NYC Agrees to $60 Million Settlement in Property Seizure Case

New York City has agreed to a $60 million settlement with property owners whose buildings were seized through the city's Third Party Transfer program. The agreement, filed in Manhattan federal court on Friday, resolves a class-action lawsuit initiated nearly a decade ago.

The settlement will provide payouts to the owners of 64 properties that were taken by the city due to unpaid tax debts. "We're grateful to be able to finally give some relief to some of these families," said Sara Kane, an attorney representing the homeowners.

The plaintiffs argued that their properties were seized without "just compensation," violating their constitutional rights. They also alleged that the city failed to provide proper notification regarding the seizures. The lawsuit was filed in 2019.

The Third Party Transfer program allows for the transfer of ownership of buildings with significant housing code violations and substantial property tax arrears to a nonprofit organization. This organization then facilitates the transfer of the property to an affordable housing developer.

However, court documents indicate that the value of the seized real estate often exceeded the amount owed in taxes. The city maintains that the property transfers did not violate the former owners' rights, but is settling to end the protracted litigation. "The City maintains that the transfer of properties did not violate the former property owners’ rights, but the City is settling to resolve this longstanding litigation," said Andrew Stern, spokesperson for the city’s Department of Housing Preservation and Development.

This settlement is among the largest by the city in the past decade. It comes as the Mamdani administration plans to revive the program as part of the mayor’s "Fix the City" housing initiative.

The settlement covers properties seized most recently in 2019. However, more than 500 other properties remain part of the ongoing class-action suit, according to the plaintiffs' attorneys. "We hope that the court system allows for the rest of the rounds to have a similar result," Kane added.