N.Y. Tax Law § 255: Supplemental mortgages

§ 255. Supplemental mortgages. 1. (a) (i) If subsequent to the

recording of a mortgage on which all taxes, if any, accrued under this

article have been paid, a supplemental instrument or mortgage is

recorded for the purpose of correcting or perfecting any recorded

mortgage, or pursuant to some provision or covenant therein, or an

additional mortgage is recorded imposing the lien thereof upon property

not originally covered by or not described in such recorded primary

mortgage for the purpose of securing the principal indebtedness which is

or under any contingency may be secured by such recorded primary

mortgage, such additional instrument or mortgage shall not be subject to

taxation under this article, except as otherwise provided in paragraph

(b) of this subdivision, unless it creates or secures a new or further

indebtedness or obligation other than the principal indebtedness or

obligation secured by or which under any contingency may be secured by

the recorded primary mortgage, in which case, a tax is imposed as

provided by section two hundred and fifty-three of this article on such

new or further indebtedness or obligation.

(ii) Notwithstanding any provision to the contrary in subparagraph (i)

of this paragraph, the taxes imposed by or pursuant to the authority of

this article shall apply to the recording of a spreading agreement or

additional mortgage which imposes the lien thereof upon real property

located in any city in the state having a population of one million or

more and not originally covered by or described in a recorded primary

mortgage, unless the real property that becomes subject to the lien of

such spreading agreement or additional mortgage is owned by the

mortgagor of the real property subject to the lien of such recorded

primary mortgage. If the commissioner of taxation and finance finds that

transfers of one or both of such properties in connection with the

recording of the spreading agreement or additional mortgage have been

undertaken for the purpose of avoiding or evading the application of

this paragraph rather than solely for an independent business or

financial purpose, such commissioner may disregard such transfers. For

purposes of this subparagraph, there shall be a presumption that all

transfers of one or both of such properties to related parties within

the twelve-month period preceding the recording of such spreading

agreement or additional mortgage have been undertaken for tax avoidance

or evasion purposes and such presumption may be rebutted only with clear

and convincing evidence to the contrary. For this purpose, the term

"related" shall have the same meaning as in paragraph (b) of subdivision

two of section two hundred fifty-three-a of this article except that

references to "fifty percent" in such paragraph (b) shall be read as

"twenty-five percent".

(b) Notwithstanding any provision to the contrary in paragraph (a) of

this subdivision, taxes are imposed at the rates specified in paragraph

(a) of subdivision two of section two hundred fifty-three of this

chapter for each one hundred dollars and each remaining major fraction

thereof of principal indebtedness or obligation secured by or which

under any contingency may be secured by a supplemental instrument or

additional mortgage, whether or not there is any new or further

indebtedness or obligation other than the principal indebtedness or

obligation secured by the recorded primary mortgage, where (i) the

supplemental instrument or additional mortgage imposes the lien of a

recorded mortgage upon real property not previously subject to the

mortgage or where an additional mortgage upon such additional property

is recorded as additional or substitute security for indebtedness or

obligation already secured by a recorded mortgage and such property is

situated in a county where the tax imposed by such paragraph (a) is in

effect and (ii) the recorded primary mortgage was on real property

situated in a county which had suspended the tax imposed by such

paragraph (a) and the mortgage was recorded without payment of such tax.

The taxes imposed by this subdivision shall be distributed pursuant to

section two hundred sixty-one of this chapter in the same manner as a

tax imposed by subdivision two of section two hundred fifty-three of

this chapter.

(c) The taxes imposed by this section shall be paid to the proper

recording officer at the time the supplemental instrument or additional

mortgage is recorded.

2. (a) If, at the time of recording such instrument or additional

mortgage, any exemption is claimed under this section, there shall be

filed with the recording officer and preserved in his office a statement

under oath of the facts on which such claim for exemption is based. The

determination of the recording officer upon the question of exemption

shall be reviewable by the tax commission.

(b) If an exemption is claimed under this section, at any time after

such instrument or additional mortgage is recorded and tax paid, there

shall be filed with the tax commission, as part of the application for

refund a statement under oath of the facts on which such claim for

exemption is based. A copy of the order of refund of the tax commission

shall likewise be filed with the recording officer and preserved in his

office.