New York Laws
Article 11 - Tax on Mortgages
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.

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