Earlier this month, the New York State Senate (S318) and Assembly (A407) reintroduced proposed legislation seeking to extend the New York State mortgage recording tax to mezzanine debt and preferred equity financings. This proposed legislation provides that mortgage recording taxes will be assessed on mezzanine and preferred equity financing transactions where the mezzanine or preferred equity financing is “related to the real property upon which a mortgage instrument is filed.” Lenders and preferred equity investors would be motivated to ensure that the tax is paid, since under the proposed legislation, remedies under the New York Uniform Commercial Code (UCC) would not be available to the mezzanine lender or preferred equity investor unless the mortgage recording tax was paid.
