March 22, 2021
By: Alan Kolod
The New York City Bar Association recently issued a report, prepared by its Commercial Law and Uniform State Laws Committee and endorsed by its Real Estate Committee, opposing enactment of a bill that would impose a recording tax on Article 9 UCC financing statements with respect to Mezzanine Debt and Preferred Equity Investments supported by the equity value of mortgaged real estate. The report concludes that the tax would be easily avoided because, absent enactment of the bill, a financing statement would not have to be filed for most such financings. To the extent parties were required to file, they could simply avoid application of New York law and involvement of the New York courts. Thus, the primary effect of the law would not be to raise tax revenues but to make use of New York entities, law and the courts unattractive and to increase the cost of such financings for owners of New York real estate.
Alan Kolod, chair of Moses & Singer, is Chair of the Commercial Law and Uniform State Laws Committee, and was involved in drafting the report, the primary authors of which were Sandra Stern and Edwin Smith, members of the Committee who are also Uniform Law Commissioners for New York and Massachusetts, respectively. The Report, which was published on March 17, 2021, is available here.