N.Y. Real Property Actions & Proceedings Law § 756-a: Stay of action or proceeding when a party's claim to title is in dispute

§ 756-a. Stay of action or proceeding when a party's claim to title is

in dispute. 1. (a) A federal, state or local government agency may move

for a stay of any proceeding to recover possession of or quiet title to

real property relating to a residential dwelling unit or property, based

on a pending good faith investigation into the theft or fraud in the

title to, or the financing of, the premises that is the subject of any

proceeding. Upon the agency's showing of the pendency of a good faith

investigation, the court shall issue a stay of the proceeding, including

staying execution of a warrant of eviction or enforcement of a judgment

so long as the investigation is ongoing.

(b) Every six months, the court shall schedule a status conference

with the government agency and any other parties to the action to review

any stay and to determine if the investigation is still continuing in

good faith and shall continue the stay of the proceeding until the

government investigation is closed. If it should deem necessary, a court

may review any supporting documents filed by the government agency in

camera and to be filed under seal if deemed necessary by the government

agency.

2. The court shall stay all proceedings to recover possession of or

quiet title to real property relating to a residential dwelling unit or

property, where a charging instrument is filed against a party to such

proceeding for deed theft, larceny, offering a false instrument for

filing, criminal possession of stolen property or any other law

asserting theft or fraud in obtaining title to property and said

charging instrument relates to the premises that are the subject of such

proceeding. The stay shall remain in effect until resolution of such

criminal action.

3. The court shall stay all proceedings to recover possession of or

quiet title to real property relating to a residential dwelling unit or

property, where a federal, state or local government agency has

commenced a civil action or proceeding relating to the theft or fraud in

the title to, or the financing of, the premises that are the subject of

such proceeding.

4. The court shall stay all proceedings under section seven hundred

eleven or seven hundred thirteen of this article for ninety days to

allow a party to file a complaint in the appropriate forum when the

court makes a determination that there is a bona fide dispute between

parties purporting to own the property that is the subject of the

proceeding.

(a) A rebuttable presumption that a bona fide dispute to title exists

shall be created when the party disputing petitioner's title, owns or

owned the property that is the subject of the court proceeding during

the last three years, or is a person interested in the property, as

defined by section one hundred three of the surrogate's court procedure

act.

(b) A party may seek an additional stay of the proceeding beyond the

initial ninety day stay by the court if they were unable to file a

complaint or seek a stay from another forum. In extending the stay, the

court shall consider, without limitation, the totality of the

circumstances including steps the parties have taken to resolve the

dispute, the harm to the parties of a further stay, and the ability of

the parties to advocate for themselves or retain counsel.

(c) This section shall not apply to any proceeding commenced pursuant

to subdivision ten of section seven hundred thirteen of this article.

5. Nothing in this section shall diminish the court's own discretion

to further stay a proceeding in the interests of justice.

6. Nothing in this section shall limit a party from seeking relief,

including a stay of a proceeding under this article, in another court.

7. For purposes of this section, a proceeding to recover possession of

or quiet title to real property shall include any proceeding under

section seven hundred eleven or seven hundred thirteen of this article,

an ejectment action or a writ of assistance pursuant to section two

hundred twenty-one of this chapter, a foreclosure action, an action to

enforce a mortgage note, or any other action affecting title to or

encumbrance upon real property, or any other judicial or administrative

proceeding to recover possession of or quiet title to real property.

8. For purposes of this section, a party shall include:

(a) a corporation, limited liability company, partnership or other

entity where a charging instrument has been filed against an individual

who has a financial or controlling interest in the entity that holds

title to the property; or

(b) where a charging instrument has been filed against a seller of the

property, including an individual or corporation, limited liability

company, partnership or other entity, or where a charging instrument has

been filed against an individual who has a financial or controlling

interest in the entity that sold the property.