NYC $60 Million Home Seizure Settlement, Who Qualifies and How to Claim Compensation

New York City has agreed to a proposed $60 million settlement with former property owners who say the city’s Third Party Transfer (TPT) program took their properties and erased their equity without adequate notice or compensation. U.S. District Judge Jennifer L. Rochon of the Southern District of New York granted preliminary approval in October 2026, certified a settlement class for settlement purposes and authorized notices to class members. A final fairness hearing is set for May 5, 2027. The settlement is not yet final, and no money has been paid out.

The case is Dorce et al. v. City of New York et al., No. 1:19-cv-02216 (JLR) (S.D.N.Y.). The settlement covers only the 64 properties, containing about 839 housing units, that the city transferred in Round 10 of the program. It does not resolve claims for more than 500 properties from earlier rounds, which remain in litigation. The city denies wrongdoing, and the settlement returns no titles. It provides money for lost surplus equity.

Official settlement website: none has been publicly confirmed yet. Watch the court docket and the court-authorized notice. Claim form and deadline: the notice is expected to explain how former owners can submit claims, but a final claim form, portal and claim deadline had not been publicly confirmed as of October 26, 2026. Do not mistake May 5, 2027 for a claim deadline.

Quick Facts: New York City’s $60 Million Third Party Transfer Settlement

Detail	Information
Case name	McConnell Dorce, et al. v. City of New York, et al.
Court	U.S. District Court, Southern District of New York
Judge	Jennifer L. Rochon
Case number	1:19-cv-02216 (JLR) (SLC)
Proposed settlement	$60,000,000 common fund
Lead plaintiffs	McConnell Dorce, Cecilia Jones and Sherlivia Thomas-Murchison
Principal defendant	City of New York
Program involved	New York City Third Party Transfer program (N.Y.C. Admin. Code §§ 11-401 et seq.)
Covered properties	64 properties transferred in Round 10, including about 30 Housing Development Fund Corporation buildings
Housing units involved	Approximately 839
Main allegations	Taking of surplus equity without compensation, inadequate notice and unequal impact on communities of color
Current status	Preliminary approval granted; final approval pending
Final fairness hearing	May 5, 2027
Official settlement website	Not yet publicly confirmed
Claim form	Not yet publicly confirmed; see the court-authorized notice
Claim deadline	Not yet publicly confirmed
Earlier TPT rounds	Not covered; separate claims remain in litigation

What Is the New York City Third Party Transfer Program?

New York City created the Third Party Transfer program in 1996 to deal with properties that had unpaid municipal charges and serious housing problems. The program let the city foreclose on qualifying properties and transfer them to designated nonprofit organizations, which could then rehabilitate the buildings or arrange their management, with the goal of preserving affordable housing.

The lawsuit argues the city used the program in ways that went beyond recovering unpaid debts. In an ordinary foreclosure sale, proceeds beyond what is owed can go back to the owner. The transfer process, however, could extinguish the owner’s title without paying for the property’s remaining value. The central financial dispute is that the amount owed to the city could be far smaller than the value of the property it took.

The program has been effectively paused since 2019, according to plaintiffs’ counsel, and city officials have discussed possible reforms. A 2019 City Council review reportedly found that many selected properties did not meet the program’s “distressed” threshold. Transfers in Round 10 went to nonprofit intermediaries such as Neighborhood Restore Housing Development Fund Co. Inc. and BSDC Kings Covenant.

Why McConnell Dorce and Other Homeowners Sued New York City

The lawsuit was filed in federal court on March 11, 2019. The named plaintiffs challenged TPT transfers under federal constitutional protections and state law. Two plaintiffs show the issues at stake. The figures below are allegations and valuations from the case record, not final findings.

McConnell Dorce: a Brooklyn property held since 1977

Dorce owned a multifamily property in East Flatbush, Brooklyn, that he had held since 1977. The complaint alleged he fell behind on water and sewer charges and entered a repayment arrangement with the city, which kept accepting his payments but still foreclosed and transferred the title. He reportedly owed $45,132 in municipal charges, while a city valuation put the property at $226,000, a figure the plaintiffs disputed. Dorce died in February 2026, before the settlement was reached.

Cecilia Jones: a cooperative building in Crown Heights

Jones held an ownership interest in a cooperative apartment building at 585 Nostrand Avenue in Brooklyn. The allegations say the city transferred the building without adequate notice or compensation. The city’s reported valuation was $736,000, while it said $160,760 in property tax and water charges was owed.

Both cases raise the same question: whether the government may use a tax-related foreclosure to take a property worth more than the debt and keep the difference without paying just compensation.

Why the Lawsuit Focuses on Black and Latino Homeowners

The plaintiffs allege the TPT program disproportionately affected homeowners in Black, Caribbean American and Hispanic neighborhoods, and that owners did not get meaningful notice before losing title. Home equity can represent decades of payments, repairs and family wealth, so losing it can be a major loss of generational wealth.

The claims include violations of the Equal Protection Clause, due process and the constitutional requirement of just compensation. A claim of disparate impact is not a final finding of intentional discrimination, and the settlement resolves the covered claims without a trial on every allegation.

What the Second Circuit Decided in Dorce v. City of New York

A federal district court first dismissed the complaint on jurisdictional grounds. On June 23, 2021, the Second Circuit reversed in part, allowing important claims to proceed (Dorce v. City of New York, 2 F.4th 82 (2d Cir. 2021)).

• Takings Clause (Fifth Amendment): the government may not take private property for public use without just compensation, a rule that binds state and local governments through the Fourteenth Amendment. The Second Circuit let the surplus equity claim go forward rather than treating it as barred by the earlier state foreclosure judgments.
• Due Process Clause (Fourteenth Amendment): the plaintiffs alleged they did not receive adequate notice before foreclosure and transfer, and the court held the relevant due process claims could proceed.
• Equal Protection Clause (Fourteenth Amendment): the court allowed the relevant claim about the program’s impact on communities of color to proceed. It did not find that every transfer was unconstitutional or make a final finding of discrimination.

That decision decided which claims could go forward. It was not an award of damages.

How the Supreme Court’s Tyler v. Hennepin County Decision Relates to the Settlement

In Tyler v. Hennepin County, 598 U.S. 631 (2023), the Supreme Court unanimously held that a county could not keep the surplus value of a home after a tax foreclosure just because the owner failed to pay the tax debt, since doing so plausibly amounted to a taking.

Tyler concerned Minnesota’s system, not New York City’s TPT program, so it does not automatically establish liability here. It does reinforce the principle at the heart of the dispute: a government may collect a legitimate tax debt, but the debt does not necessarily let it keep the owner’s entire equity. The settlement came after years of litigation, including the 2021 Second Circuit ruling and Tyler.

Who May Qualify for the New York City $60 Million Settlement?

The settlement covers the Round 10 class, not everyone whose property was ever foreclosed on in New York City. The class consists of former owners (or their successors) of properties the city transferred in Round 10 that had value above the municipal liens, which is called surplus equity.

You should review the notice if:

• You owned a property that the city transferred in Round 10.
• You held a qualifying ownership interest in a Round 10 property.
• The property was worth more than the applicable tax liens and municipal charges.
• You are an estate representative or successor to a deceased owner. How estates, successors and partial owners are treated depends on the court-approved class definition.

Who does not automatically qualify?

• Every New York City homeowner who owes property taxes.
• Tenants who lived in a transferred building but did not hold a qualifying ownership interest.
• Owners of properties transferred in Rounds 1 through 9.
• Owners elsewhere in New York State or in other states.
• People affected by an unrelated tax foreclosure or an ordinary mortgage foreclosure.

The class definition, not a person’s race, income or neighborhood, decides eligibility.

How Much Could a New York City Property Owner Receive?

The $60 million fund is not an equal share for everyone. Individual payments reportedly reflect each owner’s calculated surplus equity loss, and under the reported terms a claimant whose calculated loss is under $25,000 receives a $25,000 minimum. The fund also pays attorney fees (reported at up to 30%, subject to court approval), expenses, administration costs and service awards, so the amount that reaches owners will be lower than the headline figure. Confirm these terms in the court-approved notice.

The parties had very different estimates of potential damages, including disputes over how to value the properties and calculate prejudgment interest. Do not estimate a payout by dividing $60 million by 64 properties or 839 units, and treat no payout as guaranteed until final approval and an eligibility and allocation decision.

How to File a Claim for the New York City Property Seizure Settlement

The court has authorized notices to inform former owners about the settlement and how to seek compensation. As of October 26, 2026, a final public claim form, claims portal and deadline had not been publicly confirmed, so prepare now but do not rely on any unverified website.

1. Identify whether your property was a Round 10 transfer. Gather the address, ownership history, tax liens and foreclosure or transfer records, because the settlement covers Round 10 only.
2. Gather ownership and valuation records. Useful records include deeds, cooperative share documents, estate papers, tax records, municipal lien statements, appraisals and foreclosure or transfer notices. The final process will say what documentation is required.
3. Watch for the official notice and claim form. Follow the Southern District of New York docket for Dorce v. City of New York, No. 19-cv-02216. The notice should give the administrator, the settlement website, the claim form instructions, the documentation required and the deadline. Until then, do not send sensitive personal or financial information to an unverified website.
4. Follow the form and deadline exactly. Keep a complete copy of everything you submit and proof of mailing or electronic confirmation.
5. Check the final approval decision. A claim form is not approval of a payment. The court decides at the fairness hearing, set for May 5, 2027, whether the settlement becomes final.

You should never have to pay a fee to file a claim. Legitimate administrators and class counsel do not ask for payment to process claims, and scammers sometimes imitate settlement notices. Verify any notice against the court docket and the class counsel details in the official notice. Class counsel include attorneys from Ropes & Gray LLP, Valli Kane & Vagnini LLP, Yolande I. Nicholson, P.C., and White & Case LLP.

Can Homeowners Object to or Opt Out of the NYC Settlement?

Because the settlement is at the preliminary approval stage, wait for the formal notice for the exact procedures and deadlines. Such notices usually explain how class members can object, request exclusion or appear at the fairness hearing. Those deadlines may fall before May 5, 2027, so do not assume a date that the notice does not state.

A class member who does nothing may still be bound by an approved settlement if they do not validly opt out when allowed. Opting out may mean giving up the payment while keeping the right to bring a separate claim, depending on the rules. Anyone weighing exclusion because of a large individual loss should read the notice and get independent legal advice. The release terms, and whether accepting payment affects other claims, will be in the notice and settlement agreement.

Key Dates in the NYC Third Party Transfer Litigation

Date	Event
1996	New York City establishes the Third Party Transfer program
2017–2018	Properties in the tenth round are foreclosed on and transferred
March 11, 2019	The Dorce lawsuit is filed in the Southern District of New York
June 23, 2021	The Second Circuit reverses the dismissal in part, allowing key constitutional claims to proceed
May 25, 2023	The Supreme Court decides Tyler v. Hennepin County
August 26, 2026	The parties tell the court they have fully executed a Round 10 settlement agreement
September 2, 2026	The court denies a pending summary judgment motion as moot because of the agreement, without prejudice if the settlement is not completed
About October 22, 2026	Preliminary approval reported; settlement class certified for settlement purposes; notices authorized
To be stated in the notice	Claim, objection and exclusion deadlines
May 5, 2027	Final fairness hearing

What Happens to the More Than 500 Properties From Earlier TPT Rounds?

The $60 million settlement does not resolve all TPT claims. Plaintiffs’ counsel has said claims involving more than 500 properties from earlier rounds remain in litigation, separate from this agreement. A person affected in an earlier round should not assume they can claim from the Round 10 fund because their experience was similar, and should consult counsel about the ongoing case.

For related cases about surplus equity after tax foreclosure, see our coverage of the Michigan tax foreclosure case over a homeowner’s $23,500 and the Clackamas County $2.47 million foreclosure settlement. To understand how court-supervised class proceedings, notices and payments generally work, read our guide on whether you have to pay to join a class action.

Frequently Asked Questions About the NYC $60 Million Property Settlement

Has New York City paid the $60 million settlement?

No. The settlement has preliminary approval only, and the final fairness hearing is May 5, 2027. Payments depend on final approval and completion of the claims and distribution process.

Is the settlement final?

No. The court must decide whether to grant final approval after the fairness hearing and after considering any objections and opt-outs.

Which homeowners qualify?

Former owners, or their successors, of properties transferred in Round 10 of the TPT program that had value above the municipal liens. Other rounds are not included.

Can NYC tenants receive money from the settlement?

Not automatically. The settlement concerns former property owners and qualifying ownership interests, not every tenant in an affected building.

Is there a claim form, and what is the deadline?

A final claim form, portal and claim deadline had not been publicly confirmed as of October 26, 2026. They should appear in the court-authorized notice. May 5, 2027 is the final approval hearing date, not a claim deadline.

How much will eligible owners receive?

It depends on calculated surplus equity loss, with a reported $25,000 minimum for lower-value claims. Fees, costs, administration and service awards come out of the $60 million fund.

Does the settlement cover every property seized under the TPT program?

No. It covers Round 10 only. Claims involving more than 500 properties from earlier rounds remain in litigation.

Why is the TPT program challenged under the Fifth Amendment?

The plaintiffs allege the city took properties worth more than the municipal debt without paying owners the surplus equity, which they say violates the Takings Clause’s just compensation requirement.

Did the Second Circuit rule that New York City acted illegally?

No. In 2021 it reversed the dismissal in part and let key constitutional claims proceed, but it made no final ruling on liability and awarded no damages.

Does Tyler v. Hennepin County automatically prove the NYC owners’ claims?

No. Tyler held that keeping surplus equity after a tax foreclosure can be a taking, but it involved a Minnesota procedure. It is important legal background, not a judgment against New York City.

Sources and Legal References

1. Dorce v. City of New York, No. 1:19-cv-02216 (JLR) (SLC), S.D.N.Y. (docket entry confirming the executed settlement and the September 2, 2026 order)
2. Dorce v. City of New York, 2 F.4th 82 (2d Cir. 2021)
3. Tyler v. Hennepin County, 598 U.S. 631 (2023)
4. Ropes & Gray LLP: September 2026 settlement announcement
5. U.S. District Court, Southern District of New York (docket and court notice updates)
6. N.Y.C. Administrative Code §§ 11-401 et seq. (Third Party Transfer program)

Legal disclaimer: This article explains public court records, constitutional issues and proposed settlement procedures for general information only. It is not legal advice. Eligibility, deadlines and claim procedures are governed by the court-approved notice and settlement agreement. AllAboutLawyer.com is a legal information website, not a law firm.