1. Key Features of NYC Tax Lien System that Other Cities Should Borrow

2. Case 1: The Price is Right
PO calls 15 minutes before sale looking for IPP
$1, lien
I hear kids and the Price is Right on tv in the background
Adjourn sale to allow IPP

3. Case 2:  The Rogue Pastor
Pastor of Church sells the Church property without telling the Church members
Purchaser immediately flips the property to 3rd party
Since property no longer owned by Church, City removes exemption
During foreclosure, Church brings their own action to void the fraudulent deed
City restores exemption retroactively after Church gets property back

4. Case 3:  The Water Leak
Lawyer files OSC post-sale claiming his client had no idea how he accrued the water charges which comprised the lien
In reviewing the file to prepare the opposition, in a prior motion sequence, the owner, who was not represented at the time, wrote a 2 page explanation how a pipe burst at the property causing the water charges
After showing the lawyer his client’s prior Affidavit, he withdrew the OSC and went after the surplus instead

5. Administrative Protections
NYC notifies delinquent taxpayers (90-Day Notice, 60-Day Notice, 30-Day Notice, 10-Day Notice)
NYC publishes the notice
NYC Tax Lien Ombudsman office  
NYC Law Department oversight
Servicer hello letter and notices 
Waiting period prior to commencement of foreclosure

6. Legal Protections
NYC Tax Lien foreclosure closely follows mortgage foreclosure process
Complaint is filed in the County where property is located
Service on homeowner required
Owner opportunity to present defenses to the Court
Court appoints GAL’s protect incapacitated defendants
Court appoints TA’s represent deceased defendant’s estates

7. Strict Judicial Oversight of the Tax Lien Program
Owner gets copies of all orders and judgments
Court appoints Referee
Judge reviews and confirms Referee’s report
Notice of Sale sent to owner
The courts view preservation of home ownership as important objective 
The courts treat homeowners with leniency
The courts push to facilitate settlements
Owners can seek surplus funds after foreclosure sale

8. Role of Servicers and their Counsel
Tax lien Servicers well vetted rated
Choosing a high-quality servicer is key to maximizing Advance Rate and Residual proceeds to NYC
Key goal is to collect money due to Trusts, and not to take properties from homeowners
Servicers offer varied and affordable payment plans
Attorneys implement servicers’ goals and are authorized to negotiate with homeowners and settle cases
Attorneys shape legal strategies to permit owners time and opportunity, when necessary, to set up redemption
 Attorneys offer capped fee plans to servicers to permit them control legal expenses

9. Legal Protection of Tax Lien Holders
Municipality wishing to attract tax lien investors must offer them broad legal protection
There must be state-wide statutory presumption of the validity of sold tax liens
Tax liens must enjoy statutory priority over private liens and mortgages
Municipality must lend its support in unavoidable litigation until statutory interest rates, investors ‘ legal standing and other important issues are settled by the courts

10. Transparent Assignment and Bidding Process
A municipality should choose a clear and consistent path regarding sale of liens
While NYC sales liens in bulk to the trusts, a retail sale program is possible
The assignment process must be clear to investors and result in a legal instrument confirming lien ownership
Tax lien holders must be permitted to record and perfect liens without cumbersome procedures

11. Notice to Owners and Redemption Period
Municipality must establish a due-process compliant process of notifying owners of impending sales
All notices must be given by municipality, not lien holders
Tax lien holders must be freed from burden of any pre-foreclosure notices
Municipality must establish a clearly delineated period of redemption by the owner

12. Pre-Foreclosure Redemption and Collection
If possible, municipality should permit tax lien holders to collect redemption amounts directly immediately following assignment amounts
After assignment, direct collection by tax lien holders is preferable to collection by city’s agencies
Tax lien holders should stand in the same position as the municipality and have powers akin to tax collectors
Under federal law, tax liens are not consumer debt and lien holders should not be treated as consumer debt collectors

13. Mitigation
Defection of liens sold in error is important to success of entire program
Municipality and tax lien holders should establish a tax lien ombudsman office (or similar) to respond to complaints, investigate errors in sale and notice process, and defect liens when warranted
Continued communication between municipality and tax lien holders (servicers) is important for myriad compliance issues

14. Litigation
NY has simplified (compared to mortgages) foreclosure procedure
In tax lien cases, NY law does not permit challenges by owners after their time to answer complaint expired
In NYC, tax lien holders have the right to retain private attorneys to foreclose liens
Right to recover legal fees is statutorily recognized and fees are part and parcel of liens
No monetary caps on recovery of fees
No government “approval” of the amount due
In NYC, tax lien holders “bid-in” not just tax lien but subsequent taxes owed