N.Y. Tax Law § 258 — Effect of nonpayment of taxes

§ 258. Effect of nonpayment of taxes. 1. No mortgage of real property\nshall be recorded by any county clerk or register, unless there shall be\npaid the taxes imposed by and as in this article provided. No mortgage\nof real property which is subject to the taxes imposed by this article\nshall be released, discharged of record or received in evidence in any\naction or proceeding, nor shall any assignment of or agreement extending\nany such mortgage be recorded unless the taxes imposed thereon by this\narticle shall have been paid as provided in this article. Provided,\nhowever, except as otherwise provided in subdivision two of this\nsection, in order to obtain a release or discharge of record where the\nmortgagor is not liable for the special additional tax imposed under\nsubdivision one-a of section two hundred fifty-three of this chapter,\nsuch mortgagor or any subsequent owner of the mortgaged property or a\npart thereof may pay the tax imposed under such subdivision one-a and\npenalty, and may either apply for the credit allowable under this\nchapter for payment of such additional tax or may maintain an action to\nrecover the amounts so paid against any person liable for payment of the\ntax or any subsequent assignees or owners of such mortgage or\nconsolidated mortgage of which such mortgage is a part, as if such\namounts of tax and penalty were a debt personally owed by such persons\nto the mortgagor or subsequent owner. No judgment or final order in any\naction or proceeding shall be made for the foreclosure or the\nenforcement of any mortgage which is subject to any tax imposed by this\narticle or of any debt or obligation secured by any such mortgage,\nunless the taxes imposed by this article shall have been paid as\nprovided in this article; and, except otherwise provided in subdivision\ntwo of this section, whenever it shall appear that any mortgage has been\nrecorded without payment of a tax imposed by this article there shall be\nadded to the tax a sum equal to one-half of one per centum thereof for\neach month or fraction of a month for the period that the tax remains\nunpaid except where it could not be determined from the face of the\ninstrument that a tax was due, or where an advance has been made on a\nprior advance mortgage or a corporate trust mortgage without payment of\nthe tax, in which case there shall be added to the tax a sum equal to\none per centum thereof for each month or fraction of a month for the\nperiod that the tax remains unpaid. In any case where a mortgage of real\nproperty subject to a tax imposed by this article has heretofore been\nrecorded or is hereafter recorded in good faith, and the county clerk or\nregister has held such mortgage nontaxable or taxable at one amount, and\nit shall later appear that it was taxable or taxable at a greater\namount, the commissioner of taxation and finance may remit the penalties\nin excess of one-half of one per centum per month.\n 2. In any city in this state having a population of one million or\nmore, in order to obtain a release or discharge of record where the\nmortgagor is not liable for the special additional tax imposed under\nsubdivision one-a of section two hundred fifty-three of this chapter,\nsuch mortgagor or any subsequent owner of the mortgaged property or a\npart thereof may pay the tax imposed under such subdivision one-a with\naccrued interest and any penalties, and may either apply for the credit\nallowable under this chapter for payment of such additional tax or may\nmaintain an action to recover the amounts so paid against any person\nliable for payment of the tax or any subsequent assignees or owners of\nsuch mortgage or consolidated mortgage of which such mortgage is a part,\nas if such amounts of tax and penalties were a debt personally owed by\nsuch persons to the mortgagor or subsequent owner. No judgment or final\norder in any action or proceeding shall be made for the foreclosure or\nthe enforcement of any mortgage which is subject to any tax imposed by\nthis article or of any debt or obligation secured by any such mortgage,\nunless the taxes imposed by this article shall have been paid as\nprovided in this article; and whenever it shall appear that any mortgage\nhas been recorded without payment of a tax imposed by this article there\nshall be added to the tax interest on the amount of tax not paid. The\ncommissioner of taxation and finance shall set the rate of interest to\nbe paid on any underpayment of tax imposed by this article at the rate\nof interest prescribed in subsection (e) of section one thousand\nninety-six of this chapter for underpayments of tax. Such interest shall\nbe compounded daily. In addition to interest there shall be added to the\ntax a penalty of ten percent of the amount of tax due for the first\nmonth of delay in payment of the tax plus two percent of the amount of\ntax for each month of delay thereafter, up to a maximum of twenty-five\npercent, where it could not be determined from the face of the\ninstrument that a tax was due, or where an advance has been made on a\nprior advance mortgage or a corporate trust mortgage or a re-advance had\nbeen made on a mortgage where the original indebtedness it secured had\nbeen paid in whole or in part. In any case where a mortgage of real\nproperty subject to a tax imposed by this article has heretofore been\nrecorded or is hereafter recorded in good faith, and the county clerk or\nregister has held such mortgage nontaxable or taxable at one amount, and\nit shall later appear that it was taxable or taxable at a greater\namount, the commissioner of taxation and finance may remit the penalties\nbut not interest.\n