Deed theft victims get foreclosure protections in New York

The New York State Legislature has passed a bill that enhances civil culpability for those accused of deed theft, while adding protections against foreclosure and eviction when this crime is alleged.

However, a second bill that creates criminal penalties remains under consideration.

If signed by Gov. Kathy Hochul, the legislation that passed will halt foreclosure proceedings in cases where the property's title is in dispute, and remove good faith purchaser protections even where the buyer had no connection to the fraud. This bill also halts any eviction proceeding in cases where the title is in dispute.

While the legislation was sponsored by State Senator Brian Kavanagh, D-Brooklyn/Manhattan and Assemblymember Helene Weinstein, D-Brooklyn, it was drafted with Attorney General Letitia James.

"Homeowners rarely have any idea that they are the victims of deed theft, and only find out when they are forced to endure humiliating and terrifying situations to try and keep their own houses," James said in a press release. "This legislation will help New Yorkers to fight back against deed theft, and will empower local officials to better address this heartless and heinous crime."

The bill added language to existing law that clarifies that a county's district attorney, the state attorney general and "any law enforcement agency" can make a motion to void an "encumbrance" on the title, such as a lien that was created from the fraud.

"Deed theft is one of the leading causes of wealth-stripping in our Black and Brown communities," said Christie Peale, CEO and executive director, Center for NYC Neighborhoods. "It has denied many homeowners the ability to build generational wealth."

In December, James' office indicted five people in a purported deed theft ring that netted over $1 million in proceeds. Yet, New York does not have a law that defines deed theft as a specific crime.

The other bill, which passed the State Senate on June 8 in a unanimous vote, has been sent to the Assembly but no action has been taken in that body. It would create four classes of deed theft and establish it as a felony.

"Last fall, the Senate held a hearing on deed theft and heard directly from impacted homeowners about this pernicious crime that robs families of their assets and fuels the exodus of longtime residents from communities like mine," said State Senator Zellnor Myrie, D.-Brooklyn, who is the sponsor of the other bill. "I'm grateful to the Attorney General and my colleagues for advancing this legislation, and look forward to passing additional bills to protect our vulnerable neighbors."

Deed theft is a nationwide problem, as a recent conviction in California showed.

However no national database of this crime exists. An attempt to create one was introduced in the House of Representatives in 2022 but it did not go further.