Relief Is On the Way for Unpaid Tax and Water Bills

The New York City Council has passed a bill designed to help property-owners, including co-ops and condos, avoid having their tax liens and water/sewer liens sold to collection agencies that can pursue foreclosure. Ironically, the new forms of help are in exchange for allowing that controversial lien-sale program to continue through Dec. 31, 2020.

Among other provisions, the bill will provide more flexible payment plans, email notification of when bills are due, and phone or email notification of when a lien is scheduled to be sold. The bill also makes counselors available to boards that have fallen behind on payments. It’s all designed to help boards that have fallen behind on tax and water bills, a potentially disastrous situation.

To understand what these changes mean, a little background is in order. Each year in May, the Department of Finance (DOF) holds a lien sale in which it sells unpaid debt. The investors who buy these debts generally employ a lien-servicing company to collect from the property-owner. About two percent of the time, this results in foreclosure. The sale is controversial for a couple of reasons: servicing companies tack on their own fees and interest, plunging delinquent property-owners into even greater debt; and, according to the DOF website, predatory lenders see the list of liens that's posted 90 days before the annual sale and sometimes try to take advantage of financially strapped property-owners.

The new bill doesn't address those problems, but it does direct the DOF to notify you by email when your property-tax bill is due, provided you've registered an email address via the department's website. It also requires both the DOF and the Department of Environmental Protection (DEP) to phone or email you – and not just send you a letter – to let you know your lien is going to be sold.

But the most significant changes involve installment payment plans. Right now, both the DOF and the DEP allow payment plans if your property is at risk for a lien sale. Both agencies offer $0 down and a repayment period of up to 10 years. If you haven't made an installment payment in six months, the lien can be sold unless you bring your payments up to date, interest and fees included. The new bill will allow you to wipe out that old installment plan and enter into a new one – provided you come up with a down payment of 20 percent of the entire amount you owe.

Interestingly, while the DOF and DEP operate more or less identically where payment plans are concerned, the new bill allows the DEP to determine whether you'll pay your water/sewer lien in quarterly or monthly installments, while you get to decide whether to pay your tax lien to the DOF in quarterly or monthly installments.

Sponsored by four City Council members working in conjunction with the mayor's office, the bill is expected to be signed into law this month.