Section 255 Affidavit (CEMA) (NY)
A Standard Document form of affidavit for use in a New York mortgage loan transaction that includes a consolidation, extension, and modification agreement (CEMA). This affidavit is essential for claiming an exemption from mortgage recording taxes (MRTs) under Section 255 of the New York Tax Law, which may be a significant transaction cost. This Standard Document supports the structuring of CEMA transactions, where an existing mortgage is not discharged but is instead consolidated with a new "gap mortgage." This approach limits the assessment of MRTs to only the new funds, or "gap amount," being advanced. The affidavit provides the necessary declarations to affirm that the CEMA is a supplemental mortgage that does not create or secure new indebtedness, which is critical for obtaining the tax exemption on the principal balance of the original mortgage being consolidated. This Standard Document has integrated notes with important explanations and drafting tips.
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