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Industrial Development Agencies Located In The Central New York Regional Transportation District No Longer Exempt From The Additional Mortgage Recording Tax

In 1969, New York State enacted the New York State Industrial Development Agency Act which created industrial development agencies (“IDAs”). New York State created IDAs to promote the economic welfare, recreation opportunities and prosperity of the inhabitants of New York State. IDAs have traditionally provided financial assistance by offering exemptions from sales and use taxes, mortgage recording tax, and real property taxes. Mortgages executed by IDAs have been exempt from the payment of all mortgage recording taxes, including (1) the Basic Tax of 0.50% of the amount of the mortgage, (2) the Special Additional Tax of 0.25% of the amount of the mortgage, (3) the Additional Tax of 0.25% of the amount of the mortgage for mortgages recorded in counties located within the Central New York Regional Transportation District and certain other transportation districts and 0.30% of the amount of the mortgage for counties located within the downstate Metropolitan Commuter Transportation District, and (4) any local mortgage recording tax imposed by some cities and counties.

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NYS Real Estate Transfer Tax on Conveyances of Real Property

In New York State, sellers who convey an interest in real property are required to pay New York State real estate transfer tax. In the usual sale of real property, the real estate transfer tax is computed at a rate of $2 for each $500 of consideration or fractional part thereof. For example, in a transaction in which the consideration paid is $100,000, the real estate transfer tax will be $400. The transfer tax is due when the instrument effecting the conveyance, which is a deed in the case of an interest in real property, is delivered from the grantor/seller to the grantee/buyer in the transaction.

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Beware of Preserving Lien Priority When Modifying Mortgages

When lenders modify the terms of a mortgage loan they should be careful to obtain the necessary consents from any junior lien holders and to record the necessary documents memorializing the modification. In general, under New York law successive mortgages on the same property are entitled to priority in the order in which their respective mortgage liens have attached to the property. The mortgage lien generally attaches to the property when it is recorded in the county clerk’s office of the county in which the property is located.

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Hotel Syracuse Litigation Illustrates the Requirement that Lenders Must File Building Loan Contracts

The historic Hotel Syracuse in downtown Syracuse was recently the subject of a mortgage foreclosure action which led to litigation involving the priority of the liens against the property. The New York State Court of Appeals case of Altshuler Shaham Provident Funds, Ltd. v. GML Tower LLC (21 N.Y.3d 352), decided in June 2013, illustrates the requirement that lenders must file building loan contracts when the loan proceeds are advanced over time to pay for real estate construction purposes.

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