We're the Habitat for Humanity NYC affiliate's housing development fund company. We give 20-30 year interest-free mortgage loans to low-income homebuyers to finance construction, and take back a mortgage from each homeowner as security. Are those mortgages -- where WE are the lender/mortgagee, not the borrower -- exempt from mortgage recording tax?

Plain-English summary

Habitat for Humanity Housing Development Fund Company, Inc. is the contracting entity for Habitat for Humanity - New York City (HFH-NY), a chapter of Habitat for Humanity International founded in 1984 when NYC hosted the first Jimmy Carter Work Project. HFH-NY has built 66 homes across the Bronx, Brooklyn, Manhattan, and Queens using volunteer and paid labor, tax-deductible donations, and the future homeowners' own sweat equity — selling homes at no profit with affordable, interest-free financing. As homeowners make monthly mortgage payments, those funds flow into a revolving "Fund for Humanity" used to build more homes.

Petitioner is organized under Article XI of the Private Housing Finance Law as a housing development fund company (HDFC), holding title to construction sites until conveyance to homeowners and contracting for construction. In this program, Petitioner enters 20-to-30-year interest-free mortgage loans with low-income buyers to finance construction as cheaply as possible; the homeowner gives Petitioner a mortgage to secure repayment, and Petitioner sought to record those mortgages without paying mortgage recording tax.

Tax Law § 252 generally bars mortgage recording tax exemptions arising from other statutes, and doesn't itself carve out HDFCs. But Private Housing Finance Law § 577(2) provides, "any inconsistent provision of law to the contrary notwithstanding," that "mortgages of a housing development fund company shall be exempt from the mortgage recording taxes imposed by article eleven of the tax law" — a provision already incorporated into the mortgage recording tax regulations themselves (20 NYCRR § 644.1(b)(9)). Applying the settled rule that a later, more specific enactment governs an earlier general one on the same subject (Williamsburgh Power Plant Corp. v. City of New York), the Department found the 1966 Private Housing Finance Law exemption prevails over the 1909 mortgage recording tax provisions. Critically, § 577(2)'s language — "mortgages of a housing development fund company" — doesn't distinguish between an HDFC as BORROWER (mortgagor) and an HDFC as LENDER (mortgagee) taking back security for its own loans. So the mortgages Petitioner receives from its Habitat for Humanity homebuyers, securing Petitioner's own interest-free construction loans to them, are exempt from mortgage recording tax just as fully as a construction loan mortgage the HDFC itself gives to an outside bank would be.

What this means for you

Housing development fund companies making direct loans to homebuyers or developers

Your mortgage recording tax exemption under Private Housing Finance Law § 577(2) isn't limited to mortgages you give as borrower — it covers mortgages you TAKE as lender/mortgagee too, since the statute exempts "mortgages of a housing development fund company" regardless of which side of the transaction the HDFC sits on.

Homebuyers financing through a Habitat for Humanity or similar HDFC affiliate's direct-loan program

Expect no mortgage recording tax on the mortgage you give back to the HDFC to secure your construction loan, which helps keep total closing costs down on already below-market financing.

Common questions

Q: Does this exemption depend on the HDFC being the mortgagor or the mortgagee?
A: Neither role matters — the statute exempts "mortgages of a housing development fund company," which the Department read to cover the HDFC on either side of the transaction.

Q: Is this the origin case for the HDFC mortgage recording tax exemption?
A: It's an early, foundational application — a later opinion (TSB-A-01(4)R, New York State Title Attorneys Bar Association) built directly on this one to confirm the exemption also survives when an HDFC construction loan mortgage is later severed into substitute mortgages and assumed by individual homebuyers.

Q: Can another HDFC or nonprofit rely on this specific opinion?
A: No. It binds the Department only as to this petitioner and these facts, though the underlying Private Housing Finance Law § 577(2) exemption applies to HDFCs generally.

Citations and references

Statutes and regulations:

• Tax Law § 253 (mortgage recording tax on real property mortgages)
• Tax Law § 252 (no exemption by reason of any other statute, absent later specific enactment)
• Private Housing Finance Law § 577(2) (HDFC mortgages exempt from mortgage recording tax, notwithstanding any inconsistent law)
• 20 NYCRR § 644.1(b)(9) (regulatory codification of the HDFC mortgage exemption)

Case law cited in the opinion:

• Williamsburgh Power Plant Corp. v. City of New York, 255 App. Div. 214, aff'd 280 N.Y. 551 (later specific enactment governs earlier general enactment)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/mortgage_rec_ao_2000.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/mortgage/a00_4r.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Tax Policy Analysis
Technical Services Division

TSB-A-00(4)R
Mortgage Recording Tax
November 20, 2000

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. M000727B

On July 27, 2000, the Department of Taxation and Finance received a Petition for Advisory
Opinion from Habitat for Humanity Housing Development Fund Company, Inc., 334 Furman Street,
Brooklyn, New York 11201.
The issue raised by Petitioner, Habitat for Humanity Housing Development Fund Company,
Inc. is whether section 577(2) of Article XI of the Private Housing Finance Law exempts a housing
development fund company from payment of the mortgage recording tax imposed pursuant to Article
11 of the Tax Law when such housing development fund company is the lender/mortgagee.
Petitioner presents the following facts. Habitat for Humanity - New York City ("HFH-NY")
is a not-for-profit corporation whose mission is to build simple, decent and affordable housing for
clients in need through its volunteer and paid labor force. Petitioner is the contracting entity for
HFH-NY. In its capacity as contracting entity, Petitioner holds title to real estate on which projects
are constructed until conveyance to the housing recipient. Petitioner also contracts with construction
and tradespeople, and purchases construction materials. Petitioner's activities are funded by
HFH-NY.
HFH-NY is one of more than 1,500 United States affiliates of Habitat for Humanity
International, an ecumenical housing ministry that seeks to eliminate substandard housing throughout
the world. HFH-NY was founded as a chapter of Habitat for Humanity International in 1984, when
New York City was selected as the site of the first Jimmy Carter Work Project. Since 1984,
HFH-NY has built 66 homes in the Bronx, Brooklyn, Manhattan and Queens. HFH-NY builds and
rehabilitates these homes with the help of the future homeowners, volunteer labor and tax-deductible
donations of money and materials. The homes are sold to families at no profit and are financed with
affordable, no-interest loans. The homeowners' monthly mortgage payments are deposited into a
revolving Fund for Humanity that is used to build more homes. It is not a giveaway program, but
rather a joint venture in which those who benefit from the housing are involved in the work.
In the course of its program, Petitioner enters into twenty to thirty year interest free mortgage
loans with low income home buyers in order to finance the costs of construction as inexpensively
as possible. To secure repayment of these loans, the homeowners give Petitioner a mortgage and
Petitioner seeks to record such mortgages exempt from payment of any mortgage recording tax.
Petitioner is duly organized pursuant to Article XI of the Private Housing Finance Law
("Article XI") as a housing development fund company for the exclusive purpose of developing

-2­
TSB-A-00(4)R
Mortgage Recording Tax
November 20, 2000

housing for low income persons and families. Petitioner is sponsoring the financing of housing
development projects located in New York State pursuant to Article XI.
Applicable Law
Article 11 of the Tax Law imposes taxes on the recording of mortgages of real property
measured by the principal debt or obligation secured or which under any contingency may be secured
by the mortgage. Section 252 of Article 11 of the Tax Law, which sets forth the preponderance of
the exemptions from the mortgage recording tax, provides, with certain exceptions not relevant here,
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." Section 252 of the Tax Law does not provide a specific exemption from the mortgage
recording tax for housing development fund companies.
Subdivision (2) of section 577 of the Private Housing Finance Law provides:
Any inconsistent provision of law to the contrary notwithstanding, mortgages
of a housing development fund company shall be exempt from the mortgage
recording taxes imposed by article eleven of the tax law.
Additionally, subdivision (b) of section 644.1 of the Mortgage Recording Tax regulations
provides, in part:
The recording of the following mortgages is exempt from the taxes described
in Part 642 of this Title by reason of express statutory provision relating to such
taxes:
*

*

*

(9) mortgages of housing development fund companies formed pursuant to
article 11 of the Private Housing Finance Law (section 577[2] of the Private Housing
Finance Law). . . .
Conclusions
An apparent inconsistency exists between the Tax Law and the Private Housing Finance Law.
Where a conflict exists between two enactments relating to the same subject matter, the later specific
enactment governs the earlier general enactment. (Williamsburgh Power Plant Corp. v. City of New
York, 255 App Div 214, affd 280 NY 551.) Therefore, as the pertinent provisions of section 252 of
the Tax Law as cited previously in this opinion were enacted in 1909, they must yield to the
exemption provisions contained in the Private Housing Finance Law, which were enacted in 1966.

-3­
-3TSB-A-00(4)R
Mortgage Recording Tax
November 20, 2000

Indeed, the provisions of Section 577(2) of the Private Housing Finance Law have been
incorporated into and are specifically cited in Section 644.1 of the Mortgage Recording Tax
regulations.
Based on the foregoing, it is concluded that the mortgage recording tax is not due upon the
recording of a mortgage by a housing development fund company where such housing development
fund company is the lender/mortgagee. Accordingly, mortgages entered into by Petitioner in
connection with the HFH-NY program described above are not subject to the mortgage recording
tax.

DATED: November 20, 2000

NOTE:

/s/
Jonathan Pessen
Tax Regulations Specialist III
Technical Services Division

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