New York State bill would put moratorium on property tax foreclosures

A bill that recently passed the State Legislature would keep Nassau and Suffolk counties from foreclosing on properties when homeowners fail to pay their taxes.

The bill, which is focused on so-called in rem tax foreclosure, still needs to be signed by Gov. Kathy Hochul before it becomes law. A spokesman for Hochul said she is reviewing the legislation.

The bill was introduced after the U.S. Supreme Court ruled in May that a Minnesota county violated the Fifth Amendment’s Takings Clause during a foreclosure process for failure to pay property taxes. In deciding Tyler v. Hennepin County, Minnesota, Chief Justice John Roberts wrote that the county could not keep all $40,000 it received by selling the condo of 94-year-old Geraldine Taylor at auction. Taylor, who had moved out of the condo and was living in a senior community, was only behind $15,000 on her taxes. The county had kept the remaining $25,000.

“The situation here is we have a vulnerable population — senior citizens, veterans — who were unfairly foreclosed on, and excess funds not returned,” said State Sen. Kevin Thomas (D-Levittown), the lead sponsor of the bill in that chamber. “The bill that passed both houses addresses the issue.”

The moratorium is meant to give local governments time to develop a way to reimburse homeowners for any excess proceeds if they lack one. 

“I’m hoping, for the municipalities that do not have a plan in place, within the next year they will because this isn’t that hard,” Thomas said. “This doesn’t take a rocket scientist to figure out how to return excess funds.”

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