NYC’s Tax Lien Sale is Back. Here’s What You Need to Know.

On May the city will resume selling the debt of property owners who owe taxes or water sewer and emergency repair charges the first lien sale since the pandemic struck But contemporary reforms mean homeowners have more options and more avenues to seek help Home in Brooklyn Adi Talwar City Limits On May New York City will resume selling the debt of property owners who owe taxes or water sewer and urgency repair charges but newest reforms mean homeowners have more options and more avenues to seek help This year marks the first time the city has carried out the tax lien sale since it was paused during the COVID- pandemic In reauthorizing it to resume the City Council and Mayor Eric Adams passed a series of policies in intended to alleviate financial hardship and promote housing stability for at-risk owners This included the introduction of the Easy Exit Effort which allows landlords of one- to three-family homes or condos to delay their inclusion in the sale for up to a year as long as they live at the residence and meet certain income requirements The city also allocated million for outreach and development to homeowners at danger This includes a partnership with the Center for NYC Neighborhoods which is offering free one-on-one sessions with certified housing counselors and attorneys It s not too late right now reported Kevin Wolfe the group s senior cabinet affairs manager There are so multiple different options for the homeowners that are built into the system and there may even be other options for you to get financial relief that you re not aware of This includes expected exemptions for senior citizens veterans disabled homeowners and nonprofits as well as three different payment plan options We encourage them to to reach out to us talk to us go over their situation and then we can help them with a variety of options to work out the best way to get off the lien sale Wolfe declared HELPFUL MATERIALS Reach the Center for NYC Neighborhood s Homeowner Help Desk here or by calling - - The organization has other advice and useful links here Check to see if your property is still on the lien sale list on the Department of Finance s website Find information on exemptions payment plan options and other FAQs here City Limits sat down with Wolfe to talk more about the history of the lien sale how it works and what at danger owners should know about the process This conversation has been edited and condensed for clarity What is the tax lien sale and how did it get started in New York City The tax lien sale is the mechanism that New York City uses in order to basically collect delinquent taxes water debt or municipal debt from from the Department of Housing Preservation and Rise called the urgency repair liens They have certain thresholds that change from year to year If your taxes have been late for a certain amount of time or you owe a certain amount of taxes water debt or your emergency repair lien is too high it will turn into a lien The lien is not recorded on your property but it is a lien and at a certain point your lien will be eligible to be sold on the tax lien sale Basically what happens is the city will sell the lien to a trust a private investor cannot buy a lien They sell the lien to the trust and then the trust basically handles the servicing of the debt and they will have a third party servicer a lot of times What will typically happen if the lien is still not paid off after it s sold the trust will foreclose the property and they will go through a tax foreclosure process that s the process where you lose your home But different from mortgage foreclosure tax foreclosure is very hard to defeat There are far fewer defenses New York has not had a lien sale forever The lien sale originated in the s under the Giuliani era where there were a lot of properties that were vacant that were abandoned that tax delinquency was a big issue with and the city really financially had gone through a lot of struggles in order to pay its debts The Department of Finance says that in order for the city to borrow funds from the bond arena they need to have stable sources of revenue And the bond sector necessities to see that if New York City says Well we have property taxes and that s one of our revenue sources they need to see that they have enforcement mechanisms to authentically collect on the property taxes due And so the lien sale is that mechanism and that s one of the things that gives the bond arena confidence and can lower the city s borrowing costs and increase the amount that the city can borrow from year to year How might a homeowner find themselves on the tax lien sale list Homeowners are disproportionately on the tax lien sale About percent of the properties on the lien sale are tax class properties one- two- or three-family homes We are seeing a plurality of the homes that are on the lien sale are literally water debt it s not taxes If you have a large apartment building and the landlord s not paying the water and you shut it off then you ve got to be on the nightly news about how the tenants don t have water The city doesn t want to be in that situation and so what they ve done instead is sell the lien And so it gets homeowners caught up who just cannot afford the water bill This is not instances where somebody is behind You have to be thousands of dollars behind in debt Very rarely do you have somebody who s just using worth of water every year typically what will happen is that there s a major leak New York s homes are old a disproportionate amount of our homes are were built before World War II compared to the rest of the country These are big pipes and so if they burst you have a huge amount of water that s coming out and your bills can easily escalate Preponderance of these homeowners don t have a mortgage You hear a lot in a great number of of the neighborhoods I m house rich but cash poor This is that type of situation where the house is valuable but the the homeowner does not have the money to pay the taxes and in a great number of cases has a tough time accessing capital and unlocking the equity in their home for a variety of reasons The tax lien scheme has been heavily criticized for disproportionately impacting certain communities What has that impact looked like previously The lien sale is very concentrated in who it really impacts In majority Black neighborhoods you re six times more likely to have a lien sold on your property than a majority white neighborhood majority Hispanic Latino neighborhoods are twice as likely than a white neighborhood If you look at the map we genuinely have a tax lien tracker on our website you could overlay those historic maps where it says redlining it s the same neighborhoods we re talking about Bedford-Stuyvesant Crown Heights Flatbush East New York is a huge neighborhood the central Brooklyn neighborhoods Southeast Queens Jamaica Hollis St Albans It s the same areas that historically were redlined it s the same areas that were targeted that had racial predatory lending It s the same areas that have suffered from discrimination for decades almost a century As we already mentioned the city passed policies last year aimed at protecting small homeowners at peril Are there further reforms you think lawmakers should pursue Long term we would want to see the lien sale abolished for homeowners for our one- to three- family tax Class homeowners even with water debt This has unfortunately been an instrument of displacement we re trying to change that inequity We totally understand I ve got a big building in midtown or downtown I m a slumlord that type of thing should not be excused and the city should make every effort to collect the debt on those properties But when you re talking about someone s home it s an entirely different situation The reason why people are not paying the loans the typical reason is they have a hardship They have a fixed income These are senior citizens They re in physiological debt Perhaps there was a death in the family and they lost the income We ve never come across somebody who s just like I don t want to pay my taxes Everyone wants to figure out how to rectify the situation nobody s hiding money You re talking about low- to moderate-income people who don t have the economic means to pay their debt We want to change that situation and come up with a more equitable way so the city is collecting their debts without displacing homeowners Is there anything else people should know There are a lot of scams One of the unfortunate things is that the list of homeowners on the lien sale is made residents Even though New York City does not sell its liens to private investors like Texas they do make the list general What will happen is that you ll have people who go door knocking and they ll scam the homeowner Again these are very very valuable pieces of property and the scammers know it So we definitely encourage homeowners before you make any decisions on it to reach out and get advice from a lawyer To reach the editor contact Jeanmarie citylimits org Want to republish this story Find City Limits reprint framework here The post NYC s Tax Lien Sale is Back Here s What You Need to Know appeared first on City Limits