Controversial NYC Tax Lien Sale Extends Deadline by Two Weeks

New York City’s controversial sale of outstanding property tax and water debts owed by thousands of homeowners was delayed by two weeks, just days before it was scheduled to occur.

The city’s Department of Finance said in a press release Thursday that the delay, from May 20 to June 3, is intended to give owners “additional time to take the necessary steps to protect their properties.” Lien buyers could ramp up the pressure on debtors, including by hiking up interest payments and eventually initiating foreclosures or evictions.

“We are targeting owners that have indicated they’re interested in resolution, through door knocking, calls or walk-ins, but haven’t taken the steps to remove themselves,” department spokesperson Ryan Lavis said. “The impetus is that it’s been years since a lien sale was held and felt it was appropriate to give folks more time.”

According to a May 14 Bloomberg Tax analysis, only about one-third of nearly 30,000 delinquent properties have been removed from the original lien sales list, despite a $2 million campaign by the city to help owners do so.

That drop-off rate tracks closely with the numbers in the days before New York’s last lien sale in 2021, the data show. About 70% of the remaining roughly 18,000 liens are in neighborhoods that are mostly non-White, an analysis of Census data shows.

The lien sale program first launched in 1996, when the city was lined with blighted properties abandoned during the 1970s housing crisis. It was halted in 2020, with officials citing pandemic-era economic hardships. The city last held a sale of tax liens in 2021, after which the City Council declined to reauthorize the program without reforms.

The city agreed last year to restart the sale amid declining revenue, with new guardrails aimed at limiting the disproportionate impact on poor and largely non-White New Yorkers.

Homeowners end up on the lien sale list if they have $5,000 in property tax debt that is at least three years overdue, or between $1,000 and $3,000 in water debt at least one year overdue. Owners of one-family houses can’t end up on the lien sale if they only have unpaid water bills.

Property owners can get off the lien sale list by paying what they owe, enrolling in a payment plan, submitting an “easy exit” application, applying for a property tax exemption, or submitting a probate application, the release said.