NYC Council Advances New Legislation to Shift Sales of Liens from a Financial Trust to a City Land Bank, Transforming Process to Protect Communities and Homeowners

Bills follow successful reforms, prioritizing revenue collection while preventing displacement of homeowners and tenants

City Hall, NY - Today, the Council's Committee on Finance heard a package of bills that would transform the City's tax lien sale process. It would shift the City from the current practice of selling liens to a Delaware-based trust and instead using a New York City-established land bank. Five bills, sponsored by Speaker Adrienne Adams and Council Members Justin Brannan, Gale Brewer, and Sandy Nurse, would collectively move the City towards using a City-established land bank that prioritizes community needs, avoids unnecessary displacement of homeowners, and ensures tax delinquent properties are returned to productive use, while allowing the City to continue efficient collection of outstanding municipal debts. Some of the bills would implement several of the final recommendations of the Temporary Task Force on Tax Liens, which was the product of the Council's previous reforms. Introduction 1407 (Speaker Adams, Nurse, and Brannan) and Introduction 1420 (Nurse and Brannan) would collectively advance the transformation of the lien sale. Int. 1407 would also add requirements for any purchasers of liens to prevent circumstances that lead to foreclosure, like what recently happened in Brooklyn. Introduction 570-A (Brewer) would establish a land bank for New York City.

"Homeowners, especially those in communities of color, have too often been placed in jeopardy of losing their homes from the tax lien process, undermining housing affordability, community stability, and the equity and generational wealth they helped build for families over generations," said Speaker Adrienne Adams. "The Council's recent reforms added important protections for at-risk homeowners by creating diversion opportunities and programs to avoid the lien sale, but more work is required to safeguard New Yorkers. Our proposed legislation can transform the process from selling liens to a trust and instead to a land bank, which alongside revenue collection, prioritizes community needs and protects against displacement of homeowners, while ensuring the City is able to collect tax revenues in a timely manner. I thank Council Members Nurse, Brannan, and Brewer for their work and the Task Force for its recommendations to improve outcomes for our entire city."

The other two bills in the legislative package seek to implement certain final recommendations from the joint Council-Mayor Task Force that establish new notice and reporting requirements for the mayoral administration. Introduction 1411 (Brewer and Brannan) would require the Department of Finance (DOF) to send notices to condominium boards when a tax lien against a unit is proposed for sale. It is designed to help enforce liens against secondary-use condominium units, like parking spaces and storage lots, and help avoid any unintended use of these units by outside parties which represent a high share of chronically unresolved tax liens. Introduction 1419 (Nurse and Brannan) would impose new reporting requirements on DOF to monitor the resolution of chronically unresolved tax liens that have been unresolved for 36 months or more after sale. This would address a lack of transparency regarding properties in this situation and ensure that there is better monitoring of the conditions of those properties.

These bills follow enactment of Local Law 82 (2024), the Home Preservation & Debt Resolution Reform Act, that reformed the tax lien sale system to shift its focus from solely debt collection towards debt resolution by implementing several protections for at-risk homeowners and tenants in affected large buildings. It increased homeowner outreach efforts, opportunities for diversion from the tax lien sale process, and programs to help New Yorkers manage their property tax payments. The law also required the mayoral administration and City Council to form the joint temporary Task Force to study further ways the tax lien sale process could be changed. After a year of meetings and a public hearing, the Task Force released its Final Recommendations in September.

"For too long, the City's ghoulish tax lien system put profit before people - too often pushing vulnerable homeowners toward foreclosure with little transparency or accountability," said Council Member Justin Brannan, Chair of the Committee on Finance. "This package builds on the historic changes we made last year and takes another major step forward. By adding real oversight, further improving notice requirements, strengthening reporting, and moving toward a land bank model, the City can collect what's owed without destroying lives or hollowing out working class neighborhoods. This is about fairness, accountability, and finally making the system work for people - not the other way around."

"For 20 years, the tax lien sale has been used to collect municipal debt, but it has also displaced many Black, brown, and senior homeowners," said Council Member Sandy Nurse, co-chair of the Temporary Task Force on Tax Liens. "While the Council made historic improvements last year, more work was needed. My bills, Int. 1419 and 1420, will require regular reporting on long-unresolved liens and ensure the City's interests are transferred to a land bank. Together, they move us away from a harmful trust model and toward a more accountable, transparent system."

"New York City has lacked a coordinated, transparent way to take vacant and tax-delinquent properties and put them back into productive, affordable use," said Council Member Gale Brewer. A citywide land bank is one tool to turn blight into opportunity, prioritizing community land trusts, permanently affordable housing, and neighborhood-driven development. Int. 570-A ensures that public land serves the public good and that communities have a real voice in shaping how their neighborhoods grow. Int. 1411 will ensure condominium boards are notified when a lien is at risk of being sold, so owners are not blindsided, and communities have time to intervene. This entire package of reforms is about fairness: shifting away from an opaque process toward one that protects homeowners, increases oversight, and recognizes the real hardships facing families across the city."

The bills in the legislative package are:

Introduction 570-A, sponsored by Council Member Gale Brewer, would establish a land bank for New York City, which would be tasked with acquiring, warehousing and transferring real property to develop, rehabilitate and preserve affordable housing, ensure the collection and resolution of unpaid city taxes and debt, and prevent the displacement of tenants and homeowners. The land bank would be led by a board of directors comprised of the following individuals: the Department of Finance Commissioner, the Department of Housing Preservation and Development Commissioner, a person appointed solely by the mayor, three people solely appointed by the Council Speaker, and three people jointly appointed by the mayor and speaker.

Introduction 1407, sponsored by Speaker Adrienne Adams, would condition the commissioner of finance's general grant of authority to sell tax liens to require approval from the Council for competitive and negotiated tax lien sales besides those to a land bank. In addition, any purchaser of future tax liens would be required to regularly communicate the debts owed and would be prevented from foreclosing on primary resident homes until debts equal $200,000 or 20 percent of the market value of the property.

Introduction 1411, sponsored by Council Member Brewer, would require the commissioner of finance to notify the board of managers of a condominium if a tax lien sale is proposed against one of their condo units. This would implement part of Recommendation 6 from the Temporary Task Force on Tax Liens.

Introduction 1419, sponsored by Council Member Sandy Nurse, co-chair of the Temporary Task Force on Tax Liens, would require the commissioner of finance to submit to the council and post online an annual report on chronically unresolved properties, which refers to those properties with tax liens that have been unresolved for three or more years after being sold by the City. The Commissioner would be required to share this list of properties with agencies that conduct property-related enforcement. Those agencies would report to the mayor on any inspections undertaken on properties with chronically unresolved tax liens and the outcome of those inspections. This would implement Recommendations 1 and 2 from the Temporary Task Force that called for the City to clearly define a "chronically unresolved property".

Introduction 1420, sponsored by Council Member Nurse, would require the commissioner of finance to make best efforts to sell the City's interests in tax liens held in the Trust to a city land bank no later than 6 months after the land bank has been created. In the event that a particular sale could not be accomplished, this bill would require the commissioner to submit a report to the council to explain the reasons therefor.

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