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Volume 7 - Opinions of Counsel SBEA No. 40

Opinions of Counsel index

State of New York exemption (vesting of title) (acquisition by purchase) – Environmental Conservation Law, § 3-0305; Real Property Tax Law, § 244; Real Property Tax Law, §§ 404, 902:

Where privately owned property is purchased by the State of New York pursuant to section 3-0305 of the Environmental Conservation Law, title does not vest in the State until the deed is recorded.

Our opinion has been requested concerning the liability for 1978 county-town taxes of property purchased by the Department of Environmental Conservation (hereinafter, D.E.C.). The deed to the State was dated and signed by the grantors on October 25, 1977, and delivered to the Department of Law on October 28, 1977, but not recorded until January 12, 1978, eleven days after “lien date” (see, Real Property Tax Law, §902). The State paid for the land on February 23, 1978.

In most cases, the condition and ownership of real property as of taxable status date will determine its annual tax liability (Real Property Tax Law, §302). However, with respect to property acquired by the State or Federal governments, no liability will attach to that property if title passes prior to lien date (see, 2 Op.Counsel SBEA No. 33; 4 id. No. 60). Thus, the question for resolution here is whether title to this property was acquired by D.E.C. before or after lien date. If before, the State’s immunity from taxation would apply; if after, the property is liable for the taxes, although no sale of the property for non-payment could occur as long as the State retains ownership (see, Public Lands Law, §19).

The determination of when a transfer of title has been completed is one of fact. Section 244 of the Real Property Law sets forth the general rule as follows: “A grant takes effect, so as to vest the estate or interest intended to be conveyed, only from its delivery...” (emphasis added). There are exceptions to this rule, however. For example, section 402(A)(3) of the Eminent Domain Procedure Law provides that title to real property, which has been acquired by appropriation, vests in the State when a certified copy of the acquisition map is filed in the office or the county clerk or register of the county in which the real property is located.

There is no similar provision concerning time of vesting in the case of an acquisition by purchase. Section 3-0305(1) of the Environmental Conservation Law simply provides: “No real property shall be so acquired by purchase unless the title thereto is approved by the attorney general.”

In 1932, the Attorney General considered an earlier provision of the Conservation Law on this subject and stated the following:

It has been the universal custom of the state for many years to accept the title to land purchased as of the date of record of the deed. Many preliminary steps such as title examination, continuation of searches, etc., are necessary before the final acceptance. In reforestation cases the standard form of contract used clearly indicates the intent to pass title when the conveyance is recorded. This is true although the deed is often in the state’s possession some time before its record. (1932 Op.Atty.Gen. 151, 153).

A conclusion that title did not pass in this case until the recording of the deed is not inconsistent with the general rule (i.e., transfer effective upon “delivery” of the deed), as it might seem at first glance. In so stating, we note that delivery of a deed cannot be made conditionally (Blewitt v. Boorum, 142 N.Y. 357 at 363 (1894)), and the term “delivery” includes an unconditional acceptance by the grantee as well as an unconditional physical delivery by the grantor. The Court of Appeals so held in Ten Eyck v. Whitbeck 156 N.Y. 341, 352 (1898) stating,

The delivery of a deed is essential to transfer of title, and there can be no delivery without an acceptance by the grantee. The question of delivery, involving as it does acceptance, is always one of intention.... There must be both a delivery and acceptance with the intent of making the deed an effective conveyance. (Emphasis added).

In that same case, the Court noted that “while the presumption is that a deed was delivered and accepted at its date, it is a presumption that must yield to opposing evidence” (id.).

An example of this “opposing evidence” is found in the case of Powderly v. Aetna Casualty and Surety Company, 72 Misc.2d 251, 338 N.Y.S.2d 555 (St.Ct., Monroe Co., 1972). There, a deed had been physically delivered at the closing to the buyers’ attorney, but the court allowed parol evidence to show that there were conditions precedent to be fulfilled before the delivery was to be effective:

The recording of the papers and the redrafting of the abstract to show whether title was clear...were all conditions precedent to a delivery by the sellers and an acceptance by the buyers. That this was the intention of all the parties to the closing is buttressed by the fact that all parties knew there were certain outstanding judgments against the plaintiffs which had to be satisfied of record before either the [buyers] would accept the deed and make their payments, or before the Bank would advance the additional money on the consolidated bond and mortgage.

The undisputed proof of the circumstances attendant upon the closing indicates...that until [the buyers’ attorney] satisfied himself that the title was clear and recorded the papers, there could be no acceptance by the [buyers] (338 N.Y.S.2d at 559-560).

As indicated above, it has been the State’s custom to consider its acquisition of title by purchase complete only at the time of the recording of the deed. Applying that custom to the facts at hand, the mere delivery of the deed to the Attorney General on October 28 (i.e., prior to lien date) would not complete the transfer of title. We are of the opinion that a court would consider this custom to be controlling on the question of “acceptance” in the absence of exceptional circumstances (see, e.g., Engle v. Talarico, 33 N.Y.2d 237, 306 N.E.2d 796, 351 N.Y.S.2d 677 (1973)). No special circumstances have been brought to our attention in this case.

Therefore, it is our opinion that the title to this parcel did not vest in the State until the deed was recorded on January 12, 1978. Since this was after the date on which 1978 county and town taxes became a lien, the property is liable for payment thereof (cf., 2 Op.Counsel SBEA No. 33).

August 17, 1979

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