When we hear about Zombies, our thoughts usually turn to Halloween and cable television shows. But, the Zombies that I am talking about here are very real and may even be lurking in your neighborhood. The Zombies that I am talking about are those questionable homes that appear derelict, vacant and abandoned. You know the one… the grass is so tall it could be bailed for hay; the landscaping is overgrown; the weekly papers are piling up on the porch; there may be a broken window or other signs of disrepair. You wonder: Why doesn’t someone take care of the property? Why doesn’t someone put it up for sale? Such a property just might be a Zombie property.
A vacant and abandoned residential (1-4 family) property which meets the criteria of the Abandoned Property Neighborhood Relief Act (the “Act”) is deemed a Zombie property. The Act (codified in Real Property Actions and Proceedings Law “RPAPL” §§1308-1310) became law in 2016 in response to the large numbers of vacant and abandoned properties that sprang up in the aftermath of the Great Recession. It was during this time that many homeowners found themselves unable to make their mortgage payments. Moreover, many of these homes were worth less that the mortgages they secured. These properties, in other words, were “under water.” Many homeowners in such circumstances defaulted on their mortgages or simply “walked away” by giving the keys to the mortgagee (usually a bank). The banks were reluctant to foreclosure on such properties because not only were they were faced with the prospect of acquiring a property which would not cover the amount of the mortgage deficiency, but also because they did not want to have to maintain property until they eventually sold it.
The Act changed the law by placing an affirmative duty on most mortgagees (i.e. banks) to inspect and maintain vacant and abandoned properties before foreclosure. Banks are now required to conduct monthly (every 25-35 days) occupancy inspections of their mortgaged properties whenever the owner is 90 days or more delinquent on mortgage payments. If the bank finds on three consecutive inspections that there is no evidence of occupancy and that the property is not being maintained, then the mortgagee is required to: (1) notify the owner of owner’s right to remain in the property until the property is foreclosed; (2) enter the property in a state-wide Zombie Property Registry; and (3) maintain and secure the property. A property can also become a registered Zombie property where a local court or government entity has made a formal determination of vacancy; or where the borrowers/owners have given their intent to vacate in a sworn statement and a subsequent inspection shows no evidence of occupancy.
The Act also comes with several enforcement provisions. Banks can be fined up to $500 per property per day for failing to maintain and secure Zombie properties. Fines collected go into an Abandoned Property Neighborhood Relief Fund, which supports “abandoned property assistance grants” to local municipalities. The Act also provides procedures for expedited foreclosure of vacant and abandoned properties where certain conditions are met.
Finally—and perhaps most importantly if you think you may have a Zombie property lurking in your neighborhood—the Act creates a Zombie Hotline and a website whereby residents can file a complaint against a suspect Zombie property. Both are maintained by the New York State Department of Financial Services. The Zombie Hotline is 1-800-342-3736. The website address where you will find an on-line complaint form is: http://dfs.ny.gov/consumer/fileacomplaint.htm
The information presented in this article is intended to provide consumers with an overview or informal summary of a general area of law. It is not intended to provide legal advice, nor should it be relied upon as such. Should you have any questions regarding specific legal issue, I encourage you to contact me.