By Michele Evans / NYweeklyRecord.com / Date: 9/16/2026
Category: Government Accountability / Housing / Civil Rights / Courts
NEW YORK CITY, NY – New York City has agreed to pay $60 million to settle claims from property owners who said the city took their buildings, erased generations of equity and failed to provide meaningful notice or compensation.
The proposed class-action settlement covers 64 properties transferred during the most recent round of the city’s Third Party Transfer program. Those buildings contained about 839 homes. A federal judge must still approve the agreement before payments can begin.
For the affected families, the case is not an abstract dispute over tax enforcement. It is about homes, inheritance and the power of government to take property when an owner owes money.
McConnell Dorce, the lead plaintiff, owned his East Flatbush home since 1977 and had paid off the mortgage. The lawsuit said he fell behind on water and sewer bills, entered a repayment plan and continued making payments after the city had already transferred the property without telling him. He received no compensation, according to the court filings cited by The New York Times. Dorce died in February, before the settlement was reached.
The city has not admitted that the transfers violated anyone’s rights. A Department of Housing Preservation and Development spokesman told The New York Times that the city maintains the transfers were lawful and agreed to settle long-running litigation.
Lawyers for the owners say the program stripped families of equity far beyond the debts they owed. They also say the impact fell heavily on Black and Latino neighborhoods in Brooklyn and the Bronx. Those claims drove a seven-year legal fight that survived an early dismissal and a reversal by the federal appeals court.
The program began in 1996 as a way to move distressed buildings from delinquent owners to nonprofit groups and affordable-housing developers. City officials said the goal was to protect tenants and repair dangerous conditions. Critics found that the system sometimes swept in properties that did not meet the city’s own definition of severe distress.
A 2019 City Council investigation questioned the program’s block-pickup rule, which allowed the city to seize additional buildings on the same block when owners owed taxes or other charges. The program has largely been paused since 2019.
The settlement resolves claims tied only to the latest transfer round. Lawyers for the plaintiffs say claims involving earlier rounds, dating to 1996, remain pending. The lawsuit says the city transferred more than 590 properties containing more than 7,300 homes over the life of the program.
The legal landscape shifted in 2023, when the U.S. Supreme Court ruled in a separate Minnesota case that government cannot keep home equity worth more than a tax debt. The owners’ lawyers cited that unanimous ruling as a major turning point in the New York case.
City Hall is now considering how to revive the transfer program with stronger safeguards. Proposed changes would eliminate block pickup and focus enforcement on owners responsible for the most dangerous buildings. The settlement leaves a harder question unanswered: whether any future version can protect tenants without taking more value from owners than the city is owed.
For New Yorkers, the public-interest test is simple. A housing-enforcement program must fix unsafe buildings, give owners clear notice and preserve constitutional protections. The $60 million agreement acknowledges the cost of failing to get that balance right, even as the city disputes wrongdoing.
Sources
Ropes & Gray: $60 Million Civil Rights Settlement Over NYC Property Seizures
The New York Times: New York Seized Their Property. Now It’s Offering a $60 Million Payout.
New York Post: NYC Agrees to $60 Million Settlement With Property Owners
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