AG James, Electeds Push Delay & Reforms to Tax Lien Sales

State Attorney General Letitia "Tish" James.

State Attorney General Letitia James and a group of 57 elected officials yesterday urged Mayor Bill de Blasio to delay the city’s annual tax and water lien sale in order to protect homeowners as the COVID-19 crisis continues.

In a letter to de Blasio, the elected officials called for the removal of more than 4,700 Class 1 Properties, or residential buildings with three or fewer units, from the tax lien sale scheduled for September 4, 2020.

“Now is the time to support hardworking homeowners, not saddle them with undue financial burden,” said James. “The tax lien sale has a disproportionate impact on communities of color and will only exacerbate the financial hardships so many are already facing in the middle of a pandemic. It’s incumbent on government to protect the people — not kick them when they’re already down — and I urge Mayor de Blasio to take action immediately.”

Every year, the New York City Department of Finance (DOF) holds a tax lien sale, whereby the tax liens on properties for unpaid property taxes and water bills are sold off in an auction. The terms imposed by the tax lien sale on New Yorkers are dramatic: mandatory five percent surcharges, legal fees, and a nine or 18 percent interest rate that compounds daily. These additional fees can quickly turn a relatively small tax lien into an overwhelming financial burden, eventually pushing homeowners into foreclosure.

The buildings included in the sale every year are disproportionately located in communities of color. In fact, according to the Coalition for Affordable Homes, the city is six times more likely to sell a lien on a property in a majority Black neighborhood and two times more likely to sell a lien on a property in a majority Hispanic neighborhood than in a majority-white neighborhood.

The city generally conducts vigorous outreach to property owners to ensure residents in debt to the city are aware that they are in jeopardy of entering the lien sale process and knowledgeable about alternative payment plans.

This year, however, because of the severe constraints that COVID-19 has placed on outreach efforts, much of this work was not done at nearly the same levels as in years past.

James has long advocated for reforms to the lien sale program to address some of its gravest injustices and renews those calls today, including:

  • Eliminating water and sewer lien sales for low and middle-income occupants of one-to-three family homes (there are currently 2,639 Class 1 properties on the list that have water debt only);
  • Creating a “Homeowner Advocate” position who would help homeowners navigate different agencies involved in the tax lien sale (no such position currently exists); and
  • Excluding nonprofits and houses of worship from both the water and the property tax lien sale (there are currently 49 non-profit properties on the list, all resulting from water debt).

Among the Brooklyn electeds signing onto the letter included Brooklyn Borough President Eric L. Adams; State Senators Andrew Gounardes, Zellnor Myrie and Kvin Parker; Assemblymember Nick Perry; and City Councilmembers Alicka Ampry-Samuel, Justin Brannan, Robert E. Cornegy, Jr., Laurie A. Cumbo, Brad Lander, Farah Louis, Alan Maisel, Carlos Menchaca and Mark Treyger.

“At a time of deep financial instability across our city, especially in vulnerable communities of color, I urge the Department of Finance to cancel this year’s lien sale for small property owners,” said Myrie. “City government should be working to support homeowners burdened by the pandemic and recession, not selling off their accumulated wealth to the private market.”

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