New York State Law Amended to Require Acceptance of a Payment Made in Reliance on a Mortgage Payoff Statement

New York State law has been amended to require a mortgage lender to accept a payment received at the location and in the manner specified by the lender when such payment is received in reliance on a payoff statement, and to promptly apply such payment to the unpaid principal, interest or any other amounts due under the mortgage.

On December 12, 2025 Governor Kathy Hochul signed into law amendments to New York Real Property Law Section 275 and New York Real Property Actions and Proceedings Law Section 1921 regarding acceptance of payments received in reliance on a payoff statement. The two laws were amended to add this requirement:

“...if payment is received at the location and in the manner specified by the mortgagee, the mortgagee must accept and may not return or destroy any payment received in reliance on a payoff statement and must promptly apply such payment to the unpaid principal, interest or any other amounts due under the mortgage.”           

The stated purpose of these amendments is to ensure timely processing and recording of mortgage satisfactions and protect borrowers by requiring mortgagees to accept and apply payments based on payoff statements. However, the amendments raise a number of questions and concerns for lenders. For instance, if a payment is received based on an outdated payoff statement and is not sufficient to fully payoff the loan, is the lender required to accept the payment? If the loan is in default would acceptance of such payment constitute a waiver of the default? The answers to these questions are not entirely clear.

To help protect against some of these concerns, lenders should make sure their payoff statements clearly state the date that they are effective through, and that acceptance by the lender of any amount less than necessary to fully payoff a mortgage loan shall not constitute a waiver by the lender of its right to collect any remaining amount due and shall not constitute a waiver of any default on the loan.

The new law took effect immediately upon it being signed into law on December 12, 2025 and applies to all mortgages secured by properties in New York State (regardless of the type of lender, type of property, or the type or purpose of the loan).

Please note this is a general overview of developments in the law and does not constitute legal advice.  Nothing herein creates an attorney-client relationship between the sender and the recipient. If you have any questions about the amendments, please feel free to contact Joseph D. Simon at (516) 357-3710 or via email at jsimon@cullenllp.com, Elizabeth A. Murphy at (516) 296-9154, or via email at emurphy@cullenllp.com, David Curatolo at (516) 357-3773 or via email at dcuratolo@cullenllp.com, or Gabriela Morales at (516) 357-3850 or via email at gmorales@cullenllp.com.