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

§ 258. Effect of nonpayment of taxes. 1. No mortgage of real property

shall be recorded by any county clerk or register, unless there shall be

paid the taxes imposed by and as in this article provided. No mortgage

of real property which is subject to the taxes imposed by this article

shall be released, discharged of record or received in evidence in any

action or proceeding, nor shall any assignment of or agreement extending

any such mortgage be recorded unless the taxes imposed thereon by this

article shall have been paid as provided in this article. Provided,

however, except as otherwise provided in subdivision two of this

section, in order to obtain a release or discharge of record where the

mortgagor is not liable for the special additional tax imposed under

subdivision one-a of section two hundred fifty-three of this chapter,

such mortgagor or any subsequent owner of the mortgaged property or a

part thereof may pay the tax imposed under such subdivision one-a and

penalty, and may either apply for the credit allowable under this

chapter for payment of such additional tax or may maintain an action to

recover the amounts so paid against any person liable for payment of the

tax or any subsequent assignees or owners of such mortgage or

consolidated mortgage of which such mortgage is a part, as if such

amounts of tax and penalty were a debt personally owed by such persons

to the mortgagor or subsequent owner. No judgment or final order in any

action or proceeding shall be made for the foreclosure or the

enforcement of any mortgage which is subject to any tax imposed by this

article or of any debt or obligation secured by any such mortgage,

unless the taxes imposed by this article shall have been paid as

provided in this article; and, except otherwise provided in subdivision

two of this section, whenever it shall appear that any mortgage has been

recorded without payment of a tax imposed by this article there shall be

added to the tax a sum equal to one-half of one per centum thereof for

each month or fraction of a month for the period that the tax remains

unpaid except where it could not be determined from the face of the

instrument that a tax was due, or where an advance has been made on a

prior advance mortgage or a corporate trust mortgage without payment of

the tax, in which case there shall be added to the tax a sum equal to

one per centum thereof for each month or fraction of a month for the

period that the tax remains unpaid. In any case where a mortgage of real

property subject to a tax imposed by this article has heretofore been

recorded or is hereafter recorded in good faith, and the county clerk or

register has held such mortgage nontaxable or taxable at one amount, and

it shall later appear that it was taxable or taxable at a greater

amount, the commissioner of taxation and finance may remit the penalties

in excess of one-half of one per centum per month.

2. In any city in this state having a population of one million or

more, in order to obtain a release or discharge of record where the

mortgagor is not liable for the special additional tax imposed under

subdivision one-a of section two hundred fifty-three of this chapter,

such mortgagor or any subsequent owner of the mortgaged property or a

part thereof may pay the tax imposed under such subdivision one-a with

accrued interest and any penalties, and may either apply for the credit

allowable under this chapter for payment of such additional tax or may

maintain an action to recover the amounts so paid against any person

liable for payment of the tax or any subsequent assignees or owners of

such mortgage or consolidated mortgage of which such mortgage is a part,

as if such amounts of tax and penalties were a debt personally owed by

such persons to the mortgagor or subsequent owner. No judgment or final

order in any action or proceeding shall be made for the foreclosure or

the enforcement of any mortgage which is subject to any tax imposed by

this article or of any debt or obligation secured by any such mortgage,

unless the taxes imposed by this article shall have been paid as

provided in this article; and whenever it shall appear that any mortgage

has been recorded without payment of a tax imposed by this article there

shall be added to the tax interest on the amount of tax not paid. The

commissioner of taxation and finance shall set the rate of interest to

be paid on any underpayment of tax imposed by this article at the rate

of interest prescribed in subsection (e) of section one thousand

ninety-six of this chapter for underpayments of tax. Such interest shall

be compounded daily. In addition to interest there shall be added to the

tax a penalty of ten percent of the amount of tax due for the first

month of delay in payment of the tax plus two percent of the amount of

tax for each month of delay thereafter, up to a maximum of twenty-five

percent, where it could not be determined from the face of the

instrument that a tax was due, or where an advance has been made on a

prior advance mortgage or a corporate trust mortgage or a re-advance had

been made on a mortgage where the original indebtedness it secured had

been paid in whole or in part. In any case where a mortgage of real

property subject to a tax imposed by this article has heretofore been

recorded or is hereafter recorded in good faith, and the county clerk or

register has held such mortgage nontaxable or taxable at one amount, and

it shall later appear that it was taxable or taxable at a greater

amount, the commissioner of taxation and finance may remit the penalties

but not interest.