FOR SALE ANY REAL ESTATE OWNED PROPERTY; THIS SECTION SHALL NOT
BE CONSTRUED TO MEAN ANY AGENT OR BROKER ON RETAINER BY A BANK TO HANDLE
REAL ESTATE SALES OR PURCHASES OR ANY AGENT OR BROKER EMPLOYED BY A BANK
OR MORTGAGE COMPANY'S SUBSIDIARY.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD02184-01-3

S. 523                              2

  (D) "REGISTERED REAL ESTATE OWNED PROPERTY MAINTENANCE COMPANY"  SHALL
MEAN  ANY INDIVIDUAL OR COMPANY WHO HAS REGISTERED WITH THE SECRETARY OF
STATE PURSUANT TO SUBDIVISION TWO OF THIS SECTION TO MAINTAIN FORECLOSED
PROPERTIES PURSUANT TO SECTION THIRTEEN HUNDRED SEVEN OF THIS ARTICLE.
  2.  REGISTRATION.   (A) THE SECRETARY OF STATE SHALL POST AND MAINTAIN
ON ITS WEBSITE OR OTHERWISE MAKE READILY AVAILABLE A LIST OF  REGISTERED
REAL  ESTATE  OWNED  PROPERTY  LAWYERS, A LIST OF REGISTERED REAL ESTATE
OWNED PROPERTY AGENTS OR BROKERS AND A LIST OF  REGISTERED  REAL  ESTATE
OWNED  PROPERTY  MAINTENANCE  COMPANIES ALONG WITH COMPREHENSIVE CONTACT
INFORMATION, INCLUDING, BUT NOT LIMITED TO, FULL NAME, NAME OF ANY ASSO-
CIATED LAW FIRM,  LEGAL  PRACTICE  OR  PARENT  COMPANY,  ADDRESS,  PHONE
NUMBER, AND ANY KNOWN AFFILIATION WITH ANY STATE-CHARTERED BANK.
  (I) THE SECRETARY OF STATE SHALL CONSULT WITH THE HEAD OF THE DIVISION
OF  MINORITY AND WOMEN'S BUSINESS DEVELOPMENT TO USE REASONABLE MEASURES
TO ENSURE THAT BUSINESSES CERTIFIED UNDER ARTICLE FIFTEEN-A OF THE EXEC-
UTIVE LAW, WHICH  TRADITIONALLY  HAVE  BEEN  WOMEN  AND  MINORITIES  ARE
AFFORDED  EQUAL  OPPORTUNITY  TO  PARTICIPATE  IN AND BE INCLUDED ON THE
LISTS ALLOWED UNDER THIS SECTION.
  (II) THE SECRETARY OF STATE SHALL DENOTE ON  THE  LIST  CREATED  UNDER
THIS SECTION THAT AN ATTORNEY, BROKER OR MAINTENANCE COMPANY IS A MINOR-
ITY OR WOMEN-OWNED BUSINESS OR ENTERPRISE, AND SHALL ENSURE THAT, AT ALL
TIMES,  FIVE  TO  TEN  PERCENT  OF  THE  LIST IS MADE UP OF MINORITY AND
WOMEN-OWNED BUSINESSES.
  (B) ANY ATTORNEY, REAL ESTATE BROKER OR PROPERTY  MAINTENANCE  COMPANY
INTENDING  TO  BE  PART  OF THE LIST MAINTAINED PURSUANT TO THIS SECTION
SHALL MAKE APPLICATION TO THE SECRETARY OF STATE.
  (C) SUCH APPLICATION SHALL BE IN A FORM AND MANNER PRESCRIBED  BY  THE
SECRETARY  OF STATE AND SHALL CONTAIN SUCH INFORMATION AS, IN THE SECRE-
TARY OF STATE'S JUDGMENT, IS REASONABLE AND NECESSARY TO  DETERMINE  THE
QUALIFICATIONS FOR LICENSING OF THE APPLICANT, EXCEPT THAT THE SECRETARY
OF STATE SHALL AUTOMATICALLY DISQUALIFY ANY INDIVIDUAL OR COMPANY AFFIL-
IATED WITH OR RETAINED BY ANY STATE-CHARTERED BANK.
  (D)  THE APPLICATION SHALL BE SUBSCRIBED BY THE APPLICANT AND AFFIRMED
UNDER PENALTY OF PERJURY.
  (E) THERE SHALL BE NO APPLICATION FEE ASSOCIATED WITH THE  APPLICATION
DESCRIBED IN THIS ARTICLE.
  (F)  EACH APPLICATION SHALL BE ACCOMPANIED BY SATISFACTORY EVIDENCE OF
GOOD STANDING AND LEGITIMATE LICENSING WITH THE NEW YORK STATE  BAR,  OR
BY THE SECRETARY OF STATE OR DEPARTMENT OF STATE.
  (G)  ANY  APPLICANT FOR INCLUSION ON THIS LIST MAY SUBMIT SATISFACTORY
EVIDENCE OF LICENSURE TO PRACTICE AN EQUIVALENT OCCUPATION ISSUED BY ANY
OTHER STATE, TERRITORY, PROTECTORATE OR DEPENDENCY OF THE UNITED  STATES
OR  ANY  OTHER COUNTRY IN LIEU OF THE EVIDENCE REQUIRED BY THIS SUBDIVI-
SION, PROVIDED THAT SUCH LICENSE WAS GRANTED IN COMPLIANCE  WITH  STAND-
ARDS  WHICH  WERE,  IN THE JUDGMENT OF THE SECRETARY OF STATE, NOT LOWER
THAN THOSE OF THIS  STATE  AND  PROVIDED  THAT  SUCH  STATE,  TERRITORY,
PROTECTORATE,  DEPENDENCY, OR COUNTRY EXTENDS SIMILAR RECIPROCITY TO THE
LICENSEES OF THIS STATE OR THE APPLICANT PRACTICED AN EQUIVALENT OCCUPA-
TION IN SUCH STATE, TERRITORY, PROTECTORATE, DEPENDENCY OR COUNTRY FOR A
MINIMUM OF FIVE YEARS.
  (H) IN ADDITION TO THE POWERS AND DUTIES ELSEWHERE PRESCRIBED  IN  NEW
YORK STATE LAW, THE SECRETARY OF STATE SHALL HAVE THE POWER TO:
  (I)  APPOINT  A  SUFFICIENT NUMBER OF ASSISTANTS, INSPECTORS AND OTHER
EMPLOYEES AS MAY BE NECESSARY TO CARRY OUT THE PROVISIONS OF THIS  ARTI-
CLE, TO PRESCRIBE THEIR DUTIES, AND TO FIX THEIR COMPENSATION WITHIN THE
AMOUNT APPROPRIATED THEREFOR;

S. 523                              3

  (II)  EXAMINE  THE QUALIFICATIONS AND FITNESS OF APPLICANTS FOR REGIS-
TRATION;
  (III)  KEEP RECORDS OF ALL APPLICANTS APPROVED OR DENIED REGISTRATION;
AND
  (IV) ADOPT SUCH  RULES  AND  REGULATIONS  NOT  INCONSISTENT  WITH  THE
PROVISIONS OF THIS SECTION, AS MAY BE NECESSARY WITH RESPECT TO THE FORM
AND CONTENT OF APPLICATIONS FOR REGISTRATION, THE RECEPTION THEREOF, THE
INVESTIGATION  AND  EXAMINATION OF APPLICANTS AND PROSPECTIVE APPLICANTS
AS NEEDED, AND OTHER MATTERS INCIDENTAL OR APPROPRIATE TO THE POWERS AND
DUTIES OF THE SECRETARY OF STATE AS PRESCRIBED BY THIS SECTION  AND  FOR
THE  PROPER  ADMINISTRATION  AND  ENFORCEMENT  OF THE PROVISIONS OF THIS
SECTION.
  3. REQUIREMENTS OF SALE. (A) ANY STATE-CHARTERED BANK UNDER THE SUPER-
VISION OF THE DEPARTMENT OF FINANCIAL SERVICES  MAY  NOT  CONSULT  WITH,
CONTRACT  WITH,  OR AFFILIATE ITSELF WITH ANY ATTORNEY, AGENT, BROKER OR
MAINTENANCE COMPANY IN A TRANSACTION INVOLVING A REAL ESTATE OWNED PROP-
ERTY UNLESS SUCH INDIVIDUAL OR BUSINESS IS ON  THE  LIST  PRESCRIBED  BY
PARAGRAPH (A) OF SUBDIVISION TWO OF THIS SECTION.
  (B)  STATE-CHARTERED  BANKS UNDER THE SUPERVISION OF THE DEPARTMENT OF
FINANCIAL SERVICES MUST SELECT AN ATTORNEY, AGENT, BROKER OR MAINTENANCE
COMPANY DENOTED AS A MINORITY OR  WOMEN-OWNED  BUSINESS  ENTERPRISE  AND
INCLUDED  ON  THE LIST PRESCRIBED BY PARAGRAPH (A) OF SUBDIVISION TWO OF
THIS SECTION WHENEVER FEASIBLE IN TRANSACTIONS INVOLVING A  REAL  ESTATE
OWNED PROPERTY.
  4.  PENALTIES.  (A)  EACH VIOLATION OF THIS ARTICLE BY ANY STATE-CHAR-
TERED BANK UNDER THE SUPERVISION OF THE DEPARTMENT OF FINANCIAL SERVICES
SHALL BE A VIOLATION SUBJECT TO A FINE OF NOT  MORE  THAN  FIVE  HUNDRED
DOLLARS,  UNLESS  SUCH  VIOLATION SHALL BE KNOWING AND WILLFUL, IN WHICH
EVENT THE FINE IMPOSED SHALL BE ONE THOUSAND DOLLARS.
  (B) IF A STATE-CHARTERED BANK UNDER THE SUPERVISION OF THE  DEPARTMENT
OF  FINANCIAL SERVICES HAS THREE OR MORE PREVIOUS CONVICTIONS IN A FIVE-
YEAR PERIOD FOR VIOLATIONS OF THIS SECTION, SUCH CURRENT VIOLATION SHALL
BE SUBJECT TO A FINE OF NOT LESS THAN ONE THOUSAND FIVE HUNDRED DOLLARS.
  S 2. This act shall take effect on the ninetieth day  after  it  shall
have become a law.

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