S 1323: Prohibits pre-payment penalties for mortgages secured by real property owned in a cooperative form of ownership where over fifty percent of the units are shareholder occupied.
The bill aims to amend the general obligations law to provide relief to homeowners in cooperative forms of ownership. Currently, prepayment penalties for mortgages secured by real property are prohibited if certain conditions are met, but this protection only applies to units owned by shareholders. The bill extends this protection to units owned by cooperative members, regardless of the ownership percentage. Prepayment penalties cannot be imposed on loans or forbearances secured by real property in a cooperative form of ownership, where over fifty percent of the units are shareholder occupied. The right to prepayment must be stated in the instrument evidencing the loan or forbearance. The provisions of the bill do not apply if they conflict with federal law or regulation. The bill takes effect immediately.
| Jun. 13, 2025 | COMMITTED TO RULES |
| Feb. 03, 2025 | ADVANCED TO THIRD READING |
| Jan. 28, 2025 | 2ND REPORT CAL. |
| Jan. 27, 2025 | 1ST REPORT CAL.184 |
| Jan. 09, 2025 | REFERRED TO JUDICIARY |
STATE OF NEW YORK ________________________________________________________________________ 1323 2025-2026 Regular Sessions IN SENATE January 9, 2025 ___________ Introduced by Sen. HOYLMAN-SIGAL -- read twice and ordered printed, and when printed to be committed to the Committee on Judiciary AN ACT to amend the general obligations law, in relation to pre-payment penalties for mortgages secured by real property owned in a cooper- ative form of ownership The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Paragraph b of subdivision 3 of section 5-501 of the gener- 2 al obligations law, as amended by chapter 472 of the laws of 2008, is 3 amended to read as follows: 4 b. notwithstanding any other provision of law, the unpaid balance of 5 the loan or forbearance may be prepaid, in whole or in part, at any 6 time. If prepayment is made on or after one year from the date the loan 7 or forbearance is made, no penalty may be imposed. If prepayment is made 8 prior to such time, no penalty may be imposed unless provision therefor 9 is expressly made in the loan contract, provided that no penalty may be 10 imposed if prohibited by sections six-l and six-m of the banking law. No 11 prepayment penalty or fee shall be charged or collected on a loan or 12 forbearance secured by real property owned in a cooperative form of 13 ownership where over fifty percent of the units are shareholder occu- 14 pied. Such prepayment penalty shall be unenforceable. In all cases, the 15 right of prepayment shall be stated in the instrument evidencing the 16 loan or forbearance, provided, however, that the provisions of this 17 subdivision shall not apply to the extent such provisions are inconsist- 18 ent with any federal law or regulation. 19 § 2. This act shall take effect immediately. EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD00908-01-5