Office of Court Administration


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NYS Comptroller


Taxpayers' Guide to State and Local Audits

Office of Court Administration
Reporting on Foreclosure of Real Property Funds - Kings County

Issued: December 12, 2013
Link to full audit report 2013-S-2
Link to 90-day response

To determine whether referees are properly reporting and accounting for foreclosure funds in Kings County. Our audit covers from January 1, 2010 through March 13, 2013.

The Office of Court Administration is responsible for directing and overseeing the administrative operations of all courts in the New York State Unified Court System (UCS). This system serves the State's 62 counties through 13 districts. The borough of Brooklyn (Kings County) is in the 2nd District. The County Clerk's Office acts as the clerk of the respective county's Supreme Court. It receives, indexes, and files all Supreme Court documents and miscellaneous papers, and collects all associated filing fees, fines, and surcharges.

During the foreclosure process, when the plaintiff (lender) determines that the defendant (borrower) is unable to negotiate a settlement, the plaintiff requests judicial intervention. If the foreclosure process continues, the court will appoint a referee to determine the amount of the debt and, upon issuing a judgment of foreclosure, the referee proceeds to sell the property. The referee schedules the sale, appears in court on the appointed date and time and sells the property at auction, closes the sale, distributes the proceeds of the sale (including payment of any surplus funds to the County Clerk within five days of closing), and files the Report of Sale with the County Clerk within 30 days of closing, unless the court grants an extension.

Referees are selected from a list of eligible referees established under Part 36 of the Rules of the Chief Judge (Part 36 Eligible Fiduciary List). The court verifies the eligibility of the referee before appointment. A judge can also appoint a referee who is not on the list if he/she determines there are special circumstances, and must then notify the fiduciary clerk and the administrative judge of this decision in writing.

Key Findings

  • We found that the court-appointed referees did not always properly report and account for foreclosure funds. We reviewed 10 of 35 foreclosures with surplus funds during our audit period and determined that the funds for nine were incorrectly reported by the referee.
  • Referees deposited surplus funds late in five of the 10 sales sampled and the Reports of Sale were late for two of these 10 sales.
  • Ten of the referees we sampled were not listed on the Part 36 Eligible Fiduciary List as of December 28, 2012. UCS officials subsequently provided proof of registration for seven referees, but they did not provide any documentation for three referees.

Key Recommendations

  • Remind all referees of their responsibility as an appointee of the court to file an accurate and timely Report of Sale and accompanying schedules.
  • Remove referees from the Part 36 Eligible Fiduciary List if they are found to be negligent in performing their duty to provide an accurate Report of Sale.
  • Document and maintain the eligibility of each appointed referee as of the date of the appointment or assignment by a judge.

Other Related Audits/Reports of Interest

Court and Trust Funds County of Westchester: Report of Examination Period Covered: January 1, 2005 - January 1, 2009 (2009M-170) Court and Trust Funds County of Orange: Report of Examination Period Covered: January 1, 2005 - January 1, 2009 (2009M-229)
Court and Trust Funds County of Niagara: Report of Examination Periods Covered: January 1, 2007 - January 1, 2008 and January 1, 2008 - January 1, 2009 (2009M-239)

State Government Accountability Contact Information:
Audit Director: Carmen Maldonado
Phone: (212) 417-5200; Email:
Address: Office of the State Comptroller; Division of State Government Accountability; 110 State Street, 11th Floor; Albany, NY 12236