Senate Bill S4663

2017-2018 Legislative Session

Establishes a rebuttable presumption to the right to title of an incumbrancer in certain cases

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Archive: Last Bill Status - In Senate Committee Judiciary Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Date of Action	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 03, 2018	referred to judiciary
Feb 23, 2017	referred to judiciary

co-Sponsors

2017-S4663 (ACTIVE) - Details

See Assembly Version of this Bill:: A1569
Current Committee:: Senate Judiciary
Law Section:: Real Property Law
Laws Affected:: Amd §266, RP L
Versions Introduced in Other Legislative Sessions:: 2015-2016: A10424
2019-2020: A6111

2017-S4663 (ACTIVE) - Summary

Establishes a rebuttable presumption to the right to title of an incumbrancer in certain cases.

2017-S4663 (ACTIVE) - Sponsor Memo

                                 BILL NUMBER:  S4663

 TITLE OF BILL :

An act to amend the real property law, in relation to rebuttal of the
right of an incumbrancer

 PURPOSE :

To limit the application of the legal presumption that a bona fide
purchaser for value has acted in good faith to situations where the
purchaser had neither actual nor constructive notice of a fraudulent
transfer.

 SUMMARY OF PROVISIONS :

Section 1 of the bill amends section 266 of the real property law to
provide that the presumption of good faith which is afforded to bona
fide purchasers shall be unavailable if the purchaser of real property
had constructive notice of a fraudulent transfer.

 JUSTIFICATION :

The problem of deed theft has reached epidemic proportions, and savvy
scammers are using the existing "bona fide purchaser for value"
defense to their advantage. Real property law 266 provides that the

property interest acquired by a purchaser of real property for
valuable consideration has a priority title claim as long as the
purchaser did not have "previous notice of the fraudulent intent of
his immediate grantor." Deed scammers take advantage of this
presumption through the use of an intermediate "straw buyer" who may
themselves be unaware that they are participating in an ongoing fraud.

In practice, when a mortgaged property is transferred, the mortgagee
(lender) will file either an assumption of mortgage or a satisfaction
of mortgage with the county clerk. Deed fraud scams often involve a
homeowner unknowingly transferring title to their property through the
execution of a document of conveyance (such as a deed) without
notifying the mortgagee. It therefore follows that any filing of a
document of conveyance of mortgaged property that is not accompanied
by a satisfaction or assumption of mortgage, is a red flag for
potential fraud. This bill eliminates the favorable presumption of
good faith in such limited circumstances.

 LEGISLATIVE HISTORY :

New Bill

 FISCAL IMPLICATIONS :

None

 EFFECTIVE DATE :
Immediately after the bill has become law.

2017-S4663 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   4663
 
                        2017-2018 Regular Sessions
 
                             I N  S E N A T E
 
                             February 23, 2017
                                ___________
 
 Introduced  by  Sen.  AVELLA -- read twice and ordered printed, and when
   printed to be committed to the Committee on Judiciary
 
 AN ACT to amend the real property law, in relation to  rebuttal  of  the
   right of an incumbrancer
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:

   Section 1. Section 266 of the real property law is amended to read  as
 follows:
   §  266. Rights of purchaser or incumbrancer for valuable consideration
 protected.  This article does not in any manner  affect  or  impair  the
 title  of  a  purchaser  or  incumbrancer  for a valuable consideration,
 unless it appears that he had previous notice of the  fraudulent  intent
 of  his  immediate  grantor, or of the fraud rendering void the title of
 such grantor.  THERE SHALL BE A REBUTTABLE PRESUMPTION THAT THIS SECTION
 SHALL NOT APPLY IN THE CASE OF A TRANSFER OF  MORTGAGED  REAL  PROPERTY,
 BETWEEN  A  PURCHASER AND SELLER WHO ARE NOT ASSOCIATED PARTIES, THAT IS
 NOT ACCOMPANIED BY THE RECORDING WITH THE CLERK OF THE  COUNTY  OR  WITH
 THE  COMMISSIONER OF DEEDS IN WHICH THE PROPERTY IS LOCATED, OF A STATE-
 MENT,  EXECUTED  BY  THE  MORTGAGEE,  AND  DULY  ACKNOWLEDGED,  STATING,
 SUBSTANTIALLY,  THAT  (1)  A PARTY IS ASSUMING THE SELLER'S INDEBTEDNESS
 SECURED BY THE MORTGAGE; OR (2) THAT THE  INDEBTEDNESS  SECURED  BY  THE
 MORTGAGE HAS BEEN SATISFIED.
   FOR  THE PURPOSES OF THIS SECTION, "ASSOCIATED PARTIES" MEANS SPOUSES,
 EX-SPOUSES, PARENTS AND CHILDREN, SIBLINGS, A HOMEOWNER AND  THAT  HOME-
 OWNER'S  FAMILY  TRUST, OR A HOMEOWNER AND THAT HOMEOWNER'S WHOLLY-OWNED
 LIMITED LIABILITY COMPANY.
   § 2. This act shall take effect immediately.
 
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD04039-01-7

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Senate Bill S4663

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Archive: Last Bill Status - In Senate Committee Judiciary Committee

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co-Sponsors

2017-S4663 (ACTIVE) - Details

2017-S4663 (ACTIVE) - Summary

2017-S4663 (ACTIVE) - Sponsor Memo

2017-S4663 (ACTIVE) - Bill Text download pdf

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Sponsored By

Tony Avella

Archive: Last Bill Status - In Senate Committee Judiciary Committee

Actions

co-Sponsors

Jesse Hamilton

2017-S4663 (ACTIVE) - Details

2017-S4663 (ACTIVE) - Summary

2017-S4663 (ACTIVE) - Sponsor Memo

2017-S4663 (ACTIVE) - Bill Text download pdf

Comments