Bill Text: NY A10542 | 2023-2024 | General Assembly | Introduced


Bill Title: Enacts the "city of Buffalo historic preservation receivership act"; provides the city of Buffalo specific procedures for the appointment of a receiver of rents in instances where the property at issue is neglected or abandoned.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2024-06-03 - referred to cities [A10542 Detail]

Download: New_York-2023-A10542-Introduced.html



                STATE OF NEW YORK
        ________________________________________________________________________

                                          10542

                   IN ASSEMBLY

                                      June 3, 2024
                                       ___________

        Introduced  by  COMMITTEE ON RULES -- (at request of M. of A. Rivera) --
          read once and referred to the Committee on Cities

        AN ACT in relation to enacting the "city of Buffalo  historic  preserva-
          tion receivership act"

          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:

     1    Section 1. Short Title. This act shall be known and may  be  cited  as
     2  the "city of Buffalo historic preservation receivership act".
     3    §  2.  Legislative  findings and purpose. The legislature hereby finds
     4  and declares that:
     5    1. the city of Buffalo is home to many buildings of  historic  signif-
     6  icance,  and  such  buildings contribute to the cultural heritage of the
     7  state and are a testament to its rich history and diverse population;
     8    2. many such historic buildings  are  abandoned  and/or  neglected  by
     9  their owners of record, or no such owner may be found;
    10    3. such neglected and abandoned buildings are a blight on their commu-
    11  nities and on the state as a whole;
    12    4. the state of New York imbued the city of Buffalo housing court with
    13  jurisdiction  over  "proceedings  for  the  appointment of a receiver of
    14  rents, issues and profits of buildings in order to remove  or  remedy  a
    15  nuisance  or  to  make  repairs  required  to be made under such housing
    16  codes," under subdivision (f) of section 202 of article X of chapter 570
    17  of the laws of 1909; and
    18    5. the legislature resolves to provide the city  of  Buffalo  specific
    19  procedures for the appointment of a receiver of rents in instances where
    20  the property at issue is neglected or abandoned as defined in this act.
    21    §  3.  Definitions.  For the purposes of this act, the following terms
    22  shall have the following meanings:
    23    1. "abandoned property" means a property meeting the following  condi-
    24  tions  at  the time a petition is filed pursuant to section four of this
    25  act:
    26    (a) the building has not been legally occupied for at least 12 months;
    27    (b) the owner fails to present  compelling  evidence  that  they  have
    28  actively  marketed  the  property during the preceding 60-day period and

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD13644-01-3

        A. 10542                            2

     1  made a good faith effort to sell the property at a price which  reflects
     2  the circumstances and market conditions;
     3    (c)  the property is not subject to a pending foreclosure action by an
     4  individual or nongovernmental entity;
     5    (d) the current owner fails to present sufficient evidence  that  they
     6  acquired  the  property  within  the preceding six months. Such evidence
     7  shall not include instances where the prior owner is  a  member  of  the
     8  current  owner,  unless  the transfer of title results from the death of
     9  the prior owner, or where the current or prior owner is  a  corporation,
    10  partnership,  or  other  entity  in  which either owner or the immediate
    11  family of either owner has an interest in excess of 5 percent; and
    12    (e) the court finds at least three of the following:
    13    (i) the building or physical structure is a public nuisance;
    14    (ii) the building is in need  of  substantial  rehabilitation  and  no
    15  rehabilitation has taken place during the previous 12 months;
    16    (iii) the building is unfit for human habitation, occupancy, or use;
    17    (iv) the condition and vacancy of the building materially increase the
    18  risk of fire to the building and to adjacent properties;
    19    (v) the building is subject to unauthorized entry leading to potential
    20  health and safety hazards and one of the following applies:
    21    (A)  the owner has failed to take reasonable and necessary measures to
    22  secure the building; or
    23    (B) the city of Buffalo has secured the building in order  to  prevent
    24  such hazards after the owner failed to do so;
    25    (vi)  the  property  is an attractive nuisance to children, including,
    26  but not limited to, the presence of abandoned wells, shafts,  basements,
    27  excavations and unsafe structures;
    28    (vii)  the  presence  of  vermin  or the accumulation of debris, uncut
    29  vegetation, or physical deterioration or the structure  or  grounds  has
    30  created  potential health and safety hazards and the owner has failed to
    31  take reasonable and necessary measures to remove the hazards;
    32    (viii) the dilapidated appearance or other condition of  the  building
    33  negatively  affects  the economic well-being of residents and businesses
    34  in close proximity to the  building,  including  decreases  in  property
    35  value  and loss of business, and the owner has failed to take reasonable
    36  and necessary measures to remedy appearance or the condition; or
    37    (ix) the property is an attractive nuisance for illicit purposes;
    38    2. "actively marketed" means a "for sale" sign has been placed on  the
    39  property  with  accurate  contact  information and the owner has done at
    40  least one of the following:
    41    (a) engaged the services of a licensee under the real property law, to
    42  place the property in a multiple listing service or otherwise market the
    43  property;
    44    (b) placed weekly or more frequent advertisements in  print  or  elec-
    45  tronic media; or
    46    (c) distributed printed advertisements;
    47    3.  "building" means a residential, commercial, or industrial building
    48  or structure and the land appurtenant thereto, including a vacant lot on
    49  which a building has been demolished;
    50    4. "code" means  a  building,  housing,  property  maintenance,  fire,
    51  health  or  other public safety law or ordinance enacted by the state of
    52  New York or the city of Buffalo;
    53    5. "competent entity" means a person or  entity  including  a  govern-
    54  mental  unit  with  experience  in  the  rehabilitation  of residential,
    55  commercial, or industrial buildings and the ability to provide or obtain
    56  the necessary financing for such rehabilitation;

        A. 10542                            3

     1    6.  "costs  of  rehabilitation"  means  the  costs  and  expenses  for
     2  construction,  stabilization, rehabilitation, maintenance, and operation
     3  or demolition, including reasonable  non-construction  costs  associated
     4  with  the  project,  including but not limited to, environmental remedi-
     5  ation,  architectural,  engineering,  and legal fees and costs, permits,
     6  financing fees, and a receiver's or developer's fee;
     7    7. "court" means the city of Buffalo housing court;
     8    8. "historic property"  means  a  property  which  is  listed  on  the
     9  national  register of historic places or is a contributing property in a
    10  national register historic district or is located in a local  government
    11  ordinance historic district;
    12    9. "immediate family" means a parent, spouse, child, or sibling;
    13    10. "nonprofit corporation" means a nonprofit corporation that has, as
    14  one of its purposes, remediation of blight, community development activ-
    15  ities,  including  economic  development,  historic preservation, or the
    16  promotion or enhancement of affordable housing opportunities;
    17    11. "owner" means the holder or holders of a title to, or of  a  legal
    18  or  equitable  interest  in,  a  residential,  commercial, or industrial
    19  building.  The term shall include an heir, assignee, trustee,  benefici-
    20  ary,  and  lessee  provided  that  the ownership interest is a matter of
    21  public record;
    22    12. "party in interest" means a person or entity who  has  direct  and
    23  immediate interest in a residential, commercial, or industrial building,
    24  including:
    25    (a) the owner;
    26    (b) a lienholder or other secured creditor of the owner;
    27    (c) a resident or business owner within 2,000 feet of the building;
    28    (d)  a  nonprofit  corporation,  including a redevelopment corporation
    29  located in the city of Buffalo; or
    30    (e) the city of Buffalo;
    31    13. "public nuisance" means  a  property  that,  because  of  physical
    32  condition or use, has been declared by the appropriate official a public
    33  nuisance  in  accordance with the local housing, building, health, fire,
    34  or related code or is determined to be a public nuisance by the court;
    35    14. "substantial rehabilitation" means repairs to the building where:
    36    (a) the cost of repairs, replacements,  and  improvements  exceeds  15
    37  percent  of  the  property's  value  after  completion  of  all repairs,
    38  replacements, and improvements; or
    39    (b) more than one major building component is replaced. Major building
    40  components include:
    41    (i) roof structures;
    42    (ii) ceilings;
    43    (iii) wall or floor structures;
    44    (iv) plumbing systems;
    45    (v) heating and air conditioning systems; and
    46    (vi) electrical systems; and
    47    15. "receiver or developer's fee" means a fee equal to the greatest of
    48  the following:
    49    (a) an amount equal to $2,500, adjusted upward by 2 percent each year;
    50    (b) a 20 percent markup of the costs and  expenses  for  construction,
    51  stabilization,  rehabilitation, maintenance, and operation or demolition
    52  as described in the proposed receiver's plan approved by the court; or
    53    (c) 20 percent of the sale price of the property.
    54    § 4. Initiation of action. 1. Filing of petition. A petition  for  the
    55  appointment  of a receiver to take possession and to undertake rehabili-
    56  tation of a building may be filed by a party in interest in the city  of

        A. 10542                            4

     1  Buffalo  housing  court. The proceeding on the petition shall constitute
     2  an action in rem.
     3    2. Contents. The petition submitted to the court shall include a sworn
     4  statement  that, to the best of the petitioner's knowledge, the property
     5  is an abandoned building as defined in section three of this act, and to
     6  the extent available, after reasonable efforts to obtain  such  informa-
     7  tion:
     8    (a)  a copy of any citation charging the owner with being in violation
     9  of municipal code requirements or declaring the building to be a  public
    10  nuisance;
    11    (b)  a recommendation as to which person or entity should be appointed
    12  receiver;
    13    (c) a preliminary plan with initial cost estimates for  rehabilitation
    14  of the building to bring it into compliance with all municipal codes and
    15  duly  adopted  plans  for  the area in which the building is located and
    16  anticipated funding sources; and
    17    (d) a schedule of mortgages, liens,  and  other  encumbrances  on  the
    18  property.
    19    3.  Notice  of  lis pendens. The petitioner shall file a notice of lis
    20  pendens in the office of the recorder of deeds for Erie county.
    21    4. Notification of the owner, political subdivisions, and lienholders.
    22  (a) Upon filing the petition with the court, the petitioner shall notify
    23  the current owner of the property, all political subdivisions  in  which
    24  the  property  is  located,  all city authorities known to have provided
    25  services to the property, and all lienholders of the  filing  by  regis-
    26  tered or certified mail to the last known address of each and by posting
    27  a copy of the notice on the building.
    28    (b)  In  the  event  the registered or certified mail is returned with
    29  notation by the postal authorities that the recipient refused to  accept
    30  the  mail,  the  petitioner may mail a copy to the recipient at the same
    31  address by ordinary mail with  the  return  address  of  the  petitioner
    32  appearing thereon.
    33    (c) Service by ordinary mail shall be presumed complete if the mail is
    34  not returned to the petitioner within 30 days after mailing.
    35    (d)  In  the  event  that the registered or certified mail is returned
    36  with the notation by the postal authorities that it was  unclaimed,  the
    37  notice shall be personally served.
    38    (e)  In  the  event  that  the personal service is not able to be made
    39  after two such attempts, the petitioner shall mail the petition  to  the
    40  recipient  at  the same address by ordinary mail with the return address
    41  of the petitioner appearing thereon with service by ordinary mail deemed
    42  completed if the mail is not returned to the petitioner within  15  days
    43  after the mailing.
    44    (f)  The petitioner shall also notify the owner and each lienholder of
    45  the hearing date and provide notice that owner and lienholders may peti-
    46  tion to intervene in the action.
    47    5. Adjacent properties. The petition may include one or more  adjacent
    48  properties in a single action if:
    49    (a) the property that is the primary subject of the action is owned by
    50  the same owner as the adjacent property; and
    51    (b) the properties were used for a single or interrelated purpose.
    52    § 5. Appointment of the receiver. 1. General rule. The court shall act
    53  upon a petition submitted by holding a hearing within 60 days of receipt
    54  of  petition  and  by  rendering  a decision no later than 30 days after
    55  completion of the hearing.

        A. 10542                            5

     1    2. Intervention. A party in interest may intervene in  the  proceeding
     2  and  be  heard with respect to the petition, the requested relief or any
     3  other matter which may come before the  court  in  connection  with  the
     4  proceeding.
     5    3.  Hearing.  At the hearing, any party in interest shall be permitted
     6  to present evidence to support or contest the petition,  including,  but
     7  not limited to, the schedule of encumbrances.
     8    4.  Conditions  for  receivership.  If  a petition is filed under this
     9  section, the court may appoint a receiver if the building  at  issue  is
    10  found  to  be  an abandoned building as defined in section three of this
    11  act.
    12    5. Appointment. (a) If the court determines after a hearing  that  the
    13  property  has met the conditions outlined in the definition of abandoned
    14  building in section three of this act, the court may appoint a receiver,
    15  certify the schedule of encumbrances, and grant other relief as  may  be
    16  just and appropriate. The certification shall be binding with respect to
    17  all mortgages, liens, and encumbrances, including municipal liens, aris-
    18  ing or attaching to the property prior to the date of the petition.
    19    (b)  The  court  shall  give  first  consideration  for appointment as
    20  receiver to the most senior nongovernmental lienholder on the property.
    21    (c) In the event that the senior lienholder is found to be not  compe-
    22  tent  or  declines  the  appointment,  the court may appoint a nonprofit
    23  corporation or other competent entity. In  appointing  a  receiver,  the
    24  court shall:
    25    (i)  consider  any recommendations contained in the petition or other-
    26  wise presented by a party in interest; and
    27    (ii) give preference to the appointment of a nonprofit corporation  or
    28  governmental unit over an individual.
    29    6. Conditional relief. (a) If the court finds after a hearing that the
    30  conditions  for receivership set forth in section three of this act have
    31  been  established,  but  the  owner  represents  that  the   conditions,
    32  violations  or  nuisance,  or  emergency  condition  will be abated in a
    33  reasonable period, the court may allow the owner to  proceed  to  remedy
    34  the conditions.
    35    (b)  If  the conditions set forth in paragraph (a) of this subdivision
    36  have been satisfied, the court shall enter an order providing  that,  in
    37  the  event  that  the violations or nuisance or emergency conditions are
    38  not abated by the owner by a specific date or that other specified reme-
    39  dial activities have not occurred by a specific date or dates, an  order
    40  granting the relief specified in in the petition shall be entered.
    41    (c)  The  court  shall  also  require  the owner to post a bond in the
    42  amount of the repair costs estimated in the petition as a  condition  of
    43  retaining possession of the building.
    44    (d) Upon a finding that:
    45    (i) the petition states conditions for receivership; or
    46    (ii) the owner elects to either:
    47    (A) remedy all violations and nuisance or emergency conditions; or
    48    (B)  sell  the  property  subject to the receivership, the owner shall
    49  reimburse the petitioner for all costs incurred  by  the  petitioner  in
    50  preparing and filing the petition in accordance with the requirements of
    51  section four of this act and the receiver or developer's fee.
    52    7.  Receiver's lien. The receiver may file a lien against the property
    53  in an amount equal  to  the  costs  incurred  during  the  receivership,
    54  including,  but  not limited to, costs of rehabilitation, attorney fees,
    55  and court costs. The lien amount may be adjusted from time to time.

        A. 10542                            6

     1    8. Immediate possession. The receiver shall promptly  take  possession
     2  of the building and other property subject to the receivership and shall
     3  immediately be authorized to exercise all powers of this act.
     4    9. Removal by the court. A receiver may be removed by the court at any
     5  time  upon  the  request of the receiver or upon a showing by a party to
     6  the action that the receiver is not carrying  out  its  responsibilities
     7  under this act.
     8    § 6. Powers and duties of the receiver. 1. Full powers and duties. The
     9  receiver shall have all powers and duties necessary or desirable for the
    10  efficient  operation,  management,  and  improvement  of the building in
    11  order to bring it into compliance with all municipal building and  hous-
    12  ing  code  requirements  and  to fulfill the receiver's responsibilities
    13  under this act. Such powers and duties shall include, but not be limited
    14  to, the power to:
    15    (a) take possession and control of the building, appurtenant land  and
    16  any  personal  property  of the owner used with respect to the building,
    17  including any bank or operating account for the building;
    18    (b) collect outstanding accounts receivable;
    19    (c) pursue all claims or causes of action of the owner with respect to
    20  the building and all other property subject to the receivership;
    21    (d) contract for the repair  and  maintenance  of  the  building.  The
    22  contracts  shall be appropriately documented and included in the reports
    23  and accounting which the receiver is required to submit  or  file  under
    24  the  provisions of this act. The receiver shall make a reasonable effort
    25  to solicit three bids for contracts valued at more than  $25,000  except
    26  when  the  receiver  or  developer provides or obtains financing for the
    27  receivership;
    28    (e) borrow money and incur credit in accordance with section eight  of
    29  this act;
    30    (f)  contract and pay for the maintenance and restoration of utilities
    31  to the building;
    32    (g) purchase materials, goods, and supplies to accomplish repairs  and
    33  operate the building;
    34    (h)  with  the  court's  approval, enter into new rental contracts and
    35  leases for a period not to exceed one year;
    36    (i) affirm, renew, or enter into  contracts  providing  for  insurance
    37  coverage on the building;
    38    (j)  engage  and  pay  legal,  accounting, appraisal and other profes-
    39  sionals to aid the receiver in the conduct of the receivership;
    40    (k) when the building has been designated a historic property, consult
    41  with the preservation board of the city of Buffalo  for  recommendations
    42  on preserving the property's historic character;
    43    (l) apply for and receive public grants or loans;
    44    (m) sell the building in accordance with section nine of this act; and
    45    (n) exercise all authority that an owner of the building would have to
    46  improve,  maintain,  and  otherwise  manage  the building, including the
    47  extent to which rehabilitation will satisfy the goals of  the  receiver-
    48  ship.
    49    2. Affirmative duty. While in possession of the building, the receiver
    50  shall:
    51    (a) maintain, safeguard and insure the building;
    52    (b)  apply all revenue generated from the building consistent with the
    53  provisions of this act;
    54    (c) develop a final plan for abatement of the conditions which  caused
    55  the  petition  to  be  granted or, if no such feasible final plan can be

        A. 10542                            7

     1  developed, to develop alternatives, including the closing,  sealing,  or
     2  demolition of all or part of the building;
     3    (d)  when  the  building  has  been designated as a historic property,
     4  rehabilitate architectural features that define the property's  historic
     5  character;
     6    (e) when demolition of a property in a historic district is necessary,
     7  design  any replacement construction on the site to comply with applica-
     8  ble standards under current law;
     9    (f) implement the final plan referred to  in  paragraph  (c)  of  this
    10  subdivision upon approval by the court;
    11    (g)  submit  a  status  report  to the court and parties to the action
    12  annually or more frequently as  the  court  may  deem  appropriate.  The
    13  status report shall include:
    14    (i)  a copy of any contract entered into by the receiver regarding the
    15  improvement of the building;
    16    (ii) an account of the disposition of all revenue generated  from  the
    17  building;
    18    (iii) an account of all expenses and improvements;
    19    (iv) the status of developing and implementing the final plan pursuant
    20  to this subdivision; and
    21    (v)  a description of any proposed actions to be taken in the next six
    22  months to improve the building.
    23    3. Hearing on receiver's final plan for abatement. (a) At the time the
    24  court appoints a receiver, the receiver may present and  the  court  may
    25  approve  the  final  plan for abatement. If no plan is presented at that
    26  hearing, a hearing date on the receiver's final plan for abatement shall
    27  be set within 120 days of the appointment.
    28    (b) 30 days prior to the date  of  the  hearing,  the  receiver  shall
    29  submit the plan to the court, and to all parties to the action.
    30    (c)  The  plan  shall  include  a cost estimate, a financing plan, and
    31  either a description of the work to be done for  the  rehabilitation  of
    32  the  building,  or if rehabilitation is not feasible, a proposal for the
    33  closing, sealing, or demolition of the building.
    34    (d) The plan shall conform with all  existing  municipal  codes,  duly
    35  adopted plans for the area, and historic preservation requirements.
    36    (e)  At  the  time  of  the  hearing,  all parties shall be allowed to
    37  comment on the plan, and the court shall take all comments into  consid-
    38  eration  when  assessing  the  feasibility  of the plan and the proposed
    39  financing.  In making its assessment, the court  shall  give  reasonable
    40  regard  to  the  receiver's  determination of the scope and necessity of
    41  work to be done for the rehabilitation or demolition of the building  in
    42  approving  the final plan and in approving the costs of receivership and
    43  sale of the property.
    44    (f) Within 15 days of the hearing, the court shall  issue  a  decision
    45  approving the plan or requiring that the plan be amended.
    46    (g) If the court decision requires that the plan be amended, a hearing
    47  date shall be set within 60 days from the date of the decision.
    48    4.  Accounting.  Upon the implementation of the final plan approved by
    49  the court, the receiver shall file with the court a full  accounting  of
    50  all income and expenditures during the period of time it took to approve
    51  the final plan.
    52    §  7.  Ownership of property. 1. Ownership interest of the receiver. A
    53  receiver appointed under section five of this act  shall  be  deemed  to
    54  have  an ownership interest in and legal control of the property for the
    55  purposes of filing plans with public agencies and  boards,  seeking  and

        A. 10542                            8

     1  obtaining construction permits and other approvals and submitting appli-
     2  cations for financing or other assistance to public or private entities.
     3    2.  Liability  of owner. Notwithstanding the appointment of a receiver
     4  under section five of this act, nothing in this act shall  be  construed
     5  to  relieve the owner of any civil or criminal liability or of any obli-
     6  gation to pay taxes, municipal liens  and  charges,  mortgages,  private
     7  liens  or  other  fees  or charges, whether incurred before or after the
     8  appointment of the receiver and no such liability shall  be  transferred
     9  to the receiver.
    10    3.  Limitation of the receiver's environmental liability. (a) Notwith-
    11  standing any law to the contrary, the receiver shall not be held  liable
    12  for  any  environmental damage to the building or the real property upon
    13  which the building is located that existed prior to the  appointment  by
    14  the court of the receiver.
    15    (b)  Paragraph (a) of this subdivision shall not apply to the owner or
    16  any other person or entity regarding the building and its real  property
    17  that is subject to an appointed receiver under this act.
    18    §  8.  Incurring  indebtedness.  1.  Borrowing.  From  time to time, a
    19  receiver may borrow money or incur indebtedness in order  to  cover  the
    20  costs  of rehabilitation or otherwise fulfill the receiver's obligations
    21  under this act.
    22    2. Liens. In order to facilitate the borrowing of funds for the  costs
    23  of  rehabilitation,  the court may grant priority status to a lien given
    24  to secure payment on a debt incurred for purposes authorized under  this
    25  act, provided that:
    26    (a)  the  receiver  sought  to obtain the necessary financing from the
    27  senior, nongovernmental  lienholder,  but  the  lienholder  declined  to
    28  provide financing for reasonable improvements or other costs of rehabil-
    29  itation on reasonable terms; and
    30    (b)  lien  priority  is necessary in order to induce another lender to
    31  provide financing on reasonable terms.
    32    3. Lien status of rehabilitation expenses. Should the senior lienhold-
    33  er agree to provide financing for the costs of rehabilitation, any funds
    34  lent to cover the costs shall be  deemed  to  be  added  to  the  senior
    35  lienholder's preexisting first lien.
    36    4.  Approval  of  financing.  The  court may approve financing for the
    37  costs of rehabilitation, the terms of which may include deferred  repay-
    38  ment  and  use  restrictions. The terms of the financing may remain with
    39  the property after the receivership has ended and be assumed by  any  of
    40  the following:
    41    (a)  the  owner, if the owner regains possession of the property under
    42  section ten of this act; or
    43    (b) the buyer who takes title under section nine of this act.
    44    § 9. Sale of property. 1. Sale by owner or lienholder. If  a  property
    45  subject  to  receivership  is  sold by the owner or foreclosed upon by a
    46  lienholder or if any interest therein is transferred, such  sale,  fore-
    47  closure, or transfer shall be subject to the receivership.
    48    2.  Sale  by receiver. Upon application of the receiver, the court may
    49  order the sale of the property if the court finds that:
    50    (a) notice and an opportunity to provide  comment  to  the  court  was
    51  given to each record owner of the property and each lienholder;
    52    (b)  the  receiver  has  been in control of the building for more than
    53  three months and the owner has not successfully petitioned to  terminate
    54  the receivership under section ten of this act; and
    55    (c)  the  terms and conditions of the sale are acceptable to the court
    56  and the buyer has a reasonable likelihood of maintaining the property.

        A. 10542                            9

     1    3. Sale free and clear. (a) The court may authorize  the  receiver  to
     2  sell the building free and clear of all liens, claims, and encumbrances,
     3  provided  that  the  proceeds  of  the  sale are distributed pursuant to
     4  subdivision four of this section at settlement.
     5    (b) In the event that the proceeds of the sale are insufficient to pay
     6  all  existing  liens,  claims,  and  encumbrances, the proceeds shall be
     7  distributed according to the priorities set forth in subdivision four of
     8  this section and all unpaid liens, claims, or  encumbrances  which  have
     9  not  been  assumed  under  subdivision four of section eight of this act
    10  shall be extinguished.
    11    4. Distribution. The proceeds of the sale shall be applied in  accord-
    12  ance with the following priorities to:
    13    (a) all court costs;
    14    (b)  liens  of the state, liens for unpaid property taxes and properly
    15  recorded municipal liens;
    16    (c) costs and expenses of sale;
    17    (d) principal and interest on any borrowing or incurrence  of  indebt-
    18  edness granted priority over existing liens and security interests under
    19  subdivision two of section eight of this act;
    20    (e) costs incurred by the petitioner in preparing and filing the peti-
    21  tion in accordance with the requirements of section four of this act;
    22    (f)  costs of rehabilitation and any fees and expenses incurred by the
    23  receiver in connection with the sale or the safeguarding of the property
    24  for which the lien authorized under subdivision seven of section five of
    25  this act was filed;
    26    (g) valid liens and security interests in accordance with their prior-
    27  ity;
    28    (h) any unpaid obligations of the receiver; and
    29    (i) the owner.
    30    5. Owner's proceeds as unclaimed property.  In  the  event  the  owner
    31  cannot  be located, any proceeds from the sale which belong to the owner
    32  shall be presumed to be abandoned and unclaimed and shall be subject  to
    33  the  custody  and  control of the New York state comptroller's office of
    34  unclaimed funds pursuant to the abandoned property law.
    35    § 10. Termination of the receivership. Upon  request  of  a  party  in
    36  interest  or  the  receiver,  the court may order the termination of the
    37  receivership if it determines:
    38    1. The conditions that were the grounds for the petition and all other
    39  code violations have been abated  or  corrected,  and  the  obligations,
    40  expenses,  and  improvements of the receivership, including all fees and
    41  expenses of the receiver, have been fully paid or provided for  and  the
    42  purposes of the receivership have been fulfilled;
    43    2.  The owner, mortgagee, or lienholder has requested that the receiv-
    44  ership be terminated and has provided adequate assurances to  the  court
    45  that  the  conditions  that constituted grounds for the petition will be
    46  promptly abated, all obligations,  expenses,  and  improvements  of  the
    47  receivership  including all fees and expenses of the receiver, have been
    48  fully paid or provided for and the purposes  of  the  receivership  have
    49  been fulfilled;
    50    3.  The  building  has  been  sold  by  the  receiver and the proceeds
    51  distributed in accordance with subdivision four of section nine of  this
    52  act; or
    53    4.  The  receiver has been unable, after diligent effort, to present a
    54  plan that could be approved under paragraph (c) of  subdivision  two  of
    55  section  six  of this act or to implement a previously approved plan, or
    56  for any reason, the purpose of the receivership cannot be fulfilled.

        A. 10542                           10

     1    § 11. Applicability. 1. General inapplicability. This  act  shall  not
     2  apply to commercial and residential buildings, structures, or land owned
     3  by  or  held in trust for the federal government and regulated under the
     4  United States Housing Act of 1937 (42 U.S.C. § 1437 et. seq.) and  regu-
     5  lations promulgated under such act.
     6    2. Inapplicability to service members. This act shall not apply if the
     7  property  owner  has  vacated  the property in order to perform military
     8  service in time of war, armed conflict,  or  in  order  to  assist  with
     9  relief  efforts during a declared federal or state emergency as a member
    10  of the United States armed forces or its reserve component.
    11    § 12. This act shall take effect on the ninetieth day after  it  shall
    12  have become a law.
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