Assembly advances one-year in-rem tax-foreclosure moratorium to codify post-Tyler guidance

The Assembly approved a measure intended to give New York local tax districts time to come into compliance with a recent U.S. Supreme Court ruling on surplus proceeds from tax sales.

Sponsor Miss Hunter defended the proposal as a short, one-year moratorium "to codify that" de facto pause and allow municipalities subject to Article 11 to create uniform procedures to return surplus sale proceeds to former owners. The bill limits conveyances of tax-delinquent parcels and requires any excess post-sale proceeds to be held in trust during the moratorium.

Opponents repeatedly warned of steep fiscal effects for counties. "In my county it was a $5,000,000 hole," a member said, adding the state total could be far higher; another Republican caucus member called the proposal the wrong approach and urged a legislative solution that simply requires counties to hold proceeds in trust rather than stopping foreclosures outright. Critics also said a short carve-out tied to title acquired in a narrow window could create unfair winners and losers among counties.

Miss Hunter and supporters said the moratorium is meant to be temporary and targeted to municipalities that are bound by Article 11 and therefore cannot unilaterally adopt compliance rules; they also argued codifying the pause will let the Legislature craft a consistent fix. Supporters pointed to the need to protect homeowners who may be entitled to surplus proceeds after the Court ecision.

The Assembly recorded the bill's passage after floor debate. The bill now moves to the next steps in Albanyor final enactment and any intergovernmental consultations.