Most New York City residents have never heard of the tax lien sale, an annual event where the city quietly sells the overdue property tax debts of homeowners to private investors at a discount. Said investors can then collect on those debts, charging exorbitant interest rates and fees along the way. If the homeowners can’t pay, their homes go into foreclosure and are eventually put up for auction, displacing the family and destroying the equity they have spent their lifetime building.
Last year, New York City canceled its tax lien sale due to the COVID-19 pandemic. This year, however, the city is moving full steam ahead with a sale date of Dec. 17, despite the State of Emergency set forth by Gov. Hochul and new COVID variants on our doorstep. This action puts homeowners who are made most vulnerable by COVID-19 — predominately the elderly and people of color who have faced untold financial hardship, job loss, family illnesses and even death at disproportionate rates — at risk of losing their homes.
If New York City wants to protect its residents during the pandemic and preserve affordable housing, it will do the right thing and cancel this destructive sale once and for all.
If New York City wants to protect its residents during the pandemic and preserve affordable housing, it will do the right thing and cancel this destructive sale once and for all. (Shutterstock)
As members of the city’s Tax Lien Sale Task Force, we know firsthand just how devastating the impact of this sale is to struggling homeowners. This year, the city’s list of at-risk homes traces a line through the neighborhoods most highly impacted by COVID-19, primarily in Brooklyn, Queens, the Bronx and Staten Island. These communities have already suffered unparalleled loss, sickness and financial distress. When their debt is sold to Wall Street investors and others, they are subject to insurmountable fees and predatory practices. Some sell their homes in distress sales, others fall victim to scammers, and many end up in foreclosure. Even those who are able to dig their way out after the sale end up paying costs that dwarf what they originally owed the city.
So far, there has been little to no assistance for these distressed homeowners. Federal funds from the American Rescue Plan to help homeowners pay overdue property taxes have yet to be disbursed. The New York City Department of Finance, which usually hosts dozens of in-person events for homeowners on rights and remedies before a tax lien sale, has managed to host just three so far this year — not even one per borough. As a result, some homeowners are still unaware that the city plans to sell their tax debts to a private company right before Christmas.
Legal Services NYC, which provides free legal help to distressed homeowners, reports that many homeowners have no idea what their rights are, or where to turn for help. Many New Yorkers are eligible to be removed from the city’s tax lien list, but are not aware of their options. For example, Legal Services recently received a call from a retired, disabled, Vietnam War veteran who is entitled to multiple protections and exemptions, but was unaware of his rights and how to remove his home from the list.
An unintended consequence of the tax lien sale puts homeowners, especially those in gentrifying neighborhoods, in the crosshairs of scammers who target them and prey on their vulnerability. The Department of Finance publishes homeowners’ information on their website three months ahead of the sale. Scammers then get right to work, calling and visiting homeowners in an attempt to trick them out of their homes for a price far below market rate. In fact, homeowners are so inundated with calls, unannounced visits and flyers from scammers, they are unable to distinguish between them and non-profit organizations offering free legal assistance.
While a boon to wealthy Wall Street investors, the tax lien sale hurts the city’s efforts to maintain affordable housing. There are thousands of small family homes and condominiums on the list this year which house tenants who rely on this affordable housing. Moving forward with the sale threatens to displace these families, who often owe debts 10 times less than the average cost the city spends to create new homes for vulnerable New Yorkers after they’ve lost theirs. The Department of Housing Preservation and Development devotes an average of $46,000 per unit to build new affordable housing, with a priority on units for the elderly and disabled, while a debt of a few thousand dollars can see this very same population lose their home from the lien sale.
New York City is still reeling from the pandemic and resulting economic hardship. In our continued pursuit of a just and equitable pandemic recovery, we cannot be forcing families into yet another period of uncertainty. New York City should cancel the tax lien sale and put an end to this outsourcing of New York’s property tax collection efforts.
Adams represents Jamaica, Richmond Hill and other neighborhoods and Rivera represents the East Village, Gramercy and other neighborhoods in the City Council.