Overview - New York City

This overview is for informational purposes only and is not intended to provide legal advice. You should consult with an attorney if you intend to bid at a foreclosure auction or if you want to purchase a foreclosure bid or property.

The New York City Tax Lien Sale Program
Under a program initiated in 1996, the City of New York sells unpaid real estate taxes, water, sewer, and other charges that are liens against a property to special purpose trusts known as the NYCTL Trusts. These trusts raise the cash to purchase the delinquent liens by selling bonds. Bondholders are repaid with collections generated from the sold liens. In each year since 1996 at least one tax lien sale has taken place. Over $1.5 billion in revenues has been raised through such sales.

The sales are administered by New York City's Department of Finance (DOF). Before a sale takes place, the City provides notice of its intention to sell tax liens by publishing a list of the liens to be sold sixty, and again, ten days prior to the sale date. In addition, thirty days before the sale date, DOF sends a written notice to the property owner listed in the City's records. The New York City Administrative Code provides for a 5% surcharge, plus other costs associated with the administration of the sale (i.e. legal fees, advertising costs, etc.) to be added to the lien balance. The interest rate accruing on the sold balance is 18%, compounded daily. For more information about upcoming sales please click here to reach the New York City, Department of Finance website.

On the sale date, the liens are transferred to the purchasing trust by an instrument known as a "Tax Lien Certificate" which is recorded in the borough clerk's office. The Tax Lien Certificate requires an interest payment to be made after six months and the full amount is due one year after the sale. If the property owner fails to pay the semi-annual interest amount or does not pay the full amount within one year, an action to foreclose on the property may be started.

The Tax Lien Certificate is held on behalf of the purchasing trust by the Bank of New York as collateral agent and custodian. The Bank of New York also acts as the lockbox agent. All payments on liens owned by the trust must be made to a lockbox.

With the exception of subsequent taxes and certain federal liens, the Tax Lien Certificate is superior in right to almost all liens and other charges against the property, including mortgages and judgment liens.

The trusts have hired Plymouth Park Tax Services LLC, doing business as XSPAND (XSPAND), to collect the tax liens. XSPAND seeks to obtain full payment from taxpayers. Under certain circumstances, taxpayers may be able to schedule the payment of the delinquency over time. Attorneys are only retained to start a foreclosure if efforts to collect remain unsuccessful.

The New York City Administrative Code specifies that foreclosures of tax liens are regulated by the New York Civil Practice Law and Rules (CPLR) and by all other provisions of the law and rules of practice that apply to foreclose mortgages on real property. The Code also provides that the liens plus all interest accrued and all other charges must be paid in full, without discount.

Unless the property owner, the holder of the mortgage or another party with an interest in the property pays the delinquent lien before the foreclosure auction, the property will be sold at auction under the direction of the court to satisfy the tax delinquency. Since the first auctions in October 1998, a steady flow of judgments has created opportunities for investors to acquire the properties by participating in the tax lien foreclosure auctions. Any property which has not been sold at an auction to a third party is subsequently offered for sale by XSPAND on behalf of the trust that owned the tax lien.

Foreclosures and Auctions
Foreclosures are filed in the New York State Supreme Court located in the borough in which the property is located. When a court enters judgment it will order the public auction of the property. The auction is conducted by a referee who is a court-appointed attorney. The court will also order that notice of the auction date, time and place (notice of sale) be announced in at least one newspaper published in the borough in which the property is located. XSPAND publishes the auction information on this web site as a courtesy. The notice of sale is the official legal notice and should be used to confirm the date, time, and place of an auction. The auctions take place at the courthouse in the borough in which the foreclosure action was filed, usually on the courthouse steps or in a courtroom reserved for the auction. The borough courthouse locations are:

Auction Locations Courthouse Address

Manhattan Courthouse

60 Centre Street, Manhattan, NY

Bronx County Courthouse

851 Grand Concourse, Bronx, NY

Brooklyn Courthouse

360 Adams Street, Brooklyn, NY

Queens County Courthouse

88-11 Sutphin Boulevard, Jamaica, NY

Richmond County Courthouse

18 Richmond Terrace, Staten Island, NY

Foreclosure auctions are open to the public. Anyone agreeing to the terms of sale may bid.

The referee conducts the auction at the appointed date, time and location. The referee will sell the tax lot, identified by the "BBL" (borough, block, lot) number. The street address may not accurately refer to the property being sold. The referee will first read out loud the legal notice and the terms of sale. The terms of sale are the conditions that apply to the auction sale. Typical terms and conditions provide that the property is sold "as is" (with all faults), require a 10% deposit in certified funds to be paid at the time of the auction and a closing within thirty days.

The referee will open the bidding in accordance with the local practice in the borough. Typically, the bidding is opened at $100 or $1,000. In Queens the bidding opens at the "upset price." The upset price is the balance of the lien being foreclosed plus subsequently sold liens and current taxes and charges. A representative of the trust will bid to make certain that the property sells for at least the upset price.

The owner of the property being auctioned has the right to redeem (i.e. pay the tax lien in full) up until the moment that the referee declares the property sold. Redemption will stop the auction from proceeding. At the discretion of XSPAND, an auction may be postponed if the property owner makes a substantial payment.

Successful Bids at the Foreclosure Auction
If a third party is the successful bidder at the auction, the referee and the successful bidder will execute a memorandum of sale. The memorandum of sale documents the amount of the successful bid, the amount of the deposit and the closing date (time is of the essence). The successful bidder is required to deliver a certified or bank check made payable to the referee in the amount of 10% of the successful bid. The deposit is non-refundable. The closing is scheduled thirty days after the auction. At the closing the referee will deliver a referee's deed to the successful bidder.

Sale of Foreclosure Bid or Property if a Trust is the High Bidder
If the foreclosing trust is the successful bidder it may or may not take title to the property. If it does not take title, XSPAND, on behalf of the trust, will offer the successful bid for sale. At the closing the referee will deliver a referee's deed to the purchaser (see "Closing on the Purchase of a Bid Assignment or Property," below). During a marketing period after the auction, interested purchasers are expected to perform due diligence and may submit bids. You may send a bid to XSPAND, attention: Auction Coordinator by fax (973-267-4077) or e-mail Xspand_Investor@jpmorgan.com. You must include your name, address, telephone number, fax number, the borough, block and lot identification of the property on which you are bidding and the amount of your bid.

Following the marketing period, XSPAND will conduct a sealed bid auction. Unlike a public auction which is held in the open and all interested parties can observe the bidding progress, a sealed bid auction requires the submission of a bid in writing without knowledge of how many parties are participating and what amount competitive bidders are bidding.

XSPAND will start the sealed bid auction by the faxing a Standard Bid Form to all parties who have expressed an interest in acquiring the property. The bid package describes the procedures to follow and contains the terms and conditions to participate.

Bids are subject to review and approval by a committee that evaluates all bids.

XSPAND will notify the successful bidder in writing and call to confirm to whom the Assignment of Bid Agreement should be forwarded. The successful bidder must execute and return the "Assignment and Assumption of Bid Agreement" (for foreclosure bids) or "Purchase and Sale Agreement" (for properties) together with the required 10% deposit within ten business days. Deposits must be made in certified or bank funds and will be held in an escrow account by the attorney representing the trust.

If the winning bidder does not return the signed "Assignment and Assumption of Bid Agreement" or the "Purchase and Sale Agreement" within the required ten day period, XSPAND will either award the bid to the next highest bidder or conduct another round of bidding. Each auction is evaluated individually and is subject to committee approval.

The above is a brief summary of the sealed bid auction procedure. XSPAND may modify the procedure at anytime. The Standard Bid Form will contain the procedure applicable to any particular auction. In the event of conflicts between the text on this website and the Standard Bid Form, the terms of the Standard Bid Form shall govern.

Closing on the Purchase of a Bid Assignment or Property
At the closing of the purchase of a foreclosure bid, the bid will be assigned to the purchaser and, at the same time, the referee will execute and deliver a referee's deed conveying the property directly to the purchaser. If the property was owned by a foreclosing trust or a related company, the seller will deliver a quit claim deed or bargain and sale deed without covenants conveying the property to the bidder. Foreclosure bids and properties are sold "as is, where is, and with all faults" and neither XSPAND nor any trust can make any representations or warranties. Accordingly, it is extremely important that potential purchasers conduct a thorough investigation prior to making a bid.

On this website we show several auction lists:

  1. A List of Anticipated or Confirmed Auctions. This is a list of properties where either the court has issued a judgment of foreclosure and sale but the auction has not yet been scheduled or the date, time and place of the auction have been confirmed with the referee. You may access these auctions by clicking here . Properties are identified by the BBL (borough, block, lot) number. Street addresses may not be accurate. XSPAND provides this list as a courtesy only. The actual date, time and location of the auction are published in the legal notice.

    Prior to bidding at a foreclosure auction, you should seek advice of a real estate attorney and conduct a due diligence review which should include, at a minimum, a title search and a thorough investigation of the property. Investigations of the property should be based upon the borough, block and lot number. Street addresses may not be accurate.
  2. A list of Foreclosure Bids and Properties for Sale. All properties not sold at the foreclosure auction are available for sale. To see a list of the foreclosure bids or properties available for sale, click here . Properties are identified by the BBL (borough, block, lot) number. Street addresses may not be accurate.

For other questions about the auction and sale process, you can reach us by email at Xspand_Investor@jpmorgan.com or by phone at 866-267-4811.