Monday, December 07, 2015

Buffalo Lawmakers Amend Proposed Local Law To Limit Money Grab Of Tax Foreclosure Sale Surplus Funds To Non-Owner Occupied Houses; Foreclosed Homeowners To Have Multiple Notification Rights & Right To Claim Cash Overage From Sales In Perpetuity

In Buffalo, New York, The Buffalo News reports:
  • A bill sponsored by State Sen. Timothy M. Kennedy and Assemblyman Sean M. Ryan to give the City of Buffalo millions in surplus money from its annual property auctions has been amended to require the city to notify the foreclosed property owners that the money belongs to them.

    Also, under the revised measure, the city would only be able to claim excess proceeds from the sale of nonowner-occupied properties.

    The change comes after a story in the Nov. 26 editions of The Buffalo News revealed that $11.6 million in excess proceeds auctions, going back to 2009, sit unclaimed, and the city does not tell owners they are entitled to the money.

    The two Buffalo Democrats announced the changes to the legislation on Wednesday.

    “We weren’t aware of the notification problems,” Kennedy said. “With any legislation, as you find things out, you make changes.”

    If the amended legislation passes, the city will have to notify property owners before and during the foreclosure process of the possibility of surpluses and their right to claim them. And when a property is auctioned off, the city then would have to inform the former owner of the selling price and any leftover money, Kennedy said.

    Assemblyman Michael P. Kearns also announced similar legislation but with a caveat: The notification should be retroactive to 2009. “I believe it’s still the responsibility of the city to let those people know about the money as well,” he said. Additionally, he is calling for a simplification to the lengthy legal process to claim the surplus, which can take months.

    The city supports the changes to the Kennedy-Ryan bills but even if they fail, “we’ve said previously the city will take steps to notify in the future,” said Mike DeGeorge, the city’s spokesman.

    Common Council President Darius Pridgen said the Common Council will adopt a resolution in the coming weeks to improve the city’s handling of surplus money from foreclosure auctions. “I think we are all going down the same road. We’re all on the same page,” Pridgen said.
    Changing the law would put Buffalo on par with Rochester and other cities that are diligent about notifying homeowners of surpluses. But those cities have had local laws that govern their foreclosure processes since the mid 1990s when the state allowed municipalities to create their own. While Rochester and Syracuse implemented their own statutes, Buffalo opted for the state’s guidelines, which do not address surplus funds. So going back to the early 1980s when it began holding in-rem auctions annually, Buffalo has not notified property owners about surplus money.
    Ryan said the original bill was well-meaning but needed clarification. Owners who lose their primary residence to foreclosure would continue to be able to claim their money in perpetuity. But leftover money from the sale of nonowner-occupied properties would become the city’s after five years.

    “The focus is still irresponsible landlords but we want to strike a balance so family members aren’t unjustly penalized and slumlords don’t continue to abuse the system,” he said.

    Also on Wednesday, the Western New York Law Center(1) announced that it has launched a program to provide free legal assistance to homeowners who are trying to claim surplus money from their properties. The center can be reached at 855-0203, Ext. 124.
For more, see Bill amended to tell foreclosed property owners they are due money (Revised bill frees surplus money).
(1) Western New York Law Center is a non-profit law firm providing legal representation to low-income Western New Yorkers in civil matters.

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