This past June, Governor Cuomo signed legislation that imposes pre-foreclosure duties on banks and servicing companies. After it goes into effect this December, it is anticipated that a problem that has plagued local municipalities for years with respect to abandoned residential properties will begin to subside.
Now, under the Real Property Actions and Proceedings Law (RPAPL) section 1308, first lien mortgage holders on one- to four-family vacant and/or abandoned residential real property must complete an exterior inspection of the property within 90 days of delinquency to determine if the property is vacant. While the loan is delinquent, the property must be re-inspected every 25 to 35 days.
Once it is determined that property is vacant, the loan servicer must post a notice, with contact information, stating that it is maintaining the property. If no response is received it now falls upon the mortgage holder to secure and winterize the property, replace broken doors and windows, and fix health and safety issues and any outstanding code violations on the property. The lienholder must continue to maintain the property. As every municipal official knows, the problem has always been that until the bank retakes the property after foreclosure, there was no way to gain compliance with local codes with respect to property maintenance. This problem caused surrounding property owners considerable anxiety and drove down property values in many communities. Residents would often turn to municipalities to do something that was nearly impossible. Hopefully, this new legislation will literally help to change the landscape of many communities plagued by this problem.
Where violations are found, civil penalties of up to $500 per day may be levied against the property. This will enable municipalities to hold the only true party in interest in these situations accountable and put an end to neighborhood blight originally caused by predatory lending by various financial institutions.