Property Seizure Settlement Exposes Risk in New York’s Housing Transfer Push
New York City will pay $60 million to owners of 64 properties seized under the Third Party Transfer program, settling claims that the city took buildings without just compensation or notice. Filed in 2019, the class-action suit argued the seizures violated constitutional rights when the city transferred properties with unpaid tax debts to nonprofits that handed them to affordable housing developers. Lead plaintiff McConnell Dorce, a retired ambulance driver, lost his East Flatbush, Brooklyn apartment building over water and sewage bills despite being on a city repayment plan. Dorce died in February before the settlement was announced.
Attorneys for the property owners said buildings were often worth far more than the outstanding debts—sometimes $1,000 owed on properties valued at over $1 million. The suit also alleged the program, launched in 1996 under Mayor Rudy Giuliani, disproportionately targeted minority communities and stripped families of generational wealth. While some owners were allowed to remain as tenants, others like Dorce were barred from returning once developers took control. More than 500 other properties remain part of the ongoing class-action litigation.
Mayor Zohran Mamdani plans to revive the Third Party Transfer program as part of his “Fix the City” housing plan, despite the settlement marking one of the largest payouts by the city in a decade. The program has been effectively paused since 2019. A spokesperson for the Department of Housing Preservation and Development said any restart would address concerns raised in the lawsuits, though the city maintains the transfers did not violate former owners’ rights. The settlement covers only the most recent round of seizures from 2019, leaving hundreds of additional claims unresolved.
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