New York Is Trying to Kill Zombie Homes

The State of New York recently passed a zombie property remediation law.

By , Attorney

On December 18, 2019, Governor Andrew Cuomo signed Senate Bill 5079A into law, which gives local municipalities in New York more ways to fight against zombie properties. This new law authorizes the city, village, or town in which a distressed home is located to force the lender to either foreclose the property promptly or release its mortgage.

What Is a Zombie Foreclosure or Zombie Property?

In a "zombie foreclosure," a homeowner who has fallen behind on mortgage payments moves out expecting to lose the home in a foreclosure, but for some reason, the process is canceled, the foreclosure sale doesn't happen, or title never officially transfers to a new owner. As a result, the property remains in the homeowner's name. The empty property, which is left to languish and deteriorate, is called a "zombie property" or "zombie home."

A zombie property can easily attract crime, squatters, and vandalism. Garbage accumulates, and the yard gets overgrown. All of which harms the surrounding community. (To learn more about zombie properties and the consequences of a zombie foreclosure, read Zombie Foreclosures.)

New York Law Gives Cities More Power to Fight Zombie Properties

Thousands of vacant properties in the state of New York have been in foreclosure limbo for years. Now, though, state law says that if the note is in default and the property is abandoned, then the city, village, or town may start a lawsuit to compel the lender to:

  • begin a foreclosure procedure under New York law within three months and meet all deadlines to make sure the case moves to judgment within a reasonable time period, but not to exceed one year
  • if the lender has already started a foreclosure, file the necessary motions and paperwork to move the case to judgment foreclosure within three months, or
  • issue a certificate of discharge of the mortgage within three months and file a satisfaction of the mortgage with the appropriate local office. (N.Y. Real Prop. Acts. Law § 1392).

In cases where a foreclosure is completed, the new owner—likely the lender—becomes accountable for maintaining the home, paying for property taxes, and the like. If the lender releases the mortgage, the homeowner who originally took out the loan remains in title and continues to be responsible for the property. (However, just because the lender releases its mortgage lien, that doesn't mean you're off the hook for the debt. The lender might try to enforce the note in other ways, like by filing a lawsuit.)

Ultimately, by compelling the lender to take some action, whether by foreclosing on the home or giving up its lien on the property, local municipalities will, in theory, be better able to ensure that zombie properties in New York return to productive use.

Effective date: December 19, 2019