S T A T E O F N E W Y O R K
________________________________________________________________________
11257
I N A S S E M B L Y
May 4, 2026
___________
Introduced by M. of A. WALKER -- read once and referred to the Committee
on Judiciary
AN ACT to amend the real property actions and proceedings law, in
relation to the scope of quasi-judicial immunity of referees in mort-
gage foreclosure actions
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Legislative findings and intent. The legislature hereby
finds that referees appointed in mortgage foreclosure actions pursuant
to article thirteen of the real property actions and proceedings law and
article forty-three of the civil practice law and rules perform func-
tions that are limited in scope and subject to strict judicial super-
vision.
The legislature further finds that New York courts, including the
appellate division, second department, apply a functional analysis in
determining whether quasi-judicial immunity applies, limiting such immu-
nity to acts that are discretionary in nature and integrally related to
the judicial process, and withholding such immunity for ministerial
acts, acts in excess of authority, or acts undertaken in bad faith or in
the clear absence of jurisdiction.
It is the intent of the legislature to codify and clarify these prin-
ciples as applied to foreclosure referees, and to ensure accountability
where such referees engage in misconduct or exceed the authority
conferred by statute or court order.
Court-appointed foreclosure referees have been computing judgment
debts with unlawful interest - compound interest, interest during the
motion determination period, unauthorized default rates - for years.
Those inflated computations suppress surplus funds that legally belong
to borrowers, subordinate lienholders, and creditors. In addition, fore-
closure referees fail to report surplus monies to the Court and the
former owner, and fail to deposit the surplus monies into Court as
required by law. In none of the cases has there been anyone held
accountable, despite the widespread and public account of this abuse of
power or discretion.
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD15723-01-6
A. 11257 2
Referees claim quasi-judicial immunity, even though New York State law
directs otherwise. The amendments in this bill also seek to codify the
rule being proposed by the New York State Office of Justice Initiatives
that referees "do not have judicial immunity and would not be repres-
ented by the Attorney General if sued". This legislation expressly
abrogates judicial and quasi-judicial immunity for specific enumerated
categories of misconduct, including conversion of surplus funds, failure
to deposit surplus funds into court, and failure to file the report of
sale as to surplus funds.
This act addresses any unlawful computation or unauthorized distrib-
ution of surplus monies by a referee is per se misconduct; authorizes
vacatur of the foreclosure sale where the misconduct materially affected
the open bid or upset price, the calculation of the amounts due to the
mortgagee or plaintiff or its attorneys, or the calculation or deposit
or distribution of surplus monies, and is in keeping with the federal
and state law that surplus monies from any auction is protected property
of the former owner.
§ 2. The real property actions and proceedings law is amended by
adding a new section 1354-a to read as follows:
§ 1354-A. SCOPE OF QUASI-JUDICIAL IMMUNITY OF REFEREES IN FORECLOSURE
ACTIONS. 1. FOR PURPOSES OF THIS SECTION:
(A) "REFEREE" MEANS ANY PERSON APPOINTED PURSUANT TO SECTION THIRTEEN
HUNDRED FIFTY-ONE OF THIS ARTICLE, SECTION FORTY-THREE HUNDRED ELEVEN OF
THE CIVIL PRACTICE LAW AND RULES, OR AN ORDER OF REFERENCE ISSUED IN A
MORTGAGE FORECLOSURE ACTION.
(B) "DISCRETIONARY ACT" MEANS AN ACT INVOLVING THE EXERCISE OF
REASONED JUDGMENT.
(C) "MINISTERIAL ACT" MEANS AN ACT PERFORMED IN A PRESCRIBED MANNER
WITHOUT THE EXERCISE OF INDEPENDENT JUDGMENT, INCLUDING COMPLIANCE WITH
STATUTORY DIRECTIVES OR COURT ORDERS.
2. A REFEREE SHALL BE ENTITLED TO QUASI-JUDICIAL IMMUNITY ONLY TO THE
EXTENT THAT THE ACT COMPLAINED OF:
(A) CONSTITUTES A DISCRETIONARY ACT THAT IS CONSISTENT WITH THE
SPECIFIC AUTHORITY GRANTED TO THE REFEREE;
(B) IS EXPRESSLY AUTHORIZED BY STATUTE OR BY THE ORDER OF REFERENCE OR
BY THE JUDGMENT OF FORECLOSURE AND SALE; AND
(C) IS INTEGRALLY RELATED TO THE JUDICIAL FUNCTION OF ENFORCING OR
EFFECTUATING A JUDGMENT OF FORECLOSURE.
3. A REFEREE SHALL NOT BE ENTITLED TO QUASI-JUDICIAL IMMUNITY FOR THE
NEGLIGENT OR IMPROPER PERFORMANCE OF MINISTERIAL ACTS, INCLUDING BUT NOT
LIMITED TO:
(A) COMPLIANCE WITH THE PROCEDURES GOVERNING FORECLOSURE SALES SET
FORTH IN THE JUDGMENT OF FORECLOSURE AND SALE;
(B) MISCALCULATION OF THE AMOUNTS DUE TO THE PLAINTIFF UNDER THE JUDG-
MENT OF FORECLOSURE AND SALE OR MISAPPLICATION OF THE ORDERS THEREIN AS
TO THE AMOUNTS DUE TO THE PLAINTIFF UPON THE AUCTION OF THE SUBJECT
PROPERTY;
(C) THE RECEIPT, SAFEGUARDING, ACCOUNTING FOR, AND DISTRIBUTION OF
PROCEEDS IN ACCORDANCE WITH SECTION THIRTEEN HUNDRED FIFTY-FOUR OF THIS
ARTICLE;
(D) THE PREPARATION AND FILING OF REPORTS REQUIRED BY LAW OR COURT
ORDER; OR
(E) ADHERENCE TO NOTICE, PUBLICATION, AND BIDDING REQUIREMENTS
MANDATED BY STATUTE OR COURT DIRECTIVE.
4. A REFEREE SHALL NOT BE ENTITLED TO QUASI-JUDICIAL IMMUNITY FOR ACTS
UNDERTAKEN:
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(A) IN EXCESS OF THE AUTHORITY EXPRESSLY CONFERRED BY THE APPOINTING
COURT OR IN THE JUDGMENT OF FORECLOSURE AND SALE;
(B) IN CONTRAVENTION OF STATUTORY MANDATES, INCLUDING SECTION THIRTEEN
HUNDRED FIFTY-FOUR OF THIS ARTICLE;
(C) IN THE CLEAR ABSENCE OF JURISDICTION OR DELEGATED AUTHORITY;
(D) WHERE THE REFEREE CONVERTS FORECLOSURE AUCTION PROCEEDS OR SALE
FUNDS TO PROPERTY OF A PERSON OR ENTITY OTHER THAN THE FORMER OWNER OF
THE REAL PROPERTY THAT WAS THE SUBJECT OF THE FORECLOSURE AUCTION;
(E) WHERE THE REFEREE FAILS TO DEPOSIT THE SURPLUS MONIES FROM A FORE-
CLOSURE AUCTION INTO COURT; OR
(F) WHERE THE REFEREE FAILS TO TIMELY FILE THE SURPLUS MONIES REPORT.
5. (A) NOTWITHSTANDING ANY PROVISION OF LAW TO THE CONTRARY, A REFEREE
SHALL NOT BE ENTITLED TO JUDICIAL OR QUASI-JUDICIAL IMMUNITY FOR MISCON-
DUCT.
(B) FOR PURPOSES OF THIS SECTION, "MISCONDUCT" SHALL INCLUDE:
(I) THE PERFORMANCE OF AN ACT IN VIOLATION OF A MANDATORY STATUTORY
PROVISION, COURT RULE, OR EXPRESS TERM OF THE ORDER OF REFERENCE OR
JUDGMENT OF FORECLOSURE AND SALE;
(II) ANY ACT UNDERTAKEN IN EXCESS OF THE AUTHORITY CONFERRED BY THE
APPOINTING COURT OR IN THE CLEAR ABSENCE OF JURISDICTION;
(III) THE FAILURE TO COMPLY WITH DUTIES PRESCRIBED BY SECTION THIRTEEN
HUNDRED FIFTY-FOUR OF THIS ARTICLE GOVERNING THE RECEIPT, SAFEGUARDING,
ACCOUNTING FOR, AND DISTRIBUTION OF FORECLOSURE SALE PROCEEDS;
(IV) THE UNAUTHORIZED COLLECTION, RETENTION, COMMINGLING, OR DISBURSE-
MENT OF FUNDS;
(V) CONDUCT CONSTITUTING BAD FAITH, GROSS NEGLIGENCE, OR RECKLESS
DISREGARD OF STATUTORY OBLIGATIONS OR COURT DIRECTIVES; OR
(VI) ANY MATERIAL DEVIATION FROM PRESCRIBED FORECLOSURE PROCEDURES
THAT IMPAIRS THE INTEGRITY OF THE FORECLOSURE SALE OR THE RIGHTS OF
INTERESTED PARTIES.
6. THE FOLLOWING ACTS SHALL CONSTITUTE MISCONDUCT PER SE AND SHALL NOT
BE PROTECTED BY JUDICIAL OR QUASI-JUDICIAL IMMUNITY:
(A) DISTRIBUTION OF PROCEEDS IN A MANNER INCONSISTENT WITH THE PRIORI-
TY SCHEME MANDATED BY SECTION THIRTEEN HUNDRED FIFTY-FOUR OF THIS ARTI-
CLE;
(B) CONDUCTING OR COMPLETING A FORECLOSURE SALE IN CONTRAVENTION OF
THE EXPRESS TERMS OF THE JUDGMENT OF FORECLOSURE AND SALE;
(C) CALCULATING THE AMOUNTS DUE TO PLAINTIFF IN CONTRAVENTION OF THE
EXPRESS TERMS OF THE JUDGMENT OF FORECLOSURE AND SALE;
(D) CONDUCTING OR COMPLETING A FORECLOSURE SALE IN CONTRAVENTION OF
THE EXPRESS TERMS OF THE RULES GOVERNING THE AUCTION OF THE PROPERTY;
(E) EXERCISING AUTHORITY NOT GRANTED BY THE APPOINTING ORDER, INCLUD-
ING ALTERING MATERIAL TERMS OF SALE WITHOUT COURT APPROVAL; AND
(F) FAILURE TO ACCOUNT FOR, REMIT FUNDS OR DEPOSIT FUNDS AS REQUIRED
BY LAW OR COURT ORDER.
7. UPON A FINDING OF MISCONDUCT UNDER THIS SECTION:
(A) QUASI-JUDICIAL IMMUNITY SHALL NOT APPLY TO THE CONDUCT AT ISSUE;
(B) THE AUCTION SHALL BE VACATED, SET ASIDE OR REVERSED;
(C) THE REFEREE MAY BE HELD PERSONALLY LIABLE FOR DAMAGES PROXIMATELY
CAUSED THEREBY; AND
(D) SUCH CONDUCT MAY SERVE AS A BASIS FOR SURCHARGE, REMOVAL, OR OTHER
RELIEF AS THE COURT DEEMS APPROPRIATE.
§ 3. Section 1355 of the real property actions and proceedings law is
amended by adding a new subdivision 3 to read as follows:
3. (A) THE REPORT OF SALE FILED BY THE REFEREE PURSUANT TO THIS
SECTION SHALL INCLUDE, UNDER PENALTY OF PERJURY, A CERTIFICATION THAT:
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(I) ALL AMOUNTS DISTRIBUTED TO THE PLAINTIFF WERE COMPUTED IN ACCORD-
ANCE WITH APPLICABLE LAW, THE ORDER OF REFERENCE, AND THE JUDGMENT OF
FORECLOSURE AND SALE;
(II) NO COMPOUND INTEREST WAS APPLIED IN VIOLATION OF SECTION 5-527 OF
THE GENERAL OBLIGATIONS LAW OR SECTION FIVE THOUSAND ONE, FIVE THOUSAND
TWO OR FIVE THOUSAND THREE OF THE CIVIL PRACTICE LAW AND RULES;
(III) NO INTEREST WAS APPLIED DURING ANY MOTION DETERMINATION PERIOD
CONTRARY TO APPLICABLE LAW;
(IV) ALL DISTRIBUTIONS WERE MADE IN ACCORDANCE WITH THE JUDGMENT OF
FORECLOSURE AND SALE AND THE ORDER OF REFERENCE, AND NO AMOUNT WAS PAID
OUT THAT WAS NOT AUTHORIZED BY EITHER INSTRUMENT OR BY APPLICABLE LAW;
AND
(V) THE FULL AMOUNT OF ANY SURPLUS HAS BEEN DEPOSITED WITH THE COURT
AS REQUIRED BY SUBDIVISION FOUR OF SECTION THIRTEEN HUNDRED FIFTY-FOUR
OF THIS ARTICLE.
(B) A FALSE CERTIFICATION MADE PURSUANT TO THIS SUBDIVISION SHALL
CONSTITUTE A FALSE WRITTEN STATEMENT UNDER SECTION 210.45 OF THE PENAL
LAW AND SHALL GIVE RISE TO CIVIL LIABILITY UNDER SUBDIVISION THREE OF
SECTION THIRTEEN HUNDRED FIFTY-FOUR-A OF THIS ARTICLE.
§ 4. Rule 4311 of the civil practice law and rules is amended to read
as follows:
Rule 4311. Order of reference. (A) An order of reference shall direct
the referee to determine the entire action or specific issues, to report
issues, to perform particular acts, or to receive and report evidence
only. It may specify or limit the powers of the referee and the time for
the filing of [his] THE REFEREE'S report and may fix a time and place
for the hearing.
(B) A REFEREE WHO ACTS OUTSIDE OR IN EXCESS OF THE AUTHORITY CONFERRED
UPON THE REFEREE IN THE ORDER OF REFERENCE OR IN THE JUDGMENT OF FORE-
CLOSURE AND SALE, AS APPLICABLE, OR WHO MAKES A CALCULATION OF AMOUNTS
DUE THAT VIOLATES APPLICABLE LAW GOVERNING INTEREST, FEES, OR CHARGES IN
CONNECTION WITH ANY JUDGMENT OF FORECLOSURE AND SALE IN ANY MORTGAGE
FORECLOSURE ACTION, ACTS WITHOUT JURISDICTION AND WITHOUT QUASI-JUDICIAL
AUTHORITY AS TO SUCH ACT OR CALCULATION, SHALL NOT BE ENTITLED TO JUDI-
CIAL IMMUNITY, QUASI-JUDICIAL IMMUNITY, OR ANY DERIVATIVE FORM OF IMMU-
NITY THEREFOR. SUCH REFEREE WHO ACTS OUTSIDE OR IN EXCESS OF THE AUTHOR-
ITY CONFERRED UPON THE REFEREE IN A MORTGAGE FORECLOSURE ACTION SHALL BE
SUBJECT TO CIVIL AND CRIMINAL LIABILITY PURSUANT TO SECTION THIRTEEN
HUNDRED FIFTY-FOUR-A OF THE REAL PROPERTY ACTIONS AND PROCEEDINGS LAW.
§ 5. Construction. This act shall be construed to preclude the exten-
sion of immunity to ministerial acts, ultra vires conduct, or acts
undertaken in bad faith or in the absence of authority or in the excess
of the authority conferred on the referee by a court or an order or a
judgment.
This act shall be construed consistent with the following: (a) U.S.
law in Tyler v. Hennepin Cnty, 598 U.S. 631, 645 (2023), for the princi-
ple that a property owner is entitled to the surplus from a foreclosure
sale, including a former property owner who previously was unable to pay
the mortgage; (b) New York common law governing quasi-judicial immunity,
including but not limited to Della Pietra v. State of NY, 71 NY 2d 792
(Court of Appeals, 1988), for the principle that "{w}here, however, the
official 'has stepped outside the scope of his authority' {citation
omitted} and acted in the clear absence of all jurisdiction or without a
colorable claim of authority, there is plainly no entitlement to abso-
lute immunity, even if the underlying acts are prosecutorial or quasi-
judicial in nature"; and NAT'L BANK v. Van Keuren, 184 AD 2d 92 (3rd
A. 11257 5
Dept. __), for the principles that the appointed referee is an officer
of the court and must perform his duties impartially without regard to
the interests of any particular person in the proceeding {citations
omitted}); that a court has broad discretion in setting aside a foreclo-
sure sale and ordering a resale (79 NY Jur 2d, Mortgages, § 706, at 64)
and, significantly, almost any individual, even a nonparty, who has a
legitimate interest in the outcome can move to set it aside.
§ 6. Severability. If any clause, sentence, paragraph, subdivision,
section or part of this act shall be adjudged by any court of competent
jurisdiction to be invalid, such judgment shall not affect, impair, or
invalidate the remainder thereof, but shall be confined in its operation
to the clause, sentence, paragraph, subdivision, section or part thereof
directly involved in the controversy in which such judgment shall have
been rendered. It is hereby declared to be the intent of the legislature
that this act would have been enacted even if such invalid provisions
had not been included herein.
§ 7. This act shall take effect immediately and shall apply to all
actions pending on an instrument described under subdivision 4 of
section 213 of the civil practice law and rules or as to which a surplus
exists or is claimed from an auction that was conducted on such an
instrument prior to the enactment of this act.