‘Zombie Law’ for Residential Foreclosures in NYS Goes into Effect

Dec 22, 2016

‘Zombie Law’ for Residential Foreclosures in NYS Goes into Effect

On December 20, the “zombie law” affecting residential mortgage foreclosures in New York state, officially was enacted. This legislation, in which Governor Cuomo originally signed June, helps combat the problem of vacant and abandoned properties, often referred to as “zombie homes.” The legislation, part of the Real Property Actions and Proceedings Law, applies to 1-4 family residential properties on which a lender holds a first mortgage lien, and is discussed in detail in a Harris Beach Legal Alert on zombie homes. Zombie homes are the result of the homeowner abandoning the property after the initiation of a foreclosure, but prior to the completion of such foreclosure.

The new law requires mortgagee, assignee, or servicer to conduct more frequent inspections on properties in foreclosure, as well as remedy any significant code violations or health or safety issues which exist. It also provides a ‘fast-track’ to a judgement of foreclosure and sale for a property deemed vacant and abandoned. Municipalities may also be able to recoup costs for maintenance work they do on a property which is not properly maintained.

The extent to which zombie homes affect New York has been the subject of much research, with the main issues related to zombie homes being the corresponding loss of property value to neighboring homes, as well as the cost municipalities incur to maintain a zombie property. In January 2016, one such report estimated that in Westchester County alone, there were 107 such properties which decreased neighboring property value by $10.8 million. A recent zombie home study in Upstate New York revealed 800 zombie properties in Erie County, with the local municipal burden of maintaining such properties costing taxpayers more than $1 million. Even more depressing for New York, the state ranks third in zombie foreclosures (3,365 properties) according to RealtyTrac.com’s fall 2015 report, and second in zombie properties as a percentage of total vacant properties.

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