Hold Limited Liability Property Owners Accountable for Their Neglected Properties PDF Print E-mail

 The Mandate: A substantial number of properties in New York are owned by corporations or limited liability companies. Unfortunately, it is not uncommon for those corporations and limited liability companies to abandon properties once the property has become unprofitable. Once abandoned, these properties blight the community, often becoming a safety hazard. Cities and villages are then left to shoulder the cost of remediating the properties and, in many instances, demolishing unsafe buildings. Although local governments may place the costs they incur in remediating a property as a lien on the property, the municipality's abatement/demolition costs frequently exceed the property's resulting value, leaving the local government and its taxpayers paying for the costs of the property.

The Cost: The cost of demolishing a single family home can range from $20,000 to $40,000 per home. Demolitions of multiple dwellings and commercial properties frequently exceeding $50,000 and can stretch into the hundreds of thousands of dollars. With tens of thousands of buildings needing to be demolished across the State of New York, the cost to New York's local governments and their taxpayers is in the tens of millions.

The Solution: State law should be amended to allow local governments to petition a supreme court judge for an order allowing the local government to attempt to recover the costs it incurs in remediating or demolishing an unsafe building from the owner of the corporation or limited liability company. Specifically, local governments should be allowed to pierce the protective veil of a corporation or limited liability company if the value of property which is the subject of a proceeding pursuant to General Municipal Law ยง 78-b(1) is less than the cost of abating the nuisance condition or code violation or demolishing the unsafe structure and (a) the assets of the corporation or limited liability company are insufficient to cover the cost of abatement or demolition and (b) the corporation or limited liability company (i) made a profit on the property at any time during the five years prior to the abatement or demolition or (ii) used financial losses on the property to write-off capital gains or income from other properties that the corporation or limited liability company owns during the five years prior to the abatement or demolition.