2023 New York Laws › TAX - Tax › Article 11 - Tax on Mortgages › 258 - Effect of Nonpayment of Taxes.

§  258. Effect of nonpayment of taxes. 1. No mortgage of real property
  shall be recorded by any county clerk or register, unless there shall be
  paid the taxes imposed by and as in this article provided.  No  mortgage
  of  real  property which is subject to the taxes imposed by this article
  shall be released, discharged of record or received in evidence  in  any
  action or proceeding, nor shall any assignment of or agreement extending
  any  such  mortgage be recorded unless the taxes imposed thereon by this
  article shall have been paid as  provided  in  this  article.  Provided,
  however,  except  as  otherwise  provided  in  subdivision  two  of this
  section, in order to obtain a release or discharge of record  where  the
  mortgagor  is  not  liable  for the special additional tax imposed under
  subdivision one-a of section two hundred fifty-three  of  this  chapter,
  such  mortgagor  or  any subsequent owner of the mortgaged property or a
  part thereof may pay the tax imposed under such  subdivision  one-a  and
  penalty,  and  may  either  apply  for  the  credit allowable under this
  chapter for payment of such additional tax or may maintain an action  to
  recover the amounts so paid against any person liable for payment of the
  tax   or  any  subsequent  assignees  or  owners  of  such  mortgage  or
  consolidated mortgage of which such mortgage  is  a  part,  as  if  such
  amounts  of  tax and penalty were a debt personally owed by such persons
  to the mortgagor or subsequent owner.  No judgment or final order in any
  action  or  proceeding  shall  be  made  for  the  foreclosure  or   the
  enforcement  of any mortgage which is subject to any tax imposed by this
  article or of any debt or  obligation  secured  by  any  such  mortgage,
  unless  the  taxes  imposed  by  this  article  shall  have been paid as
  provided in this article; and, except otherwise provided in  subdivision
  two of this section, whenever it shall appear that any mortgage has been
  recorded without payment of a tax imposed by this article there shall be
  added  to  the tax a sum equal to one-half of one per centum thereof for
  each month or fraction of a month for the period that  the  tax  remains
  unpaid  except  where  it  could  not be determined from the face of the
  instrument that a tax was due, or where an advance has been  made  on  a
  prior  advance mortgage or a corporate trust mortgage without payment of
  the tax, in which case there shall be added to the tax a  sum  equal  to
  one  per  centum  thereof  for each month or fraction of a month for the
  period that the tax remains unpaid. In any case where a mortgage of real
  property subject to a tax imposed by this article  has  heretofore  been
  recorded or is hereafter recorded in good faith, and the county clerk or
  register has held such mortgage nontaxable or taxable at one amount, and
  it  shall  later  appear  that  it  was  taxable or taxable at a greater
  amount, the commissioner of taxation and finance may remit the penalties
  in excess of one-half of one per centum per month.
2. In any city in this state having a population  of  one  million  or
  more,  in  order  to  obtain  a release or discharge of record where the
  mortgagor is not liable for the special  additional  tax  imposed  under
  subdivision  one-a  of  section two hundred fifty-three of this chapter,
  such mortgagor or any subsequent owner of the mortgaged  property  or  a
  part  thereof  may pay the tax imposed under such subdivision one-a with
  accrued interest and any penalties, and may either apply for the  credit
  allowable  under  this chapter for payment of such additional tax or may
  maintain an action to recover the amounts so  paid  against  any  person
  liable  for  payment of the tax or any subsequent assignees or owners of
  such mortgage or consolidated mortgage of which such mortgage is a part,
  as if such amounts of tax and penalties were a debt personally  owed  by
  such  persons to the mortgagor or subsequent owner. No judgment or final
  order in any action or proceeding shall be made for the  foreclosure  or
  the  enforcement  of any mortgage which is subject to any tax imposed by
  this article or of any debt or obligation secured by any such  mortgage,

  unless  the  taxes  imposed  by  this  article  shall  have been paid as
  provided in this article; and whenever it shall appear that any mortgage
  has been recorded without payment of a tax imposed by this article there
  shall  be  added  to the tax interest on the amount of tax not paid. The
  commissioner of taxation and finance shall set the rate of  interest  to
  be  paid  on any underpayment of tax imposed by this article at the rate
  of interest  prescribed  in  subsection  (e)  of  section  one  thousand
  ninety-six of this chapter for underpayments of tax. Such interest shall
  be compounded daily. In addition to interest there shall be added to the
  tax  a  penalty  of  ten  percent of the amount of tax due for the first
  month of delay in payment of the tax plus two percent of the  amount  of
  tax  for  each month of delay thereafter, up to a maximum of twenty-five
  percent, where  it  could  not  be  determined  from  the  face  of  the
  instrument  that  a  tax was due, or where an advance has been made on a
  prior advance mortgage or a corporate trust mortgage or a re-advance had
  been made on a mortgage where the original indebtedness it  secured  had
  been  paid  in  whole  or  in part. In any case where a mortgage of real
  property subject to a tax imposed by this article  has  heretofore  been
  recorded or is hereafter recorded in good faith, and the county clerk or
  register has held such mortgage nontaxable or taxable at one amount, and
  it  shall  later  appear  that  it  was  taxable or taxable at a greater
  amount, the commissioner of taxation and finance may remit the penalties
  but not interest.