We're the state agency redeveloping Times Square/West 42nd Street. Private developers are leasing sites from us and financing construction through commercial lenders, with us named as mortgagee or co-mortgagee even though we have no beneficial interest in the loan. Is recording those mortgages -- and later assignments or modifications of them -- exempt from mortgage recording tax?

Plain-English summary

This is the Department's advisory opinion on the mortgage-recording-tax mechanics behind one of New York's best-known redevelopment projects: the transformation of West 42nd Street and Times Square. Starting in 1980, the New York State Urban Development Corporation (UDC, doing business as Empire State Development Corporation) partnered with New York City to redevelop roughly 13 acres of midtown Manhattan — turning a blighted stretch of Times Square into new office towers, a hotel, and renovated historic theaters (including the New Amsterdam Theatre, restored by a Disney affiliate, and the Victory Theater, restored by the not-for-profit New 42nd Street, Inc.). UDC acquired the land through condemnation and other means, then leased individual sites to private developers who were responsible for construction.

To finance construction, developers borrowed from commercial lenders. As part of the deal structure, UDC (or its subsidiary, 42nd St. Development Project, Inc.) would be named the mortgagee or co-mortgagee on the construction/development mortgages — even though UDC had no actual beneficial interest in the loans, which really belonged to the private lenders. UDC would later assign its interest in each mortgage to the lender. UDC asked the Department to confirm that recording these "Recognized Mortgages," and any later assignments, supplements, modifications, or amendments of them, escaped mortgage recording tax.

The Department agreed, on two independent legal grounds. First, New York State agencies carry tax immunity that exists independent of the mortgage recording tax statute's own exemption list (Tax Law § 252) — rooted in the basic principle that taxing property held for public purposes by the state or its subdivisions raises no net revenue and isn't the "just or practical" subject of taxation (citing a 1913 Attorney General opinion and Matter of Hamilton). Second, and more specifically, the UDC Act itself (Unconsolidated Laws § 6272) declares that UDC and its subsidiaries "shall not be required to pay any taxes... and shall at all times be free from taxation of every kind" on their projects, property, and money — and courts have instructed that this exemption be construed liberally given UDC's public mission of combating urban blight (citing Wein v. Beame, upholding a similar tax exemption for UDC's ownership of the Commodore Hotel even against "straw man" arguments). So: while UDC is the named mortgagee or co-mortgagee and the mortgage is recorded before UDC assigns away its interest, the recording is exempt. That exemption extends forward to later assignments, supplements, modifications, or amendments, as long as either (1) the instrument doesn't itself create a new taxable mortgage or does qualify as an exempt "supplemental mortgage" under Tax Law § 255, or (2) UDC remains the named mortgagee or co-mortgagee on the new instrument. If the secured debt increases, tax applies — but only to the increase, and only if tax would otherwise have been due on a mortgage securing that additional amount.

What this means for you

Public benefit corporations running large redevelopment projects

If your enabling statute contains a broad tax exemption (especially one courts are instructed to read liberally, as with the UDC Act), being named a pass-through mortgagee on private developer financing — with the intent to assign your interest to the real lender afterward — can be structured to avoid mortgage recording tax on the whole project's construction financing, not just a single mortgage.

Private developers and construction lenders on public-authority redevelopment sites

This same-day/companion structure is common on large public-private redevelopment deals: the public authority takes legal title as mortgagee first (getting the exemption), then assigns to your bank. Confirm the assignment timing and documentation match what the Department approved here, since the exemption depends on UDC being the mortgagee of record when the mortgage is FIRST recorded.

Accountants and real estate attorneys

This ruling is explicitly cited as "the 42nd Street Advisory Opinion" in later Department rulings on the same UDC/ESDC pass-through-mortgagee doctrine (e.g., the Roosevelt Island Octagon Project ruling, TSB-A-09(1)R), confirming it's treated as a foundational precedent in this doctrinal family alongside the Waldorf-Astoria/Retirement System case and the Industrial Development Agency line.

Common questions

Q: Does the exemption depend on UDC actually keeping the money or benefiting economically from the loan?
A: No. UDC has no beneficial interest in the Recognized Mortgages at all — the exemption turns on UDC's status as a tax-immune state instrumentality and its statutory authority to record mortgages as part of the Project, not on who economically benefits.

Q: What happens once UDC assigns the mortgage to the private lender?
A: The initial recording (while UDC was mortgagee) is exempt. Later assignments, supplements, modifications, or amendments stay exempt too, as long as the secured principal debt isn't increased, or UDC is again the named mortgagee/co-mortgagee on that later instrument.

Q: Can another UDC-adjacent project, or an unrelated developer, rely on this specific ruling?
A: No. It binds the Department only as to UDC and the 42nd Street Project's facts, though the reasoning is the same doctrine applied to UDC's other projects (see the Queens West rulings, TSB-A-00(3)R and TSB-A-02(6)R) and to other public authorities like RIOC and the Port Authority.

Citations and references

Statutes:

• Tax Law § 252 (general rule against MRT exemptions arising from other statutes)
• Tax Law § 253 (mortgage recording tax imposition, measured by principal debt secured)
• Tax Law § 255 (supplemental mortgage treatment -- no new tax if secured debt isn't increased)
• Tax Law § 250 (increase in mortgage indebtedness taxable as a new mortgage)
• McKinney's Unconsolidated Laws §§ 6251 et seq. (New York State Urban Development Corporation Act)
• Unconsolidated Laws § 6272 (UDC and its subsidiaries free from taxation of every kind)
• Unconsolidated Laws § 6253(6) (definition of "project" under the UDC Act)
• Unconsolidated Laws §§ 6252, 6283, 6284 (UDC Act legislative findings; liberal construction mandate)

Case law and prior opinions cited:

• Matter of Hamilton, 148 N.Y. 310 (state/municipal property held for public purposes isn't a practical subject of taxation)
• 1982 Opinions of the State Comptroller No. 82-188; One Park Place Associates, TSB-A-82(1)(M) (Industrial Development Agency mortgage exemption line)
• Matter of City of New York v. Tully, 88 A.D.2d 701 (Waldorf-Astoria mortgage held by NYS Employees' Retirement System exempt; state agency immunity independent of Tax Law § 252)
• Wein v. Beame, 43 N.Y.2d 326 (liberal construction of UDC's real property tax exemption; rejecting "straw man" argument)
• New York State Urban Development Corp. d/b/a Empire State Development Corp., TSB-A-95(15)R (prior UDC mortgage recording tax exemption ruling)
• Matter of City of New York v. State Tax Commn., 130 A.D.2d 890; Matter of Rednow Realty Corp. v. Tully, 72 A.D.2d 621; Matter of Park and 46th St. Corp. v. State Tax Commn., 295 N.Y. 173; Matter of Bay View Towers Apts. v. State Tax Commn., 48 A.D.2d 86, aff'd 40 N.Y.2d 856 (supplemental mortgage / increased-indebtedness case law)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/mortgage_rec_ao_1997.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/mortgage/a97_5r.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-97(5)R
Mortgage Recording Tax

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. M970214B

On February 14, 1997, the Department of Taxation and Finance received a
Petition for Advisory Opinion from the New York State Urban Development
Corporation d/b/a Empire State Development Corporation, 633 Third Avenue, 37th
Floor, New York, New York 10017.
The issues raised by Petitioner, the New York State Urban Development
Corporation (UDC), are:
1) Whether the taxes imposed by Article 11 of the Tax Law and Chapter 26 of the
Administrative Code of City of New York (collectively, the mortgage recording
tax) are due upon the recording of any mortgage of property that is part of the
UDC's 42nd Street Development Land Use Project (the Project) where (i) UDC, or
its wholly owned subsidiaries, including 42nd St. Development Project, Inc., the
subsidiary formed to implement the Project on behalf of UDC, is (a) the named
mortgagee (whether as trustee, agent, nominee or otherwise) or (b) a co-mortgagee
(whether or not a private entity is the other co-mortgagee), (ii) UDC is
obligated to record the mortgage and (iii) the mortgage is entered into in
furtherance of the Project, including, without limitation, use of the proceeds
of the mortgage loan for acquisition and development costs associated with the
Project or other Project purposes incurred by parties other than UDC (any of the
foregoing, "Project Costs").
2) If a mortgage referred to in 1) above is assigned, supplemented, modified or
amended, or if any mortgage so assigned, supplemented, modified or amended is
thereafter from time to time assigned, supplemented, modified or amended, whether
mortgage recording tax is due upon the recording of the applicable instrument or
otherwise to the extent that either (a) the then outstanding principal
indebtedness secured by the mortgage is not increased (or, if increased, whether
mortgage recording tax is imposed only with respect to any increase in the amount
of secured indebtedness and then only if mortgage recording tax would otherwise
have been required to be paid on such additional indebtedness) or (b) UDC is
named as mortgagee or co-mortgagee, with respect to, and is obligated to record,
such assignment, supplement, modification or amendment.
Petitioner submits the following facts as the basis for this Advisory
Opinion. The petition relates to anticipated transactions. An advisory opinion
is based on the facts presented (20 NYCRR 2376.1(a)).
We note that the
application of the opinion is limited to the anticipated facts set forth in the
opinion.
In 1980, UDC entered into a memorandum of understanding with the City of
New York (the "City") for the redevelopment of the West 42nd Street/Times Square
area. The redevelopment was conceived as a joint effort, to be implemented by
public agencies and private developers designated by UDC and the City.
A

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comprehensive study and plan of the Project area, aimed at turning Times Square
into a safe, lively center for entertainment, shopping, commuting and business,
was commissioned and completed in 1981.
This plan (the "Project Plan") was
approved by UDC's Directors in 1984 and, in the same year, approved by the City's
Board of Estimate. Amendments to the Project Plan have been approved in 1984,
1988, 1991, 1994 and 1996.
The Project Plan envisions, among other improvements, the construction of
four new office towers at the eastern end of the Project area and, at the western
end, a hotel, along with other commercial and retail uses. Construction of
certain of the long-term improvements may by deferred if warranted by market
conditions. If so, the affected portion of the Project area must be developed,
in the near term, for tourist and entertainment-related activities in accordance
with an immediate revitalization program known as "42nd Street Now!". In the
mid-block, the Project Plan calls for the renovation of nine turn-of-the-century
theaters along West 42nd Street to house a mix of entertainment and
entertainment-related uses, including live theater.
Substantial public
improvements, including sidewalk and lighting improvements and new subway
entrances, also form part of the Project.
The public uses and benefits expected to flow from the Project are
reflected in the determinations and findings made as part of UDC's approval
process for the Project. The UDC resolutions approving the Project in 1984 set
forth certain of the goals of the Project:
To overcome conditions of blight in the Project Area which have
discouraged new investment for over half a century and which
discourage the public's use of this historic part of New York
City,... to eliminate the blight and physical decay, as well as the
crime and frightening street life, that now characterize the West
42nd Street area;... to preserve and restore the area's
extraordinary older theaters for theatrical and upgraded movie use,
and, by so doing, to revitalize the project area as a theater and
entertainment center serving tourists and all New Yorkers....
As part of the 1984 approval process, extensive determinations and finding
were made with respect to the Project. These findings projected the following
benefits from the Project:
The 42nd Street Project will provide significant economic benefits
to the public. In revenues, alone, the City is expected to realize
as a result of the new construction an increase of over six times
the real estate taxes it would have received, were the Project not
built. The Project will also generate thousands of new jobs in the
area....
The Project is expected to benefit the public by eradicating or
substantially ameliorating the threatening social conditions that
pervade the area. The present tawdriness will be eliminated from
the Project area and replaced with a lively and wholesome street
environment emanating from the active commercial, retail, hotel,
theater, and upgraded entertainment uses.
As a result of the

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improved surroundings, it is anticipated that crime in the project
area will be substantially reduced.
The expected effect of the
Project will be to recreate, through a cohesive project plan, some
or all of the former glory of 42nd Street and thus return the area
to use and enjoyment by the public as a whole.
Since the Project Plan was approved in 1984, UDC has acquired fee title,
through condemnation and otherwise, to most of the approximately 13 acres of land
in midtown Manhattan that make up the Project area (the entirety of the Project
area, the "Land"). UDC has divided the Land into various sites and, as more
fully described below, has leased, or will lease, the sites to private developers
or, in the case of certain of the theaters, to a not-for-profit organization, the
New 42nd Street, Inc. ("New 42"), which is charged with overseeing the
implementation of the Project on those sites.
More specifically, sites 1, 3, 4 and 12, the "office sites" at the eastern
end of the Project area, were leased in 1988 to affiliates of Times Square Center
Associates ("TSCA"), a partnership between The Prudential Insurance Company of
America and an affiliate of Park Tower Realty Corporation. In July 1996, the
TSCA entity acting as the Site 12 tenant assigned its interest in the Site 12
lease to an entity controlled by The Durst Organization, which has commenced
construction of an office building on Site 12. The New Amsterdam Theatre (which
comprises a portion of Site 6) is leased to New Amsterdam Development Corporation
("NADC"), an affiliate of Disney Development Corporation. Renovation of the
theater by NADC, currently underway, is scheduled to be completed in the spring
of 1997. A lease with an affiliate of the Forest City Ratner Companies for the
development of an entertainment/retail complex to be located on portions of Sites
6, 8 and 10 has been signed.
Leases with affiliates of the Tishman Urban
Development Corporation for the development of a hotel and retail/entertainment
complex on Site 7 are being finalized and are expected to be executed shortly.
Finally, New 42 has completed the renovation of the Victory Theater, which opened
in 1995 as New York's only theater dedicated to young people.
Generally, the tenant of each site, or an affiliate thereof, will act as
the developer of that site, with the obligation to construct certain buildings
and improvements on the leased premises, or to rehabilitate existing
improvements, in accordance with the Project Plan. In addition, as to all sites
other than some or all of the theaters leased to New 42, it is anticipated that
each tenant (or the applicable developer) will pay (or, through site revenues,
will, in effect, reimburse the public parties for) certain costs associated with
the acquisition of the relevant site. Certain of the developers may also be
expected to defray the cost of improvements to public facilities (sidewalks,
lighting, subway entrances, etc.) in the Project areas. Specific financial terms
vary substantially from site to site.
Except for the reimbursement of certain UDC expenses and the dedication of
certain site revenues to the recovery of other public funds invested in the
Project (including, for example, the repayment, with interest, of loan funds made
available by UDC for the rehabilitation of the New Amsterdam Theater), other
payments made by the tenants under the leases inure to the benefit of the City.
In addition, title to the Land and to the landlord's rights under each of the
leases will revert to the City upon the occurrence of certain milestone events

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or dates, for example, completion of specific components of the Project. At the
end of the term of each lease, ownership of all buildings and improvements will
vest in the landlord, free of any interest of the tenant. In some instances,
however, the tenant will have an option to purchase its site following a stated
period after completion of the initial construction or renovation work.
The City and State have recognized from the outset that tax exemptions and
abatements would be required to make the initial development of the Project
financially feasible. An important factor in this regard is the real property
tax exemption which the Project enjoys by virtue of the ownership of the Land by
UDC or a subsidiary of UDC. The leases (other than the lease to the New 42)
require payments in lieu of real property taxes to be made in increasing amounts
during the lease term. The Project also enjoys an exemption from New York sales
tax.
Here, too, the developers are generally required to make stipulated
payments in lieu of sales taxes to the landlord. Such payments in lieu of sales
tax are, in certain instances, required to be applied to site acquisition costs
and other Project expenses and purposes.
Finally, exemption from mortgage
recording tax and, in certain instances, the making of payments in lieu of
mortgage recording taxes, is contemplated as a financial component of certain of
the transactions.
Pursuant to certain documents between UDC and the developers (the "Project
Documents"), UDC will (a) either be the named mortgagee (whether as trustee,
agent, nominee or otherwise) or be a co-mortgagee (whether as trustee, agent,
nominee or otherwise), and a private entity may be the other co-mortgagee under
each of the mortgages and separate assignment of leases and rents (collectively,
the "Recognized Mortgages") and (b) be obligated to record the respective
Recognized Mortgages. Although UDC will either be the named mortgagee or a co­
mortgagee, UDC will have no beneficial interest in the Recognized Mortgage.
Contemporaneously with the execution and delivery of a Recognized Mortgage,
or at any time thereafter, UDC may assign all of its right, title and interest
in and to the relevant Recognized Mortgage to the lender having beneficial
ownership of such Recognized Mortgage, which may be UDC's co-mortgagee.
In addition to the contemplated assignments of UDC's interest in the
Recognized Mortgages to other lenders or its co-mortgagee, UDC anticipates that
the Recognized Mortgages may, from time to time (whether before and/or after UDC
has ceased to be the designated mortgagee or co-mortgagee), be assigned,
supplemented, modified or amended and that the applicable instruments reflecting
such assignment, supplement, modification or amendment will be recorded. Thus,
for example, in accord with customary mortgage financing practices, it is
anticipated that mortgages securing acquisition and construction financing will
be assigned, supplemented and modified and converted to permanent financing upon
the completion of construction.
Further, from time to time, the Recognized
Mortgages may be assigned from one lender to another, or the loans may be
refinanced. It is also possible that the identity of the mortgagors will change,
either by reason of the assignment of a lessee's interest to an affiliate or to
an unrelated person. Finally, if and when a lessee exercises a purchase option
contained in its lease, a leasehold mortgage may be converted into a mortgage
secured by a fee interest or may be spread to cover the fee interest.

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Analysis, Issue #1
Regarding issue "1", Article 11 of the Tax Law imposes taxes on the
recording of mortgages of real property located in New York State, measured by
the principal debt or obligation secured by the mortgage. Section 252 of Article
11, applicable to exemptions from the mortgage recording tax, provides, with
certain exceptions not relevant herein, that "[n]o mortgage of real property
situated within this state shall be exempt, and no person or corporation owning
any debt or obligation secured by mortgage of real property situated within this
state shall be exempt, from the taxes imposed by this article by reason of
anything contained in any other statute."
Even though section 252 of the Tax Law does not provide a specific
exemption with respect to the operations of UDC, it is well established that
State agencies enjoy an immunity from taxation independent of the statutory
exemptions listed in section 252 of the Tax Law for property utilized in the
public interest. New York State Urban Development Corporation d/b/a Empire State
Development Corp., Adv Op Comm T&F, December 18, 1995, TSB-A-95(15)R.
In a March 29, 1913 opinion, the Attorney General opined that no mortgage
recording tax was due when New York State acted as mortgagor and quoted the
following passage from Matter of Hamilton, 148 NY 310, 313-314:
The property held by the state, or by any of its municipal
divisions, for public purposes, is not, and never has been, subject
to taxation ... The end and object of all taxation is to raise
revenue for the purpose of defraying the expenses of government, and
since no revenue could be raised by imposing taxes on property owned
by the state itself, or any of its political divisions, such
property is no just or practical sense the subject of taxation.
This principle has been applied to exempt from the mortgage recording tax
mortgages on property when legal title is held by a New York State Industrial
Development Agency created pursuant to Article 18-A of the General Municipal Law
even though beneficial ownership of the property is held by private interest.
(See 1982 Opns St Comp No. 82-188, p 240; One Park Place Associates, Adv Op St
Comm, May 24, 1982, TSB-A-82(1)(M) and New York State Urban Development Corp
d/b/a Empire State Development Corp., supra)
Also, in Matter of City of New York v. Tully, 88 AD2d 701, in concluding
that a $45 million mortgage secured by the Waldorf-Astoria hotel was exempt from
the mortgage recording tax because the mortgagee (the New York State Employees'
Retirement System) was a New York State agency, the Court noted that the State
agency was immune from taxation "and [t]his immunity is enjoyed independent of
the exemptions from taxation set forth in section 252 of the Tax Law...." The
Court reasoned that "[t]he mortgage is similarly property of the immune agency
and thus exempt from taxation....".
In 1968, the New York State Legislature established UDC as a vehicle for
reversing blight and decay in New York's towns and cities.
McKinney's
Unconsolidated Laws of New York §§ 6251 et seq (New York State Urban Development
Corporation Act, L 1968, ch 174, as amended) (hereinafter "UDC Act")). UDC is

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a corporate governmental agency of the State, constituting
subdivision and public benefit corporation. UDC Act § 6254(1).
benefit corporation, UDC exercises governmental authority.

a political
As a public

Section 6272 of the UDC Act provides, in pertinent part, that:
[UDC} and its subsidiaries shall not be required to pay any taxes,
other than assessments for local improvements, upon or in respect of
a project or of any property or monies of [UDC} or any of its
subsidiaries... and [UDC}, its subsidiaries, projects, property and
moneys...shall at all times be free from taxation of every kind by
the state and by the municipalities and all other political
subdivisions of the state.
Section 6253(6) of the UDC Act defines a "project" as follows:
A specific work or improvement including lands, buildings,
improvements, real and personal properties or any interest therein,
acquired, owned, constructed, reconstructed, rehabilitated or
improved by [UDC] or any subsidiary thereof, whether or not still
owned or financed by [UDC] or any subsidiary thereof...
Section 6252 of the UDC Act provides the following statement of legislative
findings and purposes:
It is hereby declared that the acquisition, construction,
reconstruction, rehabilitation or improvement of such industrial,
manufacturing and commercial facilities, and of such cultural,
educational and recreational facilities including, but not limited
to, facilities identified as projects...are public uses and public
purposes for which public money may be loaned and private property
may be acquired and tax exemption granted, and that the powers and
duties of the New York State urban development corporation as
hereinafter prescribed are necessary and proper for the purpose of
achieving the ends here recited.
Section 6283 of the UDC Act states:
Insofar as the provisions of the act are inconsistent with the
provisions of any other law, general, special or local, the
provisions of this act shall be controlling.
Section 6284 of the UDC Act provides:
This act, being necessary for the welfare of the state and its
inhabitants, shall be liberally construed so as to effectuate its
purpose.
Consistent with the legislative mandate of the UDC Act, courts have given
liberal interpretation to its tax exemption provisions. For example, in Wein v.
Beame, 43 NY2d 326, the New York Court of Appeals upheld an exemption from real
property taxes as applied to the Commodore Hotel property in Manhattan. The

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hotel had been sold to UDC for one dollar, then leased back to the seller for 99
years. Arguments that UDC had no real interest in the property, and was a "straw
man" brought into the project solely to provide a tax exemption, were rejected.
The Court stated:
It is not for us to speculate as to the motive for UDC's
participation, nor to delineate the amount of active participation
which is necessary to denominate a particular project a UDC project.
Here, UDC will be the owner of the building, and it is enough that
UDC has to combat otherwise inevitable urban blight, which is thus
clearly in accordance with the benign purposes of the Legislature in
creating UDC. (Id. At 331)
Conclusion, Issue #1
In view of the broad exemption granted UDC and its projects by the UDC Act
and the direction that the provisions be liberally construed, as well as the
general immunity of New York State agencies from taxation, the recording of the
Recognized Mortgages is not subject to the mortgage recording tax if the UDC is
the named mortgagee or a co-mortgagee (whether as trustee, agent or otherwise)
and the Recognized Mortgages are recorded prior to the time that UDC assigns its
interest in the mortgages to other lenders or its co-mortgagee.
Analysis, Issue #2
Section 255 of the Tax Law provides as follows:
[i]f subsequent to the recording of a mortgage on which all taxes,
if any, accrued under this article have been paid, a supplemental
instrument or mortgage is recorded for the purpose of correcting or
perfecting any recorded mortgage, or pursuant to some provision or
covenant therein, or an additional mortgage is recorded imposing the
lien thereof upon property not originally covered by or not
described in such recorded primary mortgage for the purpose of
securing the principal indebtedness which is or under any
contingency may be secured by such recorded primary mortgage, such
additional instrument or mortgage shall not be subject to taxation
under this article, unless it creates or secures a new or further
indebtedness or obligation other than the principal indebtedness or
obligation secured by or which under any contingency may be secured
by the recorded primary mortgage....
Section 250 of the Tax Law provides that "[a] contract or agreement by
which the indebtedness secured by any mortgage is increased or added to, shall
be deemed a mortgage of real property for the purpose of this article, and shall
be taxable as such upon the amount of such increase or addition."
Once a mortgage has been given and recorded, the recorded primary mortgage
may be changed by a supplemental mortgage and, under the provisions noted above,
no additional recording tax will be due as long as the amount secured remains the
same. Matter of City of New York v. State Tax Commn., 130 AD2d 890, 891. Of

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course, were the indebtedness secured by the lien to be reduced or the lien ­
terminated for any reason, tax would be due on any increase on the new
obligation. Matter of Rednow Realty Corp. v. Tully, 72 AD2d 621, 622.
Both sections 253 and 255 of the Tax Law require that only a mortgage on
the principal debt or obligation, or a new or further indebtedness other than the
principal obligation should be subject to the recording tax. Matter of Park and
46th St. Corp. v. State Tax Commn., 295 NY 173, 178-179 and Matter of Bay View
Towers Apts. v. State Tax Commn, 48 AD2d 86, 89, affd 40 NY2d 856.
Conclusion, Issue #2
The recording of any assignment, supplement, modification or amendment of
Recognized Mortgages that were the subject of Conclusion, Issue #1, is not
subject to mortgage recording tax to the extent (1) the instrument is not a
mortgage subject to tax under section 253 of the Tax Law (as in the case of an
assignment of the Recognized Mortgages), (2) the recording is exempt under the
supplemental mortgage provisions of section 255 of the Tax Law, but only to the
extent that the principal indebtedness or obligation that was secured by the
prior primary mortgage is not increased or added to or (3) UDC is named as
mortgagee or co-mortgagee with respect to such assignment, supplement,
modification or amendment.

DATED:

April 18, 1997

NOTE:

/s/
John W. Bartlett
Deputy Director
Technical Services Bureau

The opinions expressed in Advisory Opinions
are limited to the facts set forth therein.