In NYC the types of unpaid city debt that can be sold include:
All unpaid real property taxes, water and sewer charges, and other charges on property become liens on the day they become due and payable and may ultimately be sold to a third-party in a transaction known as the lien sale.
Properties are included in the lien sale when they meet a certain threshold of delinquency and do not qualify for a number of available exemptions like properties owned by certain senior citizens and low-income homeowners.
When is a Lien Eligible to Be Sold?
For example, for 1-3 family homes, a tax lien is sold when a property owner’s debt on the property exceeds $1,000 for over three years. For 2-3 family homes, a property will be sold if a water or sewer lien of the least $2,000 is due for over a year.
What are the Statutory Notice Requirements for Lien Sales?
When a property has liens eligible for the foreclosure sale, the City must notify a property owner via newspaper publications and by mail that a lien on their property will be sold if not satisfied. There is a 90-days notice, a 60-day notice, a 30-day notice, and a 10-day notice (“Notification Process”). Not receiving the required statutory notification is not a defense to prevent a foreclosure proceeding. Adm. Code of NYC 11-320.
Step for Avoiding the Lien Sale
1.Payment in Full of All Outstanding Charges and Fees. At any time during the required Notification Process, a property owner may pay the outstanding balance of the debt or enter into a payment agreement with the City in order to avoid inclusion in the lien sale; or
2. Enter into a payment agreement with the City. A payment plan is an agreement between a property owner and the DOF to pay the amount owed over time instead of paying the full amount all at once. Here is the link to the NYC DOF Property Tax Payment Agreement Application. Currently, the City offers repayment plans with terms that range up to 10 years with available options of depositing $0 downpayment.
The New York City Council recently passed legislation that reduces the late payment interest rate for property taxes due on July 1, 2020, for eligible property owners who have been impacted by COVID-19.
The DOF Currently offers the following repayment plans:
- Down payments for as little as $0 – Property owners do not have to make a down payment.
- For property taxes and most other charges:
- Monthly or quarterly installments are available.
- Terms of up to 10 years.
The annual interest rate property owners will be charged under a payment plan is set by law and depends on the Assessed Value of the property:
Annual Interest Rate
Assessed Value of Property
||Less than $250,000
||Through June 30, 2020
||Less than $250,000
||July 1, 2020 through September 30, 2020
||Less than $250,000
||October 1, 2020 through June 30, 2021
||Greater than $250,000
||Through June 30, 2021
Payment Plan Rules
After a property owner enters into a Property Tax Payment Agreement, the property owner must pay both new charges under the repayment plan and the required installment amount. If the property owner fails to make the required payment under the Payment Agreement for six months, the Payment Agreement is considered to be the default and may be canceled. Further, in the event of default, the property owner may not be legible to enter into another payment agreement for that property for the next five years absent extenuating circumstances.
Recent NYC Updates Concerning Enforcement of Lien Sales due to the COVID-19
On September 4, the Mayor announced that the last day to pay and remove properties from the tax lien sale at-risk pool has been postponed to September 24. Soon after, the governor issued an executive order prohibiting any sales of tax liens until December 3. The postponement was extended to January 1, 2021. During this time, DOF will continue to work with property owners whose tax lien is at risk of being sold.
Customers who received a lien sale warning notice should pay what they owe at www.nyc.gov/citypay or enter into a payment agreement to avoid being included in the sale.
What Happens After the Lien Sale?
What Happens After a Tax Lien Foreclosure is Initiated?
Here is the most recent list of properties eligible for the lien sale in the five boroughs:
DOF’s Property Tax Liens
DEP’s Water and Sewer Lien Sale
HPD’s Municipal Liens