N.Y. Real Prop. Law § 126

Current through 2024 NY Law Chapter 457

Section 126 - Trust indentures

No trustee shall hereafter accept a trust under any trust indenture or mortgage within the contemplation of this article or act as trustee thereunder unless the instrument creating the trust shall contain the following provisions, among others, which confer the following powers and impose the following duties upon the trustees:

1. In the case of an event of default (as such term is defined in such instrument), to exercise such of the rights and powers vested in the trustee by such instrument, and to use the same degree of care and skill in their exercise as a prudent man would exercise or use under the circumstances in the conduct of his own affairs.

2. In considering what actions are or are not prudent in the circumstances, to consider whether or not:

(a) to take such action as may be necessary or proper to sequester the rents and income of the property;

(b) to procure from the owner of the property an assignment of rents and/or a consent to enter into possession of the property and to collect the rents therefrom;

(c) to apply to the court for the appointment of a receiver of the rents and income of the property;

(d) to declare due and payable forthwith any principal amount remaining due and unpaid and commence an action of foreclosure;

(e) to apply the moneys received as rents and income from the property as well as moneys received by the trustee from any receiver appointed for such property in his discretion, to the maintenance and operation of such property, the payment of taxes, water rents and assessments levied thereon and any arrears thereof, to the payment of underlying liens, and to the creation and maintenance of a reserve or sinking fund.

3. If the trustee can obtain the information without unreasonable effort or expense, to render annually to bondholders, after the occurrence of a default, unless such default be previously cured, a summarized statement of income and expenditures in connection with the property.

4. To distribute the proceeds of any sale or other disposition of the property ratably among the bondholders, subject to applicable mandatory provisions of law.

5. To permit the obligor or other person in possession or control of the property, or his successors in interest, to be free to select the insurance broker or agent through whom any insurance of any kind is to be placed or written on any property affected or covered by a mortgage held by such trustee.

N.Y. Real Prop. Law § 126