Bank Unable to Record Corrective Vesting Deed Due to Failure to Secure Transfer Tax Forms
If the end game is to get a corrective deed filed by court order, make sure you ask for the proper relief in your pleading, as otherwise all may be for naught. This became painfully clear in the case of US Bank National Association v. Pettersen, Index No. 707584/2021 (Queens Co. Sup. Ct. Dec. 17, 2021). In this case, the plaintiff bank commenced an action that sought, among other things, to obtain a declaratory judgment that its mortgage, granted by a husband and wife, is a valid first mortgage lien encumbering the subject property. The bank also sought an order directing the Office of the New York City Register to accept a copy of the vesting deed for recording, as the original deed was misplaced or lost.
The court granted the requested relief, but the bank then learned that it was still unable to record the corrective deed because it lacked fully executed transfer tax forms. One of the parties had passed away, and the court-appointed administrator with limited letters of administration lacked the authority to execute such forms. As a result, the bank moved to amend the court’s order to add a provision allowing it to record the deed without filing the otherwise-required transfer tax forms (e.g., the NYC Real Property Transfer Tax Return and a NYS Real Property Tax Return).
The City Registrar opposed this request, arguing that the “failure to file a proper tax return affects the substantial rights of all New York City residents, who have a vested interest in having all taxpayers file required returns and pay taxes.” The court denied the bank’s motion, holding that the Administrative Code’s requirements to record the transfer tax forms must be complied with and the court could not waive them. The court noted that the bank could return to the Surrogate’s Court for the administrator to obtain the requisite additional authority.
This additional motion practice would not have been necessary if counsel had focused from the outset on all of the required prerequisites to recording the corrective deed, which in this case included ensuring that the lender could obtain all the signatures needed to record the ancillary tax documents.