N.Y. Tax Law § 256: Mortgages for indefinite amounts or for contract obligations

§ 256. Mortgages for indefinite amounts or for contract obligations.

If the principal indebtedness secured or which by any contingency may be

secured by a mortgage is not determinable from the terms of the

mortgage, or if a mortgage is given to secure the performance by the

mortgagor or any other person of a contract obligation other than the

payment of a specific sum of money and the maximum amount secured or

which by any contingency may be secured by the mortgage is not expressed

therein, such mortgage shall be taxable under section two hundred and

fifty-three of this chapter upon the value of the property covered by

the mortgage, which shall be determined by the recording officer to whom

such mortgage is presented for record, unless at the time of presenting

such mortgage for record the owner thereof shall file with the recording

officer a sworn statement of the maximum amount secured or which under

any contingency may be secured by the mortgage. If such maximum amount

is expressed in the mortgage or in a sworn statement filed as required

by this section, such amount shall be the basis for assessing the tax

imposed by this article. A statement filed by the owner of a mortgage

pursuant to this section shall thereafter at all times be binding upon

and conclusive against such owner, the holders of any bonds or

obligations secured by such mortgage and all persons claiming through

the mortgagee any interest in the mortgage or the mortgaged premises. If

the maximum amount secured or which by any contingency may be secured by

the mortgage is not expressed in the mortgage or in a sworn statement as

authorized by this section, the recording officer at the time such

mortgage is offered for record may require the mortgagor or mortgagee to

furnish him with proofs as to such facts as he deems necessary for the

purpose of computing the value of the property covered by the mortgage

and such proofs shall include an affidavit of appraisal of the value of

the property made by at least two competent, disinterested persons and

shall be preserved in his office. His determination and copies of the

proofs as to the basis for computing the tax on such mortgage shall be

forwarded to and subject to review by the state tax commission. Such

mortgage shall not be recorded until the statement is filed or the

proofs are furnished as required by this article.

Whenever any such mortgage shall have been recorded without the

payment of the tax as herein provided, and it shall thereafter be

determined by the tax commission, after an opportunity to be heard by

the parties in interest, that the failure to pay such tax was due to an

honest misconception on the part of the recording officer or the owner

of the instrument as to the nature of such instrument and its taxability

under this article, the tax commission may make an order permitting the

recording officer to file the aforesaid statement nunc pro tunc as of

the date of the recording of the mortgage. The payment of the tax may be

made on the basis of such statement with interest thereon at the rate of

six per centum per annum as provided in section two hundred and

fifty-eight of this article.