New York S 9796: Relates to prohibiting pre-payment penalties for mortgages secured by real property owned in a cooperative form of ownership

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S09796 Summary:

BILL NOS09796 

&nbsp

SAME ASSAME AS A00088

&nbsp

SPONSORSEPULVEDA

&nbsp

COSPNSR

&nbsp

MLTSPNSR

&nbsp

Amd §5-501, Gen Ob L

&nbsp

Prohibits pre-payment penalties for mortgages secured by real property owned in a cooperative form of ownership where over fifty percent of the units are shareholder occupied.

Go to top S09796 Actions:

BILL NOS09796 

&nbsp

04/06/2026REFERRED TO JUDICIARY

05/19/20261ST REPORT CAL.1189

05/20/20262ND REPORT CAL.

05/21/2026ADVANCED TO THIRD READING 

06/05/2026COMMITTED TO RULES

Go to topS09796 Committee&nbspVotes:

Go to topS09796 Floor&nbspVotes:

There are no Assembly votes for this bill in this legislative session.

Go to topS09796 Text:

 STATE OF NEW YORK
 ________________________________________________________________________

 9796

 IN SENATE

 April 6, 2026
 ___________

 Introduced by Sen. SEPULVEDA -- read twice and ordered printed, and when
 printed to be committed to the Committee on Judiciary

 AN ACT to amend the general obligations law, in relation to pre-payment
 penalties for mortgages secured by real property owned in a cooper-
 ative form of ownership

 The People of the State of New York, represented in Senate and Assem-
 bly, do enact as follows:

 1 Section 1. Paragraph b of subdivision 3 of section 5-501 of the gener-
 2 al obligations law, as amended by chapter 472 of the laws of 2008, is
 3 amended to read as follows:
 4 b. notwithstanding any other provision of law, the unpaid balance of
 5 the loan or forbearance may be prepaid, in whole or in part, at any
 6 time. If prepayment is made on or after one year from the date the loan
 7 or forbearance is made, no penalty may be imposed. If prepayment is made
 8 prior to such time, no penalty may be imposed unless provision therefor
 9 is expressly made in the loan contract, provided that no penalty may be
 10 imposed if prohibited by sections six-l and six-m of the banking law. No
 11 prepayment penalty or fee shall be charged or collected on a loan or
 12 forbearance secured by real property owned in a cooperative form of
 13 ownership where over fifty percent of the units are shareholder occu-
 14 pied. Such prepayment penalty shall be unenforceable. In all cases, the
 15 right of prepayment shall be stated in the instrument evidencing the
 16 loan or forbearance, provided, however, that the provisions of this
 17 subdivision shall not apply to the extent such provisions are inconsist-
 18 ent with any federal law or regulation.
 19 § 2. This act shall take effect immediately.

 EXPLANATION--Matter in italics (underscored) is new; matter in brackets
 [ ] is old law to be omitted.
 LBD00908-01-5

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