Class action targeted city program that seized homes, largely in Black and Latino neighborhoods
NEW YORK, Brooklyn civil rights attorney Yolande I. Nicholson is part of the legal team that has reached a $60 million class action settlement with the City of New York on behalf of homeowners whose properties were taken without compensation under the city’s Third-Party Transfer (TPT) program.
The settlement, which still requires preliminary court approval, is believed to be among the largest paid by the city in the past decade, according to the attorneys involved. Nicholson, who is of counsel to Valli Kane & Vagnini LLP, worked on the case alongside that firm and the law firms Ropes & Gray and White & Case, both of which represented the class pro bono.
Created in 1996, the TPT program allowed the city to seize homes from owners behind on their property taxes and transfer them to developers and nonprofit organizations, often without meaningful notice or compensation. Homeowners lost not only the properties themselves but also the equity built up in them, wealth that many families had expected to pass down to the next generation.
The impact fell heavily on communities of color. Roughly half of the properties taken in the program’s most recent round were in historically African American neighborhoods, with the greatest concentration in Black sections of Brooklyn where gentrification is well underway.
“With the Third-Party Transfer program, New York City reached in and stripped Black and Brown property owners of hundreds of millions of dollars of equity value without paying for it, under the guise that properties were distressed,” Nicholson said. “This class action settlement demonstrates that Black and Brown folk are entitled to the very same protections afforded to all Americans: payment for the unlawful taking of their property.”
The case was filed in 2019 in federal court in Manhattan and was initially dismissed on jurisdictional grounds. In 2021, the U.S. Court of Appeals for the Second Circuit reversed that ruling, finding that the plaintiffs could seek the value of their property beyond the taxes they owed. The NAACP Legal Defense and Educational Fund and the Pacific Legal Foundation filed briefs supporting the homeowners.
The case gained momentum after the U.S. Supreme Court’s unanimous 2023 decision in Tyler v. Hennepin County, which held that it is unconstitutional for the government to seize and keep home equity beyond what is owed in taxes. The parties reached the settlement through mediation in 2025.
“It took seven years, a Second Circuit reversal, and a Supreme Court ruling to get here,” said Gregg Weiner of Ropes & Gray.
Keith Wofford of White & Case said he hoped the settlement, in which the city admits no wrongdoing, would deter similar programs in the future.
The agreement covers claims from the program’s most recent round of seizures in 2017, under Mayor Bill de Blasio. Claims tied to earlier rounds, going back to 1996, are still pending. Class members will be notified after preliminary approval, which is expected later this year.
“This historic settlement does not restore the property to these families, but it is an important step toward justice,” said Sara Wyn Kane of Valli Kane & Vagnini.