TPT Homeowners Get Greenlight for Fed Class Action Lawsuit

Mr. McConnell Dorce, a house-owner in East New York received a foreclosure notice on his paid-off property from the City’s Department of Housing and Preservation Development under a non-profit Third Party Transfer program. (Photo by Tsubasa Berg)

A federal court on Thursday ruled that three central Brooklyn homeowners of color can move forward with a class action civil rights lawsuit to recover their wealth lost through the city’s Third Party Transfer program.

The case stems from alleged illegal seizures of homes taken in in-rem foreclosure proceedings under the TPT program. The seizures were first uncovered and reported on in a lengthy series in Kings County Politics, now PoliticsNY.

“Our clients, working families, had their only generational wealth, their homes, snatched from them by the City of New York under its Third Party Transfer Program.  They were not given any compensation for these illegal and unconstitutional takings and even though the City tried to get our lawsuit tossed, the Court has now acknowledged that our suit should continue to move forward,” said Matthew L. Berman, one of the plaintiffs’ attorneys with the law firm Valli Kane & Vagnini LLP.

The City conducted the seizures under the Department of Housing, Preservation and Development’s (HPD) TPT program. The program confiscates the entire property value of a home from the owner, even if the homeowner only owed the City a few thousand dollars in taxes or water and sewer charges.   

HPD would then hand the houses, and that excess value, for free or a nominal fee to development organizations of his administration’s choosing.  Two of these not-for-profit entities, Neighborhood Restore Housing Development Fund and BSDC Kings Covenant Housing Development Fund Company, are defendants in the suit. 

The three plaintiff homeowners are McConnell Dorce, Cecilia Jones and Sherlivia Thomas-Murchinson.

“We have definitely been cheated and targeted through this program. The TPT program has affected my family in many ways. My family and our neighbors who should have remained shareholders in the building have lost real, personal and future assets and value in the millions of dollars, not even measuring the value of having a home for the long term.  My now deceased mother worked, for close to 25 years, to ensure that our family would have long-term residency in an already-existing affordable housing co-op. The City took that away with the stroke of a pen,” said Thomas-Murchison. 

The plaintiffs aim to represent a class of property owners in the five boroughs who have lost their properties to the city without receiving compensation for their lost equity.

The plaintiffs had to go to the U.S. Court of Appeals after the city challenged the plaintiffs’ right to file a class-action lawsuit, arguing the matter should be one of state court jurisdiction. But the Plaintiffs successfully argued it is a federal issue as the taking of their property falls under the Fifth Amendment of the U.S. Constitution requiring just compensation for the taking of a person’s property.

The properties seized by the City in its most recent batch of TPT transfers were collectively valued at more than $66 million at the time the suit was filed, and now are worth much more.  Additionally, the suit seeks to recover the equity value of hundreds of additional properties seized by the City dating back to the early 1990s, with values potentially estimated in the hundreds of millions.

A city Law Department spokesperson noted the ruling was procedural on a jurisdictional issue and the merits have not been heard.  

“The City believes the case is meritless and should be dismissed,” the spokesperson said.