Enacts the "deed protection act"

2025 Regular Session Introduced by Jabari Brisport and 1 co-sponsor

The bill bars lenders from seizing property tied to deed theft if they did not perform reasonable due diligence to verify title before issuing the loan.

PRINT NUMBER 9309A

Overview

Bill S 9309 (2025-2026, New York) introduces the Deed Protection Act. It adds a new provision to the Banking Law to address loans secured by property where the borrower acquired title through deed theft. The act prohibits financial institutions from taking possession of such property for loan default if the lender did not conduct reasonable due diligence to determine whether the title was obtained via deed theft prior to issuing the loan. The act takes effect immediately.

Purpose and intent

Prevent lenders from seizing property or enforcing repayment on loans backed by property title that was obtained through deed theft, absent adequate due diligence by the lender.

Create a standard of “reasonable due diligence” for lenders to verify the legitimacy of title before providing a loan secured by that property.

Close a potential loophole where lenders could benefit from cognate title fraud by proceeding with foreclosures or possession despite a title dispute.

Key provisions

New section 6-q added to the Banking Law.

Prohibition: No financial institution shall take possession of property based on loan default if:

The loan was provided to a person who obtained title to the property by deed theft, and
The financial institution failed to conduct reasonable due diligence to determine whether the title was obtained by deed theft prior to making the loan.

The term “reasonable due diligence” is not further defined in the text provided; it would be interpreted by implementation guidance, regulatory standards, or case law.

Effective date: The act takes effect immediately upon enactment.

Affected parties and impacts

Financial institutions (banks and other lenders): Must perform due diligence to verify title legitimacy prior to issuing loans secured by property. If due diligence is not demonstrated, the lender may be barred from taking possession of such property after a deed-theft-related title issue is revealed.

Property owners and borrowers: Potential protection against wrongful possession actions by creditors when title to the property was obtained through deed theft and the lender failed to perform appropriate verification.

Deed theft victims and the broader real estate market: The bill could deter lenders from proceeding with high-risk loans tied to potentially stolen property without appropriate checks, potentially reducing losses from title fraud but possibly affecting access to credit for some borrowers with contested titles.

Procedural and timeline aspects

Sponsor and committee: Referred to the Senate Banks Committee; co-sponsors include Senator Julia Salazar and Senator Jabari Brisport.

Action history indicates the bill was reported and committed to judiciary on May 12, 2026, with an amendment and recommit to judiciary; prior to that, it was referred to Banks on February 27, 2026.

No sunset provision or explicit penalties are stated in the text provided; the primary remedy appears to be the limitation on taking possession of property in the specified circumstances.

Notes and considerations

The definition and scope of “deed theft” and “reasonable due diligence” are crucial for practical application. The bill text does not specify standards or processes for due diligence, leaving room for regulatory guidance or future amendments.

The immediate effective date means the provision would apply as soon as the legislation is enacted, influencing ongoing or new loans tied to properties with contested or suspicious titles.