Authorizes the commissioner of housing preservation and development for the city of New York to bring a special proceeding for appointment of an administrator for distressed property; provides for owner liability for costs of operating property and costs of the administrator after the administrator takes over management of the property.
TITLE OF BILL: An act to amend the real property actions and proceedings law, in relation to grounds for bringing a special proceeding, and payment to and liability of administrators appointed pursuant to a special proceeding
PURPOSE: The purpose of this bill is to amends Section 770 and 778 of Article 7-A of the Real Property Actions and Proceedings Law (RAPL), relating to the appointment of an administrator for distressed property through a special proceeding.
SUMMARY OF PROVISIONS:
Section 1 adds the issuance of an order by the Commissioner of the New York City Department of Housing Preservation and Development ("HPD") pursuant to Administrative Code § 27-2153 as a basis for bringing a special proceeding to appoint an administrator.
This section also adds the existence of any municipal arrears or lien on the property as a basis for HPD to bring an Article 7P. proceeding. New York City Administrative Code § 27-2153 sets forth the City's Alternative Enforcement Program ("AEP"), which empowers fin to designate certain poorly maintained properties as candidates for special enforcement treatment. Under the AEP, if an owner fails to comply with a directive to repair violations, HPD may issue an order and file it against the property, requiring that significant repair work be performed. If an owner fails to do the work, HPD ensures that such work is performed, and the cost of the work and program fees become a lien against the property.
Section 2 clarifies that the court may authorize an administrator to lease all or any part of the premises that he or she administers. It also requires an owner to pay or enter into a payment agreement to pay all outstanding real property tax liens claimed by NYC, all outstanding charges of the alternative enforcement program, and all other liens filed by NYC under RPL Section 778. Finally, it provides that the administrator can be reimbursed for legal fees incurred in connection with management of the property.
Section 3 clarifies that even when an administrator is appointed, an owner remains liable for injury to persons and property as a result of conditions on the premises.
Section 4 authorizes the bill to take effect immediately.
JUSTIFICATION: When owners of buildings included in the AEP abandon their buildings, often no one is left in place to manage them. This causes undue hardship and confusion for existing tenants, in addition to allowing buildings to fall into disrepair. While the City steps in to repair such buildings, there is still a need for a day-to-day manager or administrator. This legislation provides two additional grounds for bringing a special proceeding to appoint such an administrator: an owner's failure to comply with an ASP order, and the existence of municipal arrears or liens on these buildings. Appointment of an administrator in these two cases will help ensure
that tenants are provided with essential services, and help prevent abandonment or further deterioration of such buildings.
The provision related to leasing is important to ensure that buildings are competently run and able to realize all potential revenue. Mandating that an owner repay or enter into a payment agreement to repay all outstanding real property tax liens, all outstanding emergency repair liens filed and recorded by the City of New York and outstanding liens filed and recorded by the City pursuant to this section before the administrator is discharged ensures that the owner is financially capable of keeping the building in sound condition and reimburses the City for rehabilitating the building. The provisions related to administrator liability address a continuing issue where administrators must defend themselves in litigation which should properly be brought against an owner. These provisions provide for reimbursement of the administrator for legal fees incurred in such proceedings, and clarify that the owner is still liable for injury to persons or property due to conditions on the premises.
Accordingly, the Mayor urges the earliest possible favorable consideration of this proposal by the Legislature.
LEGISLATIVE HISTORY: New Bill.
EFFECTIVE DATE: This act shall take effect immediately.
STATE OF NEW YORK ________________________________________________________________________ 5465--A 2013-2014 Regular Sessions IN SENATE May 16, 2013 ___________Introduced by Sen. YOUNG -- read twice and ordered printed, and when printed to be committed to the Committee on Housing, Construction and Community Development -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee AN ACT to amend the real property actions and proceedings law, in relation to grounds for bringing a special proceeding, and payment to and liability of administrators appointed pursuant to a special proceeding THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Subdivision 1 of section 770 of the real property actions and proceedings law, as amended by chapter 877 of the laws of 1982, is amended to read as follows: 1. One-third or more of the tenants occupying a dwelling located in the city of New York or the commissioner of the department of the city of New York charged with enforcement of the housing maintenance code of such city, or in the counties of Nassau, Suffolk, Rockland and Westches- ter may maintain a special proceeding as provided in this article, upon the ground that there exists in such dwellings or in any part thereof a lack of heat or of running water or of light or of electricity or of adequate sewage disposal facilities, or any other condition dangerous to life, health or safety, which has existed for five days, or an infesta- tion by rodents, or any combination of such conditions; or course of conduct by the owner or
[his]THE OWNER'S agents of harassment, illegal eviction, continued deprivation of services or other acts dangerous to life, health or safety, OR THE ISSUANCE OF AN ORDER TO THE OWNER OF SUCH DWELLING BY THE COMMISSIONER OF SUCH DEPARTMENT OF THE CITY OF NEW YORK PURSUANT TO THE ALTERNATIVE ENFORCEMENT PROGRAM UNDER SECTION 27-2153 OF THE ADMINISTRATIVE CODE OF THE CITY OF NEW YORK, PROVIDED THAT SUCH DWELLING HAS NOT BEEN DISCHARGED FROM THE PROGRAM PURSUANT TO SUCHEXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD10829-07-3 S. 5465--A 2
SECTION AND THERE HAS NOT BEEN A DETERMINATION THAT THE OWNER HAS SUBSTANTIALLY COMPLIED WITH SUCH ORDER. S 2. Subdivision 1 of section 778 of the real property actions and proceedings law, as amended by chapter 95 of the laws of 1989, is amended to read as follows: 1. The court is authorized and empowered, in implementation of a judg- ment rendered pursuant to section seven hundred seventy-six or seven hundred seventy-seven of this article, to appoint a person other than the owner, a mortgagee or lienor, to receive and administer the rent moneys or security deposited with
[him]SUCH OWNER, MORTGAGEE OR LIENOR, subject to the court's direction. The court may appoint the commissioner of the department of the city of New York charged with enforcement of the housing maintenance code of such city or [his]THE COMMISSIONER'S designee as such administrator, provided that [he]THE COMMISSIONER OR THE COMMISSIONER'S DESIGNEE shall consent, in writing, to such appoint- ment. Any administrator is authorized and empowered in accordance with the direction of the court, to order the necessary materials, labor and services to remove or remedy the conditions specified in the judgment, and to make disbursements in payment thereof; and to demand, collect and receive the rents from the tenants; and to institute all necessary legal proceedings including, but not limited to, summary proceedings for the removal of any tenant or tenants; and to rent or lease for terms not exceeding three years any part of said premises, however, the court may direct the administrator to rent or lease commercial parts of said prem- ises for terms that the court may approve. In addition, such administra- tor is authorized and empowered in accordance with the direction of the court to accept and repay such moneys as may be received from the department charged with enforcement of the housing maintenance code of the city of New York for the purpose of replacing or substantially reha- bilitating systems or making other repairs or capital improvements authorized by the court. All moneys expended by the department pursuant to the foregoing shall constitute a debt recoverable from the owner and a lien upon the building and lot, and upon the rents and other income thereof. Such lien shall be enforced in accordance with the provisions of article eight of subchapter five of the housing maintenance code of the city of New York. Such administrator, shall, upon completion of the work prescribed in such judgment, file with the court a full accounting of all receipts and expenditures for such work. Such administrator shall dispose of the rents and other monies deposited with [him]SUCH ADMINIS- TRATOR according to the following order of priority: (a) Payment in full for all of the work specified in the judgment. Until all of the work specified in the judgment has been completed and payment for such work has been made, no other disbursements shall be permitted, except for fuel bills, fire and liability insurance, and bills for ordinary repairs and maintenance. (b) Payment of a reasonable amount for the services of such adminis- trator, INCLUDING REIMBURSEMENT OF ANY LEGAL FEES INCURRED BY SUCH ADMINISTRATOR IN CONNECTION WITH MANAGEMENT OF THE BUILDING. (c) Payment of outstanding real property tax liens claimed by the city of New York. (d) Payment of outstanding emergency repair liens filed and recorded by the city of New York and outstanding liens filed and recorded by the city pursuant to this section. (e) Payment to the owner of any surplus remaining after payments of paragraphs (a) through (d) of this subdivision have been made.S. 5465--A 3
S 3. Subdivision 6 of section 778 of the real property actions and proceedings law, as added by chapter 877 of the laws of 1982, is amended to read as follows: 6. Such administrator shall be liable only in his OR HER official capacity for injury to persons and property by reason of conditions of the premises in a case where an owner would have been liable; he OR SHE shall not have any liability in his OR HER personal capacity. APPOINT- MENT OF AN ADMINISTRATOR PURSUANT TO SUBDIVISION ONE OF THIS SECTION SHALL NOT RELIEVE AN OWNER OF LIABILITY FOR INJURY TO PERSONS AND PROP- ERTY IN SUCH CASE. S 4. Section 778 of the real property actions and proceedings law is amended by adding a new subdivision 11 to read as follows: 11. THE COURT MAY ONLY DISCHARGE AN ADMINISTRATOR IF THE OWNER HAS PAID IN FULL OR ENTERED INTO A PAYMENT AGREEMENT TO PAY IN FULL ALL OUTSTANDING REAL PROPERTY TAX LIENS CLAIMED BY THE CITY OF NEW YORK, ALL OUTSTANDING EMERGENCY REPAIR LIENS FILED AND RECORDED BY THE CITY OF NEW YORK, ALL OUTSTANDING CHARGES AND LIENS ASSESSED IN CONNECTION TO THE ALTERNATIVE ENFORCEMENT PROGRAM AUTHORIZED BY SECTION 27-2153 OF THE ADMINISTRATIVE CODE OF THE CITY OF NEW YORK, AND OUTSTANDING LIENS FILED AND RECORDED BY THE CITY PURSUANT TO THIS SECTION. THE PROVISIONS OF THIS SUBDIVISION SHALL NOT APPLY TO BUILDINGS TRANSFERRED PURSUANT TO SUBDIVISION TEN OF THIS SECTION. S 5. This act shall take effect immediately.