On Thursday, the city announced a $60 million settlement to compensate owners of 64 buildings seized during the 10th round of its Third Party Transfer program. The agreement, filed in Manhattan federal court, follows a 2019 class‑action that accused the city of taking properties without proper notice and that many seized homes were worth far more than the debts they owed.
Under the Third Party Transfer scheme, the city seizes properties burdened with code violations and unpaid taxes, then transfers ownership to nonprofits that seek affordable‑housing developers. The program, created in 1996 by then‑Mayor Rudy Giuliani, has moved more than 590 properties and 7,300 homes over two decades.
One plaintiff, retired ambulance driver McConnell Dorce, lost a Brooklyn building in 2021 after falling behind on water bills. The lawsuit alleged the city seized the property without notifying him; Dorce died in February before the settlement was reached.
Critics argue the program disproportionately impacted Black and Latino neighborhoods. A 2019 City Council investigation questioned whether properties seized met the city’s criteria for severe financial or physical distress.
The city maintains it did not violate owners’ rights but agreed to settle the litigation. A federal judge will review the deal on June 15, 2026, before any money changes hands. Meanwhile, the Mamdani administration is drafting reforms that would change how distressed properties are identified and transferred; a bill awaits Council approval.