N.Y. Private Housing Finance Law Section 402
Loans to owners


1.

Notwithstanding the provisions of any general, special or local law, a municipality, by such officer or agency as determined by its local legislative body, is hereby authorized:

(a)

to make or contract to make loans to the owners of existing multiple dwellings within its territorial limits, subject to the limitations in subdivision two of this section, in such amounts as may be required for the installation of proper heating facilities, the incorporation of climate resiliency improvements, or elimination of conditions dangerous to human life or detrimental to health, including nuisances as defined in Multiple Dwelling Law § 309 (Repairs, vacation and demolition of buildings)section three hundred nine of the multiple dwelling law, or other rehabilitation, preservation or improvement of such multiple dwellings, and if such owner acquires the multiple dwelling for the purposes of such rehabilitation, preservation or improvement or owns the multiple dwelling subject to an outstanding indebtedness, such loans may be made exclusively for or may include such amounts as may be required for the cost of such acquisition or for the refinancing of such outstanding indebtedness, and may make temporary loans or advances to such owners in anticipation of the permanent municipal loans for such purposes; and

(b)

to make or contract to make grants to any owner described in paragraph (a) of this subdivision, on the same terms as permitted under such paragraph for a loan. 1-a. As used in this article, the term “loan” shall include any grant made by a municipality pursuant to this article, provided, however, that any provision of this article concerning the repayment or forgiveness of, or security for, a loan shall not apply to any grant made pursuant to this article. 2-a.

(a)

Each permanent loan shall be secured by a bond and mortgage or note and mortgage upon the multiple dwelling and the land upon which it is situated, provided that where the multiple dwelling is held in the condominium form of ownership, such loan shall be secured by a bond and mortgage or note and mortgage upon the condominium units rehabilitated or improved with such loan; where the loan is made to an owner who is a lessee, such loan shall be secured by a leasehold interest in such property.

(b)

Each such bond and mortgage or note and mortgage shall be repaid over or within a period of forty years, provided that such period may be extended as the agency may determine necessary to ensure the continued affordability or economic viability of the multiple dwelling, in such manner as may be provided in such bond and mortgage or note and mortgage and contract. Such bond and mortgage or note and mortgage and the contract in connection with such permanent and temporary loans may contain such other terms and provisions not inconsistent with the provisions of this article as the local legislative body or the agency may deem necessary or desirable to secure repayment of the loan, the interest thereon and other charges in connection therewith and to carry out the purposes and provisions of this article, including, but not limited to, providing that the lien created by such bond and mortgage or note and mortgage, and, if applicable, any regulatory agreement executed by the owner and the agency or restrictive covenant approved by such agency, may be recorded in an equal or subordinate position, or subsequently made equal or subordinate, to a lien recorded by any private lender against such multiple dwelling. 2-b. If a loan pursuant to this article is made to a non-profit company or a housing development fund company which agrees to provide housing accommodations exclusively for persons and families of low income, at least thirty percent of whom are referred to it by the municipality and have prior to their initial occupancy in such accommodations resided in emergency shelter facilities operated by or on behalf of the municipality, the agency may provide that the note and mortgage shall automatically be reduced to zero in five equal annual decrements commencing on the tenth year after the initial occupancy date, provided that such accommodations have been owned and operated in a manner consistent with an agreement with the municipality contained in such note and mortgage to provide housing for such persons.

3.

The bond or note issued by the owner of such multiple dwelling and the mortgage relating thereto may authorize such owner, with the consent of the agency, to prepay the principal of the loan subject to such terms and conditions as therein provided. Such bond or note and mortgage may contain such other clauses and provisions as the agency shall require.

4.

The agency may require the payment of charges by an owner of such multiple dwelling in consideration for the financing, regulation, supervision and audit of such loan. Such fees shall be paid into the treasury of the municipality requiring the charges and shall be paid and deposited in the general fund of any such municipality.

5.

Whenever reference is made in this article to a municipal loan, a loan by a municipality, a loan from a municipality, a contract for a loan between a municipality and an owner, or any similar term, with respect to the territorial limits of the city of New York such terms shall be construed to refer to a loan made or to be made either by such municipality or by the New York city housing development corporation, whichever is applicable.

6.

The bond and mortgage or note and mortgage issued by the owner of any such multiple dwelling may provide that the loan shall be reduced to zero commencing on the fifteenth year after the execution of the bond and mortgage or note and mortgage, provided that, as of the date of any such reduction, the multiple dwelling has been and continues to be owned and operated in a manner consistent with a regulatory agreement with the municipality. Notwithstanding such provision as contained in the bond and mortgage or note and mortgage, the loan shall be reduced to zero only if, prior to or simultaneously with delivery of such bond and mortgage or note and mortgage, the agency made a written determination that such reduction would be necessary to ensure the continued affordability or economic viability of the multiple dwelling. Such written determination shall document the basis upon which the loan was determined to be eligible for evaporation.

Source: Section 402 — Loans to owners, https://www.­nysenate.­gov/legislation/laws/PVH/402 (updated Oct. 27, 2023; accessed Jul. 13, 2024).

Accessed:
Jul. 13, 2024

Last modified:
Oct. 27, 2023

§ 402’s source at nysenate​.gov

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