Opinion
No. 95.
Argued April 29, 2008.
decided June 10, 2008.
APPEAL, by permission of the Appellate Division of the Supreme Court in the Second Judicial Department, from an order of that Court, entered March 13, 2007. The Appellate Division affirmed so much of an order of the Supreme Court, Richmond County (Abraham G. Gerges, J.; op 9 Misc 3d 896), as had denied that branch of a motion by NYCTL 1998-1 Trust to apply an interest rate of 18% to its tax lien against certain property from the date that title to the property vested in the City of New York until the date that the tax lien was paid in full. The following question was certified by the Appellate Division: "Was the decision and order of this court dated March 13, 2007, properly made?"
Matter of Mill Cr. Phase 1 Staten Is. Bluebelt Sys., 38 AD3d 665, reversed.
Michael A. Cardozo, Corporation Counsel, New York City ( Rita D. Dumain, Paul T. Rephen and Fred Kolikoff of counsel), for appellant.
Goldstein, Goldstein, Rikon Gottlieb, P.C., New York City ( Michael Rikon of counsel), for respondents.
Before: Chief Judge KAYE and Judges CIPARICK, GRAFFEO, READ, SMITH, PIGOTT and JONES concur in memorandum.
OPINION OF THE COURT
The order of the Appellate Division should be reversed, with costs, that branch of the motion of appellant NYCTL 1998-1 Trust that sought to have an 18% interest rate applied to its tax lien against the subject property from the date title to the subject property vested in the City of New York until the date the tax lien is paid granted, and the certified question answered in the negative.
The City of New York acquired title to block 7561, lot 20 in the Borough of Staten Island by eminent domain on July 31, 1998. At the time title passed the NYCTL 1998-1 Trust was the holder of a tax lien certificate relating to the property, which provided that the rate of interest on the tax lien would be 18% until the lien is paid in full ( accord Administrative Code of City of NY §§ 11-224, 11-319 [b] [6]). The Trust filed a claim in the condemnation proceeding and made a motion to compel the City of New York to deduct from any award for the property the amount due under the tax lien recorded against the property.
Supreme Court granted the Trust's motion for payment. Relying on General Municipal Law § 3-a (2), the court directed that although the interest would be payable on the tax lien at a rate of 18% from the date of the tax lien certificate until the date the City acquired title to the property by condemnation, interest would be payable only at the rate of 6% from the date the City acquired title until the date the lien was paid in full. The Appellate Division affirmed and granted the Trust's motion for leave to appeal to this Court. This Court is asked to resolve the question whether interest at the rate of 18% continues to accrue after condemnation and transfer of title to the City and until the full payment of the tax lien.
The exercise of eminent domain does not reduce the interest on a tax lien ( see Matter of City of New York [Hammel Boardwalk Corp.], 288 NY 51, 57 [1942]). In Hammel, we stated,
"Although the tax statutes recognize that the city may take property by eminent domain, there is no provision for the cessation of interest upon the happening of any such event. On the contrary, reduction of interest upon any taxes, assessments and water rents below the amount fixed by law is forbidden (Administrative Code, § 415[1]-8.0, p. 217), and all taxes, assessments and water rents and interest thereon constitute liens until paid (Administrative Code, § 415[1]-7.0, p. 217)" ( id.; see also Matter of Bradhurst Urban Renewal Area [Stage 1], 40 AD3d 218, 219 [1st Dept 2007]).
Administrative Code §§ 415[1]-8.0 and 415[1]-7.0, cited in Hammel, have been recodified as sections 11-232 and 11-301, respectively.
Here, since there is no statutory authority to reduce the interest upon any taxes, assessments and sewer rents below the amount fixed by law, claimants continue to be responsible for the taxes and accrued interest at the rate of 18% until the amount owed is paid in full. A holder of a tax lien certificate, in this case appellant NYCTL 1998-1 Trust, stands in the shoes of, and has the same rights as, the City ( see Administrative Code § 11-332 [a]). This means that appellant is entitled to receive interest at the rate of 18% even after the property was acquired by the City in the condemnation proceeding. While it is true that the Trust filed its claim against the condemnation award, and not the property, the interest on the lien remained the same.
Accordingly, we hold that the interest due and owing on the subject tax lien continues to accrue at the interest rate of 18%, pursuant to Administrative Code §§ 11-224 and 11-319 (b) (6), from the vesting of title in the City of New York until the date of full payment of the lien.
Order reversed, etc.