New York Senate Bill 7231

The National Private Lenders Association (NPLA) has tracked a new bill in the NY Senate introduced by State Senator Julia Salazar and Assembly Member Harvey Epstein.

Our Legal Counsel to the NPLA, Jonathan Hornik, of PLL, has made a statement concerning Senate Bill 7231. The introduced legislation would include mezzanine debt in mortgage recording and include such transactions in the mortgage recording tax. The bill defines mezzanine debt as debt carried by the borrower that may be subordinate to the primary lien, or common shares and reported assets that are used to finance a primary lien. Essentially, that means that the current mortgage recording tax — which is 0.5 percent for mortgages of any amount (and 0.8% in the 12 counties serviced by the Metropolitan Transportation Authority) — would include debt that is currently not publicly recorded. The proposed legislation would upend New York’s real estate finance practices and, according to its sponsors, produce as much as $4 billion in annual revenue statewide. The revenue from the proposed tax would directly fund public housing.