The Real Deal New York

Liens beat foreclosures in recouping cash for city: report

Such sales raised between $70M and $110M per year from 2009 to 2012

June 30, 2014 12:20PM

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Lien Sales

Lien sales (Graphic credit: Maurice Mayfield)

The city’s focus on issuing liens to get owners to pony up cash for outstanding taxes, water, sewer bills and repair work has proven more effective than threatening foreclosure, according to a new report from the Independent Budget Office.

Under the policy, the city gives property owners 90 days to pay such outstanding expenses before starting a lien sale. The IBO reports that the city collected 80 percent of bills at 24,300 properties placed on alert between 2009 and 2012 in this fashion, according to the New York Observer.

In March of this year, the city was owed about $555 million in back taxes.

Still, about 5,000 liens per year are sold. The total value of lien sales during the three-year period to 2012 ranged from $70 million to $110 million, according to the IBO. Of those, 59 percent of lien sales were on residential properties, 25 percent on nonresidential properties and 16 percent on vacant lots, the Observer reported.

The IBO also reported that liens are more common in low-income neighborhoods. It singled out Brooklyn neighborhoods Bushwick, Bedford-Stuyvesant, East Flatbush and East New York, as well as South Queens as areas with the highest concentrations. Harlem, the North Shore of Staten Island and the Bronx also have large numbers of liens, the Observer reported.

The policy has been in place since 1996, when the city shifted away from initiating foreclosures and instead placed liens on buildings, as the Observer reported.  [NYO]Tom DiChristopher

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