NYC Considers Reviving Controversial Property Seizure Program

The Third Party Transfer (TPT) program was created in 1996 to allow New York City to foreclose on distressed, tax-delinquent properties and transfer them to nonprofits for rehabilitation. Administered by the Department of Housing Preservation and Development (HPD), the goal was to stabilize buildings, maintain affordable housing, and hold negligent landlords accountable. Criticism mounted over the years that the program devolved from its original intent, disproportionately targeting Black and Brown homeowners and stripping millions in generational wealth. A 2019 City Council audit found that over half the properties selected for transfer were not distressed and were concentrated in just 11 low-income communities of color. The program was ultimately frozen in 2019 following this public outcry and legal challenges. A key flaw was the "block pick-up" provision, which allowed the city to seize properties with minimal debt if they were on the same tax block as a genuinely distressed building. This led to situations like a retired nurse nearly losing her $2 million home over a $3,792 water bill that had, in fact, already been paid but was not correctly recorded by the city. Such data pipeline failures resulted in homeowners with no mortgage and minor, sometimes erroneous, debts losing their properties without compensation for their equity. The new bill, dubbed the Housing Rescue and Resident Protection Act, was introduced by Council Member Pierina Ana Sanchez to reform the program. Key changes include eliminating the "block pick-up" provision, creating an ombudsperson to help owners, and establishing a mechanism for former owners to recoup equity if the property is sold for more than the debt owed. The revived program aims to build a more precise risk model, targeting only the 500 properties with the most severe municipal debt and housing code violations. It also mandates more robust notification systems for both owners and tenants and introduces pathways for residents to apply for ownership of their buildings, a component largely unsuccessful in the past. In the original program's two-decade run, only 47 of 520 seized properties were ever converted to tenant ownership. The proposal has reported support from Mayor Zohran Mamdani's administration, which sees a redesigned program as a tool to pressure "slumlords" and preserve housing. However, the city's Department of Housing Preservation and Development has stated it cannot support the bill as currently written, and the program still faces the threat of lawsuits if enacted. The reforms are also being shaped by a 2023 Supreme Court ruling (*Tyler v. Hennepin County*) that curbed a government's ability to retain surplus equity from properties seized for tax debt.