Zombie Property Maintenance
- Guidance to Mortgagees and Servicers Regarding Property Maintenance Obligations for Vacant and Abandoned Residential Properties
- September 2017 Industry Guidance
- Zombie Property Filing System Information
- Zombie Property: Expedited Foreclosure
- Jump Page to PFF Filing System
- Total number of loans originated in the state in 2017
- Best Practices: Inspecting, Securing, and Maintaining Vacant and Abandoned
- Zombie Property Legislation
The Duty to Inspect, Secure and Maintain Vacant and Abandoned Properties (Section 1308 of the Real Property Actions and Proceedings Law)
The law imposes a duty to inspect, secure and maintain vacant and abandoned properties on mortgagees or their servicing agents. There is an exemption for mortgagees with a relatively small share of the home mortgage market; specifically, the inspection and maintenance requirement does not apply to state or federally chartered banks, savings banks, savings and loan associations, or credit unions that (1) originate, own, service and maintain their mortgages or a portion thereof; and (2) originated, owned, serviced, or maintained less than three-tenths of one percent of the total loans originated in the state during the calendar year ending two years prior to the current year. Mortgagees wishing to apply for the exemption may do so by completing the exemption form and emailing it to [email protected].
NOTE: A party that is exempt pursuant to the above may still be required to inspect, service and maintain property under the Department’s Industry Best Practices: Inspecting, Securing, and Maintaining Vacant and Abandoned Property
Prospective Obligation Only - For state or federally chartered banks, savings banks, savings and loan associations, or credit unions that originated, owned, serviced or maintained between three-tenths and five-tenths of one percent of the total loans originated in the state during the calendar year ending two years prior to the current year, the duty to inspect, secure and maintain vacant and abandoned properties is prospective only.
The Department’s recently published final regulation, implementing the new legislation, explains how mortgagees are to determine whether they qualify for the exemption or the prospective-only obligation. Additional information regarding the total number of loans originated in the state in 2017 is available. The regulation also outlines other important procedures for complying with the new law’s inspection, maintenance and reporting requirements.
Subject to bankruptcy filings, cease and desist orders, threats of violence, or active loss mitigation efforts, the mortgagee or its agent must complete an exterior inspection of the subject property to determine occupancy within 90 days the date on which the loan for the property becomes delinquent. The servicer must conduct follow-up inspections every 25-35 days thereafter.
If the servicer or its agent determines that the property is vacant and abandoned (as defined in RPAPL § 1309), then it must, within seven business days of the determination, post notice on an easily accessible part of the property that would be reasonably visible to the borrower, property owner or occupant, and monitor the property (1) for any change in occupancy or contact with the borrower, property owner or occupant; and (2) to ensure that the notice remains posted so long as the duty to maintain the property (detailed below) applies. The posted notice shall provide the mortgagee's toll-free number or similar contact information. The mortgagee or its agent must continue to monitor the property for seven days thereafter. If there is no indication of occupancy during this seven-day period, the servicer must secure and maintain the property until the earliest of certain events described below.
To secure the property, the mortgagee or its agent shall:
- in cases where the property contains two or more points of ingress or egress, replace no more than one door lock to provide subsequent access to the property;
- secure, replace or board up broken doors and windows;
- secure any part of the property that may be deemed an attractive nuisance;
- take reasonable measures to ensure that pipes, ducts, conductors, fans and blowers do not discharge harmful gases, steam, vapor, hot air, grease, smoke, odors or other gaseous or particulate waste directly upon abutting or adjacent public or private property or that of another tenant;
- where appropriate, winterize the applicable plumbing and heating systems;
- provide basic utilities including, but not limited to, water, electricity, natural gas, propane and sewer service, as appropriate and, when allowed by the local utility provider, that are needed for the operation of a sump pump or dehumidifier, or when there are jointly owned or shared utilities with adjoining properties or units, except for turning off water service to prevent flooding or water leaks in the property, or when other utility service could reasonably create a hazard to the property or an unauthorized occupant or person entering the property;
- remove and remediate any significant health and safety issues, including outstanding code violations; and
- take reasonable measures to prevent the growth of harmful mold.
The mortgagee or servicer must also respond to government inquiries regarding property condition, subject to restrictions regarding financial privacy, and ensure that the posted notice remains posted on an easily accessible part of the property that would be reasonably visible to the borrower, property owner or occupant so long as the duty to maintain applies.
A mortgagee who has determined a property to be vacant and abandoned and who has secured the same shall take reasonable and necessary actions, to maintain the property in a manner consistent with the standards set forth in §§ 301, 302 (excluding 302.2, 302.6 and 302.8), 304.1, 304.3, 304.7, 304.10, 304.12, 304.13, 304.15, 304.16, 307.1, and 308.1 of the New York Property Maintenance Code, to the extent that the mortgagee is able to obtain necessary or required permits or approvals. These standards seek to ensure that the subject property does not create public health concerns or is otherwise not a blight to the neighborhood or local community.
Timeline for Duty to Inspect, Secure and Maintain Property
Inspecting the Property – An exterior inspection must be conducted within 90 days of a borrower falling into delinquency and, thereafter, every 25-35 days throughout the delinquency of the loan, at different times of the day.
Posting Notice on the Property – Notice, which includes contact information from the applicable mortgagee or servicer, must be posted within 7 business days of determining that the property is vacant and abandoned.
Securing the Property – If the posted notice is not responded to or persists for 7 consecutive calendar days without contact with the borrower, property owner or occupant indicating that the property is not vacant or abandoned, or if an emergent property condition that could reasonably damage, destroy or harm the property arises, the mortgagee or its servicing agent must secure the property.
Maintain – A mortgagee who has determined a property to be vacant and abandoned and who has secured the same shall take reasonable and necessary actions, to maintain the property until the earlier of the following events:
- an occupant of the property has asserted his or her right to occupy the property, or the mortgagee or its agents have received threats of violence;
- the borrower has filed for bankruptcy;
- a court has ordered the mortgagee to stop any maintenance of the property;
- a homeowners" association or cooperative has prevented the mortgagee from gaining access to or maintaining the property;
- the property has been sold or transferred to a new owner;
- the mortgagee or investor has released the lien on the property; or
- the mortgage note has been assigned, transferred or sold to another mortgagee.
Determining Whether a Property is Vacant and Abandoned
Pursuant to RPAPL § 1309, a property will be deemed “vacant and abandoned” if three consecutive inspections of such property conducted 25-35 days apart and at different times of the day show that:
- no occupant was present and there was no evidence of occupancy on the property to indicate that any persons are residing there; and
- the property was not being maintained in a manner consistent with the standards set forth in the New York Property Maintenance Code chapter 3 §§ 301, 302 (excluding 302.2, 302.6, 302.8), 304.1, 304.3, 304.7, 304.10, 304.12, 304.13, 304.15, 304.16, 307.1 and 308.1
Residential real property will also be deemed vacant and abandoned if:
- A court or other appropriate state or local governmental entity has formally determined,following due notice to the borrower at the property address and any other known addresses, that such property is vacant and abandoned; or
- Each borrower and owner has separately issued a sworn written statement, expressing his or her intent to vacate and abandon the property and an inspection of the property shows no evidence of occupancy to indicate that any persons are residing there.
Evidence of lack of occupancy shall include but not be limited to the following conditions:
- overgrown or dead vegetation;
- accumulation of newspapers, circulars, flyer or mail;
- past due utility notices, disconnected utilities, or utilities not in use;
- accumulation of trash, refuse or other debris;
- absence of window coverings;
- one or more boarded, missing or broken windows;
- the property is open to casual entry or trespass; or
- the property has a building or structure that is or appears structurally unsound or has any other condition that presents a potential hazard or danger to the safety of persons.
Residential real property will not be deemed vacant and abandoned if, on the property:
- there is an unoccupied building that is undergoing construction, renovation, or rehabilitation that is proceeding diligently to completion;
- there is a building occupied on a seasonal basis, but otherwise secure;
- there is a building that is secure, but is the subject of a probate action, action to quiet title, or other ownership dispute of which the mortgagee has actual notice;
- there is a building damaged by a natural disaster and one or more owner intends to repair and reoccupy the property; or
- there is a building occupied by the mortgagor, a relative of the mortgagor or a tenant lawfully in possession.
Violations of RPAPL § 1308 may be heard by a hearing officer or a court of competent jurisdiction. The Superintendent is authorized to pursue any suspected violation, as is the municipality in which the subject property is located. If it shall appear to the satisfaction of the court (or its designated hearing officer), based on the preponderance of the evidence, that a violation exists, a civil penalty may be issued in the amount of up to $500 per day, per property for each day the violation persists. Moreover, the municipality in which the property is located, shall have the right to, upon notice, enter and maintain the property and shall have a cause of action against the applicable mortgagee or servicer to recover any costs incurred in the process. Any municipality wishing to take such action shall provide the Superintendent with at least ten days’ notice by completing the Notice Form and returning it to [email protected].
Email [email protected].