Bulletin: NY000046

Dear Associates:

Brief Summary: Significant changes have been made in the procedure required to obtain a satisfaction of mortgage under New York Law. Real Property Law (RPL) §274-a and Real Property Actions and Proceedings Law (RPAPL) §1921 were amended by Chapter 132 of the Laws of 1993, effective June 16, 1994.

Payoff Statement: RPL §274-a was amended by the addition of a subdivision 2, providing a formalized procedure for ordering a payoff letter and related documentation for mortgages affecting property which is "owner occupied one-to-six family residential structure or residential condominium unit".

Satisfaction: Subdivision 1 of RPAPL §1921 provides that the mortgage holder must either arrange to record the satisfaction or, if requested, provide the satisfaction to the mortgagor or mortgagor's designee, within 45 days after the payoff, and must provide the mortgagor the original note and mortgage or a ("defend and hold harmless") agreement within the same 45 day period.

Alternate Discharge: The new statute also provides for an alternative to discharge by satisfaction which falls short of the onerous legal requirements formerly required to compel the mortgage holder to execute the satisfaction, or for judicial discharge of the mortgage, but contains new onerous requirements. Instead of the court proceeding, a specially detailed attorney's affidavit and proofs can be furnished to the recording officer, with a fee for $50.00. The recording officer must then forward written notice to the mortgage holder within five (5) days of the filing, giving the holder 30 days to object. After 35 days from the initial filing, if no objection is made, the clerk shall record the affidavit and exhibits (on payment of the appropriate recording fee), and discharge the mortgage on record. If an objection is made, the recording officer must transmit a copy of the affidavit and objection to the applicable appellate division committee on professional standards. An attorney who provides false information (knowingly or negligently) is liable to the mortgage holder for damages and sanctions, and the furnisher of false information is similarly liable.

Penalties: For the first time, penalties can be imposed on mortgage holders, in certain circumstances. These circumstances invariably involve mortgages on an "owner occupied one-to-six family residential structure or residential condominium unit".