After months of negotiations, the New York City Council enacted a bill reauthorizing bulk tax lien sales. The bill is awaiting the Mayor’s signature. During COVID, the Council blocked regular tax lien sales to review and reassess the program under which the City, via its Department of Finance (DOF), converted real estate arrears into tax liens since 1996. The new bill permits DOF to conduct tax lien sales through 2028.

This reauthorization comes after a long and detailed discussion of the program by all the relevant stakeholders, such as DOF, the Council, tenant protections groups, and housing advocates. To resume tax lien sales, the interested parties needed to balance various issues of public significance, such as the City’s budgetary concerns, the effect of tax lien sales on underprivileged communities, and tenants’ need for protection from unscrupulous real estate speculators.

As a result of a vigorous public debate, the newly enacted bill increases the frequency by which DOF must notify affected homeowners of upcoming sales of delinquent taxes and water charges and contains other numerous protections for owners and tenants. These protections include removal of property from a tax lien sale up to three times within a 36-month period as of right and various “exit ramps” allowing delinquent owners to save their properties from foreclosure through exemptions and installment payment plans. The bill even provides for possible conversion of an ownership interest into an affordable long-terms lease by transferring the title to a qualified purchaser. Notably, for the first time in the history of the tax lien program, the bill removes vacant plots from future tax lien sales.

The bill also establishes a 10-member task force of Mayoral and Council appointees to examine and devise ways delinquent tax arrears could be collected fairly and effectively without the sale of tax liens.

* This article was prepared by the New York City-based law firm of Bronster, LLP. The firm has a unique distinction in representing every tax lien servicer in the City’s history since enactment of the tax lien reform in 1996.