Land bank legislation aims to reshape NYC’s contentious tax lien sale

The New York City Council is moving to transform the city’s tax lien sale process with a package of bills that would use a city-established land bank to collect outstanding municipal debts.

A land bank is the practice of buying and holding undeveloped land for future sale, controlled by a board composed of appointees from the mayor, commissioner of finance, commissioner of housing preservation and development (HPD), and speaker of the council. The city-run land bank the council is aiming to create would have the authority to buy tax liens from the city, ideally preserve homeownership, and collect debts to create revenue for the city.

When a property is on the tax lien sale list, it generally means the owner owes property taxes or has past-due water, sewer, and other property-related charges. The city can then sell the debt to an authorized buyer who has the right to collect what is owed, opening up homeowners to predatory debt collectors. For New York City, that is usually the Bank of New York Mellon and their servicer companies, MTAG Services, LLC and Tower Capital Management.

Commercial properties can be on the list for one year, while a residential property can have up to three years before the city moves forward with foreclosure. This process has put many homeowners at risk of losing their homes since its first implementation in 1996, particularly among Black and Brown individuals, seniors, and veterans.

Earlier in 2025, the Department of Finance published the tax lien list for all five boroughs for the first time in four years. The list had been paused in 2020 due to the COVID pandemic.

“We were doing doorknocking about the tax lien sale and a lot [of people] were residents renting from private LLCs or in two-family homes. These people are paying their money and the landlord wasn’t paying the water bills or whatever municipal bills the city wants them to pay,” said Alexis Smallwood-Foot, 42, founder of the ReAL Edgemere Community Land Trust (CLT). She started the trust in 2021 to build housing on vacant land and address climate resiliency issues still plaguing the Rockaways in Queens after Hurricane Sandy.

“There are also homes [on the list] that are [in] at-risk vulnerable populations, [belong to] senior citizens, those in housing programs or with mental illness in recovery,” said Smallwood-Foot. “You have daycares on the list because they’re attached to homes and churches on the list. You’re losing spaces where people of color congregate.”

Queens Assemblymember Khaleel Anderson said the city’s tax lien sale system is the farthest thing from equitable for small homeowners in places like the Springfield Gardens, Jamaica, Rochdale Village, Laurelton, Arverne, Rosedale, Edgemere, and Deerfield neighborhoods. Sometimes people come to his office in literal tears over a past-due water bill in the thousands that they had no knowledge about, he said.

“The language I use is that the city descends upon its citizens, and to that end, it becomes predatory both from the city and the banks to target these folks without regard to socioeconomic circumstances,” said Anderson. His team is working on legislation to address foreclosures in the community. “You have folks [who] have paid off their homes and [can’t pay] these debts, even with other city and state programs that could and should help them.”

Anderson’s office is adept at helping some constituents contact city agencies to set up a payment plan, find resources, apply tax credits, and enroll in exemption programs, such as the New York State School Tax Relief (STAR) or Senior Citizen Homeowners’ Exemption (SCHE). He firmly believes that the tax lien sale should be abolished and there should be an entity that helps New Yorkers pay down their debts. He also said that the city does “a very poor job” of informing community members about their debts.

This issue is by no means relegated only to neighborhoods in Queens. According to the City Council, tax liens are sold in Black and Brown districts all over the city. This includes District 12, which encompasses Eastchester and Co-op City in the Bronx; Districts 36, 37, 42, 45, and 46 — Bedford-Stuyvesant, Crown Heights, Brownsville, Cypress Hills, East New York, Canarsie, Flatbush, East Flatbush, and Flatlands in Brooklyn; and District 49, the Northshore on Staten Island.

In August 2025, Filmore Brown, a 62-year-old Jamaican immigrant and small-business owner with a paid off three-story house in East Flatbush, lost his house in a foreclosure. His home was auctioned off without his knowledge over a past-due $5,000 water bill. Brown said he wasn’t informed about what was happening until the supposed new owners breached the house in the middle of the night, drilled out the locks, and installed surveillance cameras while his family and tenants were awakened from their sleep.

Alice A. Nicholson, Brown’s attorney, said that Brown is still in his home and they are fighting the foreclosure in court. She handles numerous cases where Black and Brown homeowners are losing their homes because of bills they claim they know nothing about. She says she is convinced that at this point, it’s a scam that hunts minority, elderly, and even dead homeowners with paid-off or almost no mortgage payments. “I’m afraid to look and see for myself,” said Nicholson about her home in Brooklyn.

“Longtime New York City homeowners face a host of challenges, including a lien sale process that can be opaque and confusing,” said Brooklyn State Senator Zellnor Myrie in a statement. His recent Bill 8595 deals with preventing foreclosures. “Vulnerable homeowners, particularly Black and [B]rown property owners, deserve help when it comes to remaining in the homes they’ve spent generations protecting and improving.”

To address these inequities, housing advocates have long suggested to either reform the tax lien sale process or, as demanded by CLT groups, to abolish it all together.

The council’s finance and land use legislation includes five bills, sponsored by Council Speaker Adrienne Adams and Councilmembers Justin Brannan, Gale Brewer, and Sandy Nurse, that aim to reform the process, prioritize community needs, avoid unnecessary displacement of homeowners, and ensure tax-delinquent properties are returned to productive use, said the city.

“The current tax lien sale process has disproportionately harmed Black and Brown homeowners. This ongoing racial disparity is why the Council created the tax lien task force, which I co-chaired. This legislative package comes from some recommendations of that task force, but goes further,” said Nurse.

Councilmembers were set to hold the final vote on the tax lien reform bills on December 18 per this year’s last stated meeting.

The city claims the shift to a land bank would prevent the circumstances that often lead to foreclosures by sending DOF notices to condo boards in large buildings prior to a sale, require the DOF to monitor unresolved tax liens after three years, shift focus from debt collection to debt resolution, regularly communicate the debts owed, and keep primary resident homes until debts equal $200,000 or 20% of the market value of the property.

“If passed, it would take a holistic approach and shift the city from the sale of liens to an opaque trust and toward a land bank model that prioritizes both tax enforcement and community stability,” said Nurse. “I’m confident that the package will prevent displacement while supporting long-term homeownership and the retention of generational wealth in communities of color most impacted by the tax lien sale.”

Advocates such as Smallwood-Foot are skeptical that land bank legislation will help without proper management and transparency on the city’s part.

The DOF has been less than supportive of the bill package. The City Council reauthorized the tax lien sale through December 31, 2028, under Local Law 82. The DOF claims existing reforms under the law, including increased focus on homeowner protection and debt resolution in 2024, resulted in 85% of the 30,000 liens on the 90-day notice list being removed before the sale. A DOF spokesperson provided this figure, but not the demographic breakdown of those removed.

“For this year’s sale, we also strengthened outreach through partnerships with nonprofits, City Council members, and other city agencies,” said a DOF spokesperson. “As a result, a record number of properties were removed from the initial lien sale list, with thousands of homeowners making minimum payments, entering payment plans, or applying for exemptions. It is a fundamental misunderstanding of the role of land banks to incorporate collection of tax revenues into an entity designed for purposes of community development. No other land bank in the state conducts tax enforcement.”

In addition, a DEP spokesperson said in a statement that they are still reviewing the proposed legislation and upheld the tax lien sale as a critical tool for debt collection.

“DEP and DOF always notify customers multiple times before a property is listed or sold in the lien sale and work with them to enter into payment agreements,” said a DEP spokesperson. “DEP’s priority is to help customers remain in good standing before enforcement ever becomes necessary. The lien sale remains a critical collections tool, but including a property in a lien sale is truly a last resort. In partnership with DOF and the City Council, DEP has implemented reforms to give property owners more time, information, and resources to pay their debts.”

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