Title: Mamdani Administration Tackles Deed Theft

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Brian Lehrer: Brian Lehrer on WNYC. Last Friday, the Mamdani administration opened another new office in City Hall. You might have not heard about this one yet. This time, aimed at tackling a growing issue as property values rise in historically Black neighborhoods, it's deed theft. We've done a segment about deed theft previously. Now there's a new Office of Deed Theft Prevention, which will be led by Peter White, who Mamdani described as a longtime supervising attorney for homeowner assistance at the nonprofit organization Access Justice Brooklyn.

Now this comes just two days after City Councilmember Chi Ossé was arrested at a protest aimed at intercepting the eviction of a tenant from a brownstone in Bed-Stuy, Brooklyn. General Letitia James and the buyer, 227 Group LLC, dispute the deed theft characterization that the councilmember put forward. We'll dig into what's actually going on there in just a moment. The mayor also announced a six-month moratorium on tax lien sales while the administration reviews the program, which can put homeowners on the path to foreclosure over unpaid bills like water and sewer charges.

We will also talk about the mayor reportedly softening his tone on aspects of this pied-à-terre tax that Governor Hochul proposed and that he's embraced after the company Citadel issued a threat, as Crain's New York Business reported that word. We're going to get into all of these things with WNYC and Gothamist housing reporter David Brand. Hi, David. Always good to have you on the show.

David Brand: Hey, Brian. Thanks for having me.

Brian Lehrer: Simple question, maybe a complicated answer for those who've never heard of this problem, what is deed theft, and how does it happen?

David Brand: It's a simple question, but you're right. It is a complicated answer because it takes many forms. Like you said, this is happening a lot in these neighborhoods, especially predominantly Black neighborhoods, Southeast Queens, Central Brooklyn, Bed-Stuy, Crown Heights, where properties that have been owned by families for a very long time have these very high values. Often, there's no mortgage on these properties, and people are lower or middle-income living there, and they're being targeted by speculators, investors, and outright scammers who want to pry the properties away from them and sell them for a lot more.

That's the incentive or the motivation here. The way they do that is complicated, and where I think this gets complicated is what constitutes deed theft or what is just unethical or what gets murky with the property ownership here. In this case, in Bed-Stuy, that you mentioned, where Council Member Chi Ossé was arrested, I think it captures a lot of this confusion and the murkiness here. This was a property that was within a family for many years, about 60 years. One of the owners died. Property then reverted to heirs. Some of those heirs signed away their shares to the property. A new LLC buyer stepped in to purchase them.

A resident whose family has owned the property for many years has been living there and says, "No, I didn't consent to this. My father had an ownership share in this property. He's in a conservatorship. The conservator signed away his share. He wouldn't have done that." That's where this gets complicated because we have to go back in time. How did that conservatorship come around? Why did the conservator sign it away? Other family members said that they were willing to sell the property. What constitutes deed theft? What constitutes a property dispute? It gets very complicated.

Brian Lehrer: The big picture is, as you report, that advocates see this as a growing problem for Black and Latino households, particularly in Central Brooklyn and Southeast Queens, whether or not this particular one turns out to be a case of deed theft or not, right?

David Brand: Exactly right. I think one of the functions of this saga right now is to, again, shed light on this problem that's growing. Over about 10 years, from 2014 to 2023, Attorney General Letitia James's office received about 2,300 complaints of deed theft, basically all of those concentrated in Southeast Queens, Central Brooklyn. Over the past year, that number has increased even more. Back in 2023, I think they received about 150 complaints. Last year, they say they got about 520 complaints, so it's tripled, showing that these are valuable properties, sometimes with contested ownership histories. Investors and scammers are stepping in to try to get these properties and flip them for a lot more than they're acquiring them for.

Brian Lehrer: David, on Friday, the mayor unveiled this new Office of Deed Theft Prevention. Deed theft is already illegal, so what's this new office supposed to do?

David Brand: He says that the first things they're going to do are raise awareness and warn longtime homeowners about scams and potential for fraud that they might face. Doing that outreach is something that lawmakers, advocacy organizations, the attorney general have been doing for a while, trying to encourage people to make wills so that the ownership history isn't contested after a longtime owner dies, or to warn about potential scams that they might experience. I think that's going to be the first thing they do, and then raising awareness, too, or highlighting some examples of potential deed theft to law enforcement officials, whether that's the attorney general or district attorneys in the five boroughs, especially in Brooklyn and Queens, so that's going to be their first steps.

On the campaign trail, Mamdani pledged to create this office and to fund it with $10 million. Right now, they are allocating $500,000, and then next year, they want to add $1 million. He said on the campaign trail he also wants this office to help investigate claims of deed fraud. Peter White, who is going to be leading this office, I was reading some testimony by him to the state Senate on a hearing about deed theft a few years ago, and he said one of the biggest obstacles is that these are very time-intensive and complicated cases for law enforcement to prove and investigate. Any additional support and funding could make that easier for them.

Brian Lehrer: Listeners, anybody have a question, a comment, or a story involving you or somebody you know regarding deed theft, 212-433-WNYC, 212-433-9692, or tax lien sales, which is the next thing related that we're going to get into with our housing reporter, David Brand, 212-433-WNYC, 212-433-9692. Tell us about the tax lien sales. What's the issue there?

David Brand: Mamdani announced back in March, we were the first to report, that he was going to be suspending what he called the "predatory tax lien scheme." Since 1996, the city has sold unpaid tax liens and water debt at a discount to private investors through a trust. Then that trust tries to collect on that debt, and they will impose additional fees and interest on the property owners. If the property owners are unable to make those payments, they're at risk of foreclosure. Basically, opponents of this say it's targeting a lot of those same neighborhoods, homeowners who fall behind on their property taxes facing financial hardship, often in Southeast Queens, Central Brooklyn, and then the city sells their debts to the private collection agencies, who then can foreclose eventually on the property.

It's another way to pry homes and properties away from people. He also pledged to do that on the campaign trail. This has been an issue for the last several years, but especially the past five years. Mayor de Blasio suspended it. It resumed with what they call guardrails to try to allow homeowners and property owners to get off of the tax lien list. Then it was reestablished and then suspended again. Now, Mamdani is suspending it for at least six months to review the process and maybe formulate some type of alternative for enforcing property tax debts.

Brian Lehrer: On the deed theft and it relates maybe to the case that Council Member Ossé was trying to spotlight, even though, as you report, Attorney General Letitia James, as well as the buyer, dispute the deed theft characterization that somebody's relative actually owned the property or a share of the property. There's a tactic at the center of a lot of these cases that are more clearly deed theft, as I understand it, where investors buy a partial share from one heir and then force the sale of the entire home. Are you familiar with how that works?

David Brand: Yes, that's called partition, and that is a very common tactic. The state tried to crack down on that a couple of years ago with new legislation. If a property has multiple owners, this is especially the case if a longtime owner dies without a will or a will that doesn't clearly state who the next owner will be. There are multiple shares in that property. It could be people living all across the country or distant relatives who might not even communicate. A speculator, a real estate investor, could target one of those people and say, "I'll buy your share. You own 10% in this brownstone in Crown Heights. You live in Georgia. What are you going to do with that? Here's $10,000."

The person might say, "Oh, that sounds great. I don't even know the other people who have an interest in this." Then that investor would have been able to force a full sale of the property either on the market or making the other owners, and that could be a longtime resident, it could be the property owner's son or daughter who's living there and didn't even know about all of these different shares in the property to buy them out and say, "I bought this for $10,000. Listen, you give me $200,000, and now you own the property outright." The state tried to limit that by preventing investors from forcing the full sale. It's unclear how much that's being enforced or whether that's still going on, but there is a law now that only allows the heirs to force that full sale.

Brian Lehrer: A listener asks, "What are the signs family members should look out for that they may be getting deed theft scammed?"

David Brand: One of the measures I think that a lot of the advocates and some lawmakers are calling for is to carve out anti-harassment zones to stop speculators from just showing up at people's doors and saying, "I'll buy your house. Sign these documents. I'll buy your property. I'll pay you all cash," to try to limit that solicitation. That's one. If a home is getting solicited a lot, and I've talked to homeowners. I remember talking to one former council member in Southeast Queens whose mom owns a home in St. Albans, Queens, and he said every single day she is getting notices for all-cash offers on her very valuable home that no longer has a mortgage. I think that's one sign.

Another sign is just to look at two cases that I've reported on in the past, showing how complicated this is. One was a homeowner in Brownsville, Brooklyn, who inherited the property. He had very bad credit, and he wanted to take out a loan to do some renovations to the property, but he couldn't get approval for the loan. Someone at his church, he said, was like, "You know what? I know someone who can help you out." They had a more informal negotiation, he says, and the guy said, "Listen, you sign this property over to me, I'll get this loan for you. I'll sign it back over to you."

The person never did that, sold the property to another LLC that flipped it to another LLC, and now there's this chain of title that can be really hard to untangle. That's another, I think, warning sign, not to trust these informal relationships and to see if a family member or someone you know is getting involved in something like that because they are facing financial problems.

Brian Lehrer: A listener writes, "I am a real estate attorney with a lot of experience in this area. I have litigated these cases in civil court. These are murky cases. Criminal liability is tough to prove. However, if you can strengthen the civil laws, you will take away the financial incentives, which is what this is all about." That's an interesting comment. I think Doria in East Harlem is going to mention something else she thinks lawyers might be able to do to help prevent deed theft. Hi, Doria, you're on WNYC. Thank you for calling.

Doria: Hi, thanks for taking my call, Brian. I have some experience with this from another part of the country, both in Texas and in Chicago. I want to go back to this question about wills. One thing that was so fundamental in the community where I lived of Black and brown folks, was many of the properties were being lost, because, first, there weren't wills. Then you got all of this drama with heir's property, and that opened the door for developers and others to go in and get the property.

A really simple thing that was done in one community where I lived was organizing an army of pro bono lawyers to make sure that older folks or folks who had inherited property without going through the probate system actually made sure that they got wills. It cleaned up some of the disputes that later came up and just resulted in families losing property that they'd had for generations. That's a small piece, but it's a really foundational starting piece to help people be able to keep their property. You've got to get a will.

Brian Lehrer: David, anything on that?

David Brand: I think that's exactly right. I think that those types of estate planning services or encouraging people to make wills, and maybe that is something that this new deed theft prevention office could focus on, free estate planning or really finding properties that are potentially vulnerable to this and property owners who don't have wills and offering to do that at a discount or for free to avoid exactly what she was talking about, those types of disputes later on.

Brian Lehrer: Doria, thanks so much for bringing that up. That's really useful. Hopefully, some people will hear that and will take some steps in that direction regarding wills early enough to prevent potential deed theft. I want to bring up one other topic, David. My guest has been WNYC housing reporter David Brand. Before you go, a lot of you listeners know by now about the pied-à-terre tax proposal that Governor Hochul came out with. That would be a tax on second homes in New York City that are worth $5 million or more. That's her tax-the-rich alternative to the broader tax-the-rich proposal that Mayor Mamdani had come up with that wouldn't raise as much money, but Mayor Mamdani says he does like this piece of it for what it's worth.

This pied-à-terre tax on again second homes within New York City that are worth at least $5 million. David, here's a headline from Crain's, the business publication, over the weekend. It says, "Mamdani eases tone as Citadel--" the company, "threat sparks push for pied-à-terre tax carve-outs."It says, "Mayor Mamdani's decision to make Ken Griffin the poster boy of his plan to tax wealthy non-residents who own property in New York City backfired Thursday when Citadel suggested it may abandon its massive midtown development." Then it says, "The mayor is now softening his tone and says he is open to meeting with the Florida billionaire."

There's really a lot to unpack there in a couple of minutes, but it sounds like this is a little battle of the political giants, the mayor on the one hand, and a big real estate person on the other who's got enough clout in the city to issue a threat.

David Brand: Ken Griffin, I guess he's saying, "If you want to taunt me and make me the example of a second home tax, I'm going to take my skyscraper and leave." He is the billionaire, the head of the hedge fund Citadel. They are building a new skyscraper. They are about to break ground on it. The day that Hochul announced that she was backing this pied-à-terre tax on second homes that would be valued at $5 million or more, he went at night to the empty condo owned by Ken Griffin at Central Park South. Back in 2019, Griffin purchased that property for a record high, $238 million. Mamdani used that as a backdrop to say, "Yes, see, we are taxing the rich." Like you said, it's not exactly what he wanted, which was an income tax hike on the wealthy, but this was something.

Griffin saw that, and then you're right, his company sent an email to everyone in the company saying, "We don't like being targeted like this. Look at how much economic activity we're producing and how much in income tax and property tax we are already paying." Interesting about that is the Ken Griffin home already came up in a previous pied-à-terre debate back in 2019, right after he made that big purchase. That was the showcase second home when they tried and failed to get the tax seven years ago. I guess retreading that one.

Brian Lehrer: I guess. Do you take the threat seriously? Do you have enough information to take the threat seriously? Apparently, Mayor Mamdani is taking it seriously enough that he softened his tone in some way, according to Crain's.

David Brand: It's hard to imagine that a company would go through all of the planning and all of the approvals to build what would be a very lucrative building and then pull out because the head of the company feels slighted by the mayor, especially since this has already come up in the past. That being said, who knows? Maybe he is really angry, and Mamdani did back off a bit, saying he's an important employer, Citadel's an important employer, and I'd like to meet with him.

Brian Lehrer: Offered to meet with him. To whatever degree this actually represents a bigger picture, maybe it's to a very small degree, it pokes a hole in the rationale for the pied-à-terre tax that we heard from Governor Hochul, which was that who owns $5 million second homes in New York City? They're generally not residents of New York state, so this wouldn't be a tax on New Yorkers, so it wouldn't spur any New Yorkers to leave and take their tax dollars with them, because these are Russian oligarchs who keep a second home here, things like that. In this case, it is somebody with real estate in New York who was able to at least issue a threat that he would leave.

David Brand: Maybe that was a misstep by Mamdani to target Griffin, who was already the centerpiece of this debate a few years ago, and maybe he should have done exactly that, go to an empty Russian oligarch's condo or some overseas investor who's parking their assets. People say laundering money through New York City real estate or something like that would have been more effective. Maybe this was just rushed and put together, and now it's like, "Oh crap, we need to walk that back a little bit." You're right, the justification for the tax is that it's increasing property taxes on people who aren't living here.

If they sell, then they might sell to someone else who's willing to pay the additional tax, or they sell to someone who's willing to make New York City their permanent home, and then they'd be paying normal property taxes plus income tax and other economic activity from living and frequenting New York City.

Brian Lehrer: The housing news continues to unfold under Mayor Mamdani, as it does everywhere under every elected official, but certainly here in New York with this mayor trying to change the landscape of affordability and housing. Our housing reporter, David Brand, will, of course, continue to cover it. David, thanks for joining us as always.

David Brand: Always a lot to talk about. Thank you, Brian.

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