July 13, 2021
Advantage Foreclosure: Industry Bulletin 2021-09
Without much fanfare, New York City has amended the Administrative Code to give Relocation Liens super lien status. Relocation Liens are codified under §26-305 of the New York City Administrative Code, and by statute, were treated like a Mechanic’s Lien but with a duration of ten (10) years as opposed to one (1) year and could be renewed for an additional ten (10) year period. The statute did not give said lien priority over mortgages; however, that has now changed.
Effective September 14, 2021, the statute has been amended by adding new Section 4(d), which noted that a Relocation Lien is to be treated like a tax lien where the sums expended due to a Vacate Order and for relocating tenants are to be placed on the tax rolls. In addition, Section 4 specifically states that, “To the extent that such expenses arise from a Vacate Order issued on or after the effective date of the local law (September 14, 2021) that added paragraph d of this subdivision, they shall constitute a debt recoverable from the owner of the building at which the Vacate Order was issued with the effect and enforcement of such debt governed by paragraph (d) of this subdivision.” New paragraph (d)(5) further states that such lien shall have a priority over all other liens and encumbrances on the building and the lot upon which it stands, except for the lien of taxes and assessments.
In order to accurately bid for any sale taking place on or after September 14, 2021, it is strongly recommended that foreclosure counsel order both a tax search and a lien search prior to the sale. If a Vacate Order and a Relocation Lien is noted after said date, foreclosure counsel must add any sums to the bid in order to avoid a shortfall. If the Vacate Order and Relocation Lien was filed prior to September 14, 2021, the statute indicates that it is to be treated like a mechanics’ lien.
Please contact David Schwartzberg, Foreclosure Counsel, at
email@example.com or 631.549.7721 with any questions.