NY A05607

Establishes that when a property is sold after tax foreclosure, surplus proceeds (amounts exceeding taxes, interest, penalties, and foreclosure costs) shall be distributed to the prior owner or other lienholders in order of priority, rather than retained by the tax district.

Requires lienholders to be paid from surplus proceeds in the same order and extent as in a mortgage foreclosure under Article 13 of the Real Property Actions and Proceedings Law, with any remaining proceeds paid to the prior property owner.

Excludes abandoned properties (as defined by municipal registries or state registry) from these distribution requirements, allowing tax districts to retain proceeds from those sales.

Requires municipalities to notify former property owners when their property generated a surplus at a tax foreclosure auction, including information on how to obtain the surplus and steps needed to claim it.

Takes effect October 1, 2023, and applies to all tax foreclosure proceedings commenced on or after that date.