Bulletin: NY000144

Dear Associates:

Pursuant to the enactment of a new statute, Section 174-a of the Tax Law, the confusion surrounding the lien duration of a state tax warrant has been eliminated. The law law (Ch. 176 of the laws of 1997) effectively fixes the duration of the state tax warrant lien at 10 years from the date of docketing of such warrant.

You will recall that in 1988, the New York State Department of Taxation and Finance took the position that state tax warrants are governed by common law with respect to the duration of warrants as liens against real property. The Department argued that the common law provided for a 20 year lien period. This decision created major problems for title insurers that had been insuring titles to real property in reliance upon, among other things, the belief that warrants were liens for a 10 year period only. Warrants previously disregarded by title insurers were suddenly given new life by reason of the Department's ruling, casting doubt on otherwise clean titles. The problem was compounded by the fact that many county clerks discarded the records of warrants and judgments that were more than 10 years old, making it impossible for a title examiner to turn out older tax warrants.

The new statute signed into law on July 8, 1997 and which is effective immediately, provides that notwithstanding any other law to the contrary, the provisions of the Civil Practice Law and Rules (CPLR) relating to the duration of a lien of a docketed judgment against real property shall also apply to state tax warrants (as well as to those imposed pursuant to Article 2-E of the General City Law, Sec. 27-0923 of the Environmental Conservation Law or the Racing, Pari-Mutual Wagering and Breeding Law).

Section 5203 (a) of the CPLR states that a judgment is a lien against real property for a period of 10 years from the docketing of such judgment. The new statute makes it clear that the 10 year lien period also applies to state tax warrants. Based upon a review of the memorandum in support of the legislation and a practical interpretation of the statute, it is the position of this Company that the 10 year lien period applies to existing tax warrants which have already been docketed as well as to tax warrants which may be docketed in the future.

A copy of the new law is available through the New York City office. Should you have any questions regarding it, please contact us.