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Volume 8 - Opinions of Counsel SBEA No. 56

Opinions of Counsel index

Municipal corporations exemption (property acquired by tax deed) (time of commencement) - Real Property Tax Law, §§ 406, 1018, 1020:

The three year exemption for property acquired by a municipality for non-payment of taxes commences with the first assessment roll completed after the date of the delivery and acceptance of the deed, not the date of recording of the deed.

Upon receipt of a written application, a county treasurer may “execute to the [tax lien] purchaser a conveyance of the real property sold” if such property is not redeemed within the general one year period of redemption prescribed by section 1010 of the RPTL (see, § 1018(1)). Such a conveyance vests in the grantee an absolute estate in fee, subject, however to the further right of redemption guaranteed to occupied or mortgaged lands (see, §§ 1020(1), 1022, 1024).

Apparently, it has become the practice in some counties, for the county treasurer to execute and deliver to the county legislative body a deed to tax delinquent property at the end of the one year redemption period set forth in section 1010. However, these deeds are not generally recorded until at least two years later when the extended redemption period has expired (see also, § 1022(3)). The question presented is whether in such circumstance the exemption afforded real property acquired by a municipal corporation for non-payment of taxes (§ 406(5)) runs from the date of the delivery and acceptance of the deed or from the date of its recording.

We have found no judicial opinion which directly addresses this question. Principles of statutory interpretation, however, indicate that the three year exemption period should run from the date of the delivery and acceptance of the deed, not the date of its recording.

Section 406(5) of the Real Property Tax Law provides:

Real property owned by a municipal corporation acquired by tax deed, by referee’s deed in tax foreclosure, pursuant to article eleven of this chapter or pursuant to a deed made in lieu of tax foreclosure shall be deemed to be held by it for a public use for a period of three years from the date of the deed and during such period shall be exempt from taxation and special ad valorem levies, but shall be liable for taxes for school purposes and special assessments. Any such property from which a municipal corporation is receiving revenue on the date of taxable status, however, shall not be so exempt. [Emphasis added].

As a general principle of statutory construction, where the words of a statute have a plain meaning, no attempt should be made to alter their interpretation (Erie County Agricultural Society v. Cluchey, 40 N.Y.2d 194, 352 N.E.2d 552, 386 N.Y.S.2d 366 (1976)). Section 406(5) clearly provides that property acquired for nonpayment of taxes, other than revenue producing property, will be deemed to be held for a public use for three years “from the date of the deed”. (Of course, municipally owned property which is “held for a public use” is exempt from taxation (§ 406(1)) and this exemption for tax acquired property is reiterated in subdivision 5 of section 406.) No mention is made of the date of recording of the deed, although New York’s recording act, promulgated in 1909, preceded the forerunner of section 406(5) by some 30 years. {*}  We believe that had the Legislature intended to use the record date as a measuring point, it would have done so explicitly. Compare, for example, section 1020(4) of the RPTL, which makes conclusive the presumption of the regularity of tax sale proceedings two years after the recording of the deed.

Generally, the proper execution, delivery and acceptance of a deed passes title to property. The act of recording a deed does not pass title; it merely protects it (Mitchell v. Bartlett, 51 N.Y. 447 (1873)). Section 1020 of the Real Property Tax Law clearly provides that the conveyance of a tax deed “vests in the grantee an absolute estate in fee” subject to reservations and the right of redemption where applicable. It follows that the application of section 406(5) should be effective at the time title passes. For the Legislature to choose the recording date as a measuring point when both title to and responsibility for the property pass to the county at the time of the conveyance would be illogical.

Numerous administrative opinions have implicitly accepted the date of the tax deed as the proper measuring point (See, 5 Op.Counsel SBEA No. 114; see also, 7 Op.State Compt. 148, and 2 Op.State Compt. 626). This interpretation also comports with both the legislative intent behind the enactment of the predecessor of section 406(5) and the structure and implementation of the Real Property Tax Law in general. Memoranda in the Governor’s bill jacket on the bill which became Chapter 853 of the Laws of 1939 indicate that the law was enacted to relieve counties of tax burdens during the interim period between the time of acquisition and the time of sale or public use (see also, 5 Op.Counsel SBEA No. 114). If the recording date were to be the measuring point for the exemption, delays in recording could cause the property to be subject to taxes during the interim period between the conveyance and the resale, the time period that the Legislature intended to protect municipal governments from added tax liabilities.

Accordingly, it is our opinion that the property should be deemed to have been held for a public use for a period of three years, measured from the date of the delivery and acceptance of ,the tax deed. Therefore, the exemption should have been granted on the first assessment roll prepared after delivery and acceptance, and on the two succeeding rolls, presuming of course that the county was deriving no revenues from the properties in question.

June 5, 1985

{*}  The three year exemption was added by an amendment to section 138 of the Tax Law in 1939 (Laws of New York, 1939, chapter 853). The language in current § 406(5) is virtually identical.