A group of elderly Black and Hispanic homeowners in New York City stand to receive $60 million from a federal class-action settlement after a controversial program stripped them of their home titles and wiped out their equity over unpaid property taxes. Their 2019 lawsuit argued that the city’s Third Party Transfer (TPT) program, which empowered the city to seize homes and buildings from landlords with overdue property taxes and utility bills and unaddressed housing code violations, had unfairly and systematically focused on elderly persons of color and illegally stripped them of the accrued value of their properties and the long-term security provided by home ownership. The plaintiffs argued that the TPT program, aimed at improving and preserving affordable housing, violated the U.S. Constitution by taking private property without “just compensation” and failing to return the excess equity beyond what owners owed in back taxes or municipal charges. The multi-family apartment building located at 373 Rockaway Parkway in Brooklyn, New York (center) was once owned by the late McConnell Dorce, who lost it to foreclosure through New York City’s Third Party Transfer program. (Photo: Google Maps via BK Reader) In many cases, the difference between what the homeowners owed the city and the value of their properties was significant.  Co-Lead plaintiff McConnell Dorce, an elderly retired machinist and former ambulance driver who immigrated to the U.S. from Haiti in the 1970s, owned a multi-family home in the East Flatbush neighborhood of Brooklyn that was free and clear of any mortgage, the complaint says. Around 2012, Dorce fell behind on water and sewage bills and entered a repayment program with the city, paying all of his installments on time, the lawsuit says. Parents Stunned After Discovering What School Made Black Student with Disability Do After Lunch ‘Get Rid It’: Georgia Man Took Photos of Dismembered Woman He Met Through Escort Website, Police Say Yet, without providing him any notice, the city foreclosed on his property in November 2017 and transferred the deed to Neighborhood Restore Housing Development Fund Corp., a real estate developer (and defendant in the lawsuit), in September 2018. He first learned that the building was no longer his in late September 2018, when Neighborhood Restore began posting signs in the hallway notifying his tenants that the building was under new ownership and management. By that point, the transfer was irreversible. Dorce owed $45,132 in various tax and water charges. The city’s Department of Finance estimated the value of his property at $226,000 at the time they seized it, though the lawsuit argues its true market value was substantially higher. Dorce lost title to his property and received no compensation for his net equity, called “surplus equity” in court documents. Dorce died in February, months before the lawsuit reached a settlement. Co-Lead Plaintiff Cecelia Jones, an elderly retired home health aide and Caribbean American immigrant from Guyana who worked in New York City for 26 years, owned shares in a cooperative, four-story apartment building in the Crown Heights neighborhood of Brooklyn, predominantly populated by African American, Caribbean, Hispanic, and Middle Eastern Americans. She had lived in an apartment unit there since 1996. According to the lawsuit, Dorce lost ownership of her home in September 2018, when the city transferred the building’s title to Neighborhood Restore without notifying her first, turning her into “a renter in her own home.” The New York City Finance Department valued her property at 585 Nostrand Avenue at $736,000, while the city claimed she owed $160,760 in unpaid property taxes and water charges. Jones had no opportunity to claim the value of her surplus equity in her property. The class-action lawsuit and pending settlement, which still requires a federal judge’s approval, cover only Round 10 of New York City’s Taxpayer Protection Tax (TPT) program, which seized properties over unpaid taxes. Since 1996, the city has carried out 10 rounds involving more than 590 properties and 7,300 homes. Lawsuits over Rounds 1 through 9 are still ongoing. Round 10 involved 64 properties with 839 housing units that the city foreclosed on in 2017 and 2018 before transferring them, free of charge and without any outstanding liens, to nonprofit housing developers partnering with the city. In 2018, the seizures expanded after New York City’s Department of Housing Preservation and Development (HPD) asserted that the TPT program could include properties with at least $1,000 in unpaid city charges, provided they were on the same block as a property legally classified as distressed. The “block pick-up” policy ensnared many more properties into the program for foreclosure and transfer. After the New York City Council pushed for an investigation into the program in 2019, the final report of the TPT Working Group of the Housing and Preservation Department found in 2021 that more than 50% of selected properties were not actually in physical or severe financial distress, leading to disproportionate impacts on communities of color and owner-occupied homes and resident-controlled housing co-ops. The process faced its first legal challenge in 2019, when attorneys Yolande Nicholson and Matthew L. Berman sued the city on behalf of three plaintiffs and others who had suffered similar losses, ABC7 New York reported. “There’s a clause in the Constitution which says that government shall not take private property for public use without just compensation,” Berman said. “These were Black and brown property owners, sometimes first-time property owners, who for the most part did not have a mortgage, and were diligently paying their tax bill or getting into installment plans to pay their tax bills and very prideful of the properties, and the city took their properties for this program without any notice,” said Nicholson. “I hope that bringing this out and this settlement is a catalyst for change,” said Nicholson. The settlement averages out to just shy of $1 million per property, making it one of the top civil rights settlements against New York City in the past decade, Berman and Nicholson told AM New York. The settlement does not return property titles to owners, but it offers part of the equity value the homeowners lost. According to the plaintiffs’ memorandum supporting the settlement agreement, the plaintiffs argued that the defendants should be liable for $89 million in damages and $47 million in prejudgment interest, reflecting the total surplus equity value of the properties seized in Round 10. The defendants, meanwhile, estimated their maximum liability as $10.4 million. The $60 million compromise figure in the settlement represents about 44% of the plaintiffs’ combined damages-and-interest calculation of $136.3 million and is nearly six times the defendants’ estimate of that value. The settlement offers class members, who are primarily elderly and who were unable to pay property taxes, “a substantial benefit in light of the risks of fully litigating damages,” the memorandum says. All class members will receive a material recovery of at least $25,000, and many, including 47 people who had surplus equity, will receive a “life-changing” amount. The TPT program has been paused since 2019, and a new version of the program has been proposed by the City Council that supporters say would be more specifically targeted to landlords with a clearer record of back taxes and housing code violations, AM New York observed. Mayor Zohran Mamdani has repeatedly said he wants to take property away from bad landlords and give it to “responsible owners,” The New York Times reported. His housing plan, released this year, includes a push to revamp the TPT program, and a bill to do so is pending before the City Council. Alexander Simkin, another lawyer for the plaintiffs, said the proposed reforms “don’t cure the fundamental defect” in the program. “You can’t take people’s properties in a racially discriminatory way, and if you’re taking more than the city’s owed, you need to compensate people for that.” The lead plaintiffs and defendants have given the settlement preliminary approval, but U.S. District Court Judge Jennifer L. Rochon must still approve it, and other members of the plaintiff class must agree to its terms. The court has scheduled a “fairness hearing” for May 5, 2027, to determine whether the settlement is fair, reasonable and adequate. After the hearing, the judge will issue a final approval order, and a claims administrator will oversee several rounds of payments. NYC Took Black and Hispanic Homeowners’ Properties Without Warning, Now a $60M Payout Looms ...read more read less