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Volume 7 - Opinions of Counsel SBEA No. 52

Opinions of Counsel index

Taxes (delinquent) (notice - answer) (withdrawal from “in rem” list) – Real Property Tax Law, §§ 1122, 1124, 1138:

Prior to final judgment, a tax district may withdraw a parcel from an in rem foreclosure proceeding for any of the reasons set forth in section 1122(2) of the Real Property Tax Law, or if there is an offer of payment in full, notwithstanding failure of the owner to redeem or serve an answer as otherwise provided in section 1124.

We have been asked whether a taxing jurisdiction which forecloses liens for unpaid taxes “in rem” (Real Property Tax Law, Article 11, title 3) may accept a tender of payment in full for taxes, interest and related charges in either of the following situations:

(1) where a property owner has not redeemed within the statutory period but has served an answer (§1124(1)), claiming an erroneous description of the parcel on tax rolls and tax bills;

(2) where a property owner has “inadvertently” defaulted on his right to either redeem or answer.

The notice of foreclosure (in rem) mandated by section 1124 of the Real Property Tax Law is intended to alert interested parties to the fact that any right to redeem parcels from the lien of a tax about to be foreclosed will expire on a particular day and that, in lieu of redemption, the party may serve a duly verified answer “setting forth in detail...any defense or objection to the foreclosure” (see, e.g., City of New Rochelle v. Stevens, 271 App.Div. 977, 68 N.Y.S.2d 31 (2d Dept. 1947), aff’d 297 N.Y. 533, 74 N.E.2d 469 (1947)). The answer must be filed within 20 days after the last day for redemption so provided (§1124(1)). This section further provides that:

[In] the event of failure to redeem or answer by any person having the right to redeem or answer, such person shall be forever barred and foreclosed of all his right, title and interest and equity of redemption in and to the parcel described in such list of delinquent taxes and a judgment in foreclosure may be taken by default.

The apparent finality of the failure to redeem or to interpose an answer is also suggested by the notice which must be mailed to interested parties (§1124(2)). The last paragraph of that notice reads as follows: “Unless the taxes and all other legal charges are paid, or an answer interposed, as provided by statute, the ownership of such real property will in due course pass to [the municipal corporation]...as provided by the real property tax law of the state of New York.”

Nonetheless, we believe that section 1138 authorizes a municipality to withdraw a parcel from a list of those to be foreclosed, regardless of whether an answer has been interposed. That section was added (L.1948, c.250) subsequent to the legislation initially authorizing in rem tax foreclosures (L.1939, c.692) and its language is such that we can only conclude that it applies to both of the situations presented.

Subdivision 1 of section 1138 provides that “The enforcing officer of any tax district may at any time prior to final judgment withdraw any parcel of real property from a proceeding under this title with the approval by resolution of the governing body stating the reason therefor.” The reference to any parcel seems to us to mean whether or not an answer was filed with respect thereto.

A question has been raised, however, as to whether the remaining language of subdivision 1 of section 1138 would preclude the taxing jurisdiction from accepting payment in full although it allows acceptance of installment payments of the full amount. That language reads as follows: “[No] parcel shall be withdrawn...except for one of the reasons for exclusion of a parcel from a list of delinquent taxes set forth in subdivision [2] of section [1122] of this chapter.”

An exclusion may be granted under subdivision 2 of section 1122 where there is:

(1) a question as to the validity of the tax lien on which the foreclosure is to be based;

(2) an existing agreement to pay delinquencies in installments on which there has been no default;

(3) an agreement for payment in installments on which there has been no default;

(4) a third-party tax lien holder who has not yet enforced that lien.

It would certainly be incongruous for the Legislature to have authorized payments in installments (see (2) and (3), above) under these circumstances, but not payment in full when, in fact, the purpose of the enforcement of collection proceedings is to make the municipality whole.

In addition, the State Comptroller has suggested that authority to make agreements for the installment payment of taxes is dependent not on section 1122, but rather section 1150. The latter section authorizes tax districts owning liens on the same parcel to make agreements with regard to the disposition of such liens. This includes, but is not limited to, the authority to make agreements referred to in section 1122(2). “Such agreements may also be made between at tax district and private persons having any interest in the property concerned” (see, Op.State Compt. 68-502).

The tax district may, therefore, upon the adoption of a resolution at any time prior to final judgment, withdraw these parcels from foreclosure and make an agreement to accept payments in full for taxes, interest and other legal charges.

September 24, 1979

Updated: