3 Key Takeaways
- $60 million proposed settlement: Valli Kane & Vagnini LLP and co-counsel have reached a $60 million settlement, pending court approval, on behalf of some of the homeowners whose properties were seized through New York City’s Third Party Transfer program without compensation.
- The case challenged the loss of homeowners’ equity: The lawsuit argued that the City took properties worth substantially more than the homeowners’ outstanding debts without providing compensation for the remaining value.
- The fight isn’t over: While the settlement addresses claims arising from the program’s 2017 property seizures, claims involving earlier rounds of the program, dating back to 1996, remain pending.
New York City has agreed to a $60 million proposed class action settlement with homeowners whose properties were seized in Round 10 of the City’s Third Party Transfer (TPT) program without compensation for the equity they had built in their homes.
Valli Kane & Vagnini LLP, together with Yolande I. Nicholson of Yolande I. Nicholson, P.C., Of Counsel to the firm, filed the federal class action in March 2019 and has litigated it since. Ropes & Gray LLP and White & Case LLP joined later as co-counsel.
Unfair treatment & loss of existing equity in properties
The Third Party Transfer program was created in 1996 as a way for New York City to address properties with significant municipal debts and housing violations. Under the program, the City could take ownership of qualifying properties and transfer them to a nonprofit organization, which would then work with an affordable housing developer.
The stated goal was to improve deteriorating housing and protect tenants.
But for homeowners whose properties were seized, the consequences have been devastating.
There is a constitutional protection in place that needs to be considered. The government cannot just take all of your property because you owe a debt. This lawsuit, in particular, challenged a system in which a property could be worth substantially more than the taxes, water charges or other municipal debts owed by the homeowner. Plaintiffs argued that the City could (and did) take the property without compensating the owner for that remaining equity.
In some instances, homeowners also alleged that they were not properly notified that their properties had been seized.
Families who had spent decades building homeownership were left with nothing.
“These are families that were really working towards generational wealth,” Valli Kane & Vagnini attorney Sara Wyn Kane told the New York Post. “It was literally taken out from under them, and they were given nothing for it.”
How the case began
The Third Party Transfer program operated for more than two decades before anyone challenged it in court. Yolande I. Nicholson, a Brooklyn attorney who had spent years representing homeowners in foreclosure and municipal-debt matters, identified the pattern in the seizures: the City was taking title to properties worth far more than the debts owed against them, and keeping the difference.
In 2018 she brought the facts to Valli Kane & Vagnini. The firm took the case on, Ms. Nicholson came in as counsel to the firm, and in March 2019 they filed the federal class action on behalf of McConnell Dorce, Cecelia Jones and Sherlivia Thomas-Murchison.
Eight years of litigation for homeowners’ rights
In 2019, Valli Kane & Vagnini along with Of Counsel Yolande I. Nicholson, filed a federal class action lawsuit on behalf of New York homeowners challenging the City’s TPT program.
The litigation followed years of property seizures under the program and ultimately became part of a broader national legal conversation about what happens when the government takes private property to satisfy a debt.
Four months after the case was filed, Keith Wofford — then of Ropes & Gray — joined the plaintiffs’ team, and Ropes & Gray committed pro bono resources to the litigation. Mr. Wofford later moved to White & Case, which joined as additional co-counsel; Ropes & Gray has remained on the case throughout.
In 2023, the U.S. Supreme Court unanimously ruled in Tyler v. Hennepin County that the government cannot take a person’s property to satisfy a debt and keep the value that exceeds the amount owed. This ruling attracted cross-ideological support from the ACLU, the Cato Institute, and amicus curiae (friend of the court) briefs in support of the plaintiffs’ appeal were filed by NAACP and the Pacific Legal Foundation.
The principle the Supreme Court adopted unanimously in 2023 is the one this lawsuit had pleaded four years earlier: that a government may collect what it is owed, but may not keep a homeowner’s equity beyond the debt.
The proposed settlement follows years of litigation, including proceedings in federal district court and the U.S. Court of Appeals for the Second Circuit. The parties ultimately reached the proposed agreement on Round 10.
McConnell Dorce: A home built over decades
For lead plaintiff McConnell Dorce, the case was deeply personal.
Dorce, a retired ambulance driver, had owned his East Flatbush, Brooklyn, property since 1977. As stated in the lawsuit, he owned the property free and clear of a mortgage and had built his life around it.
After falling behind on water and sewer charges, Dorce entered into a repayment agreement with the City.
But according to the lawsuit, the City subsequently seized his property without notifying him that the transfer had occurred. The City continued accepting his payments, even though his property had already been taken, according to court documents. Mr. Dorce never received compensation for the property, according to the lawsuit.
Sadly, Mr. Dorce died in February 2026, before the proposed settlement was reached.
“We’re grateful to be able to finally give some relief to some of these families,” Kane told the New York Post. She also described it as particularly heartbreaking that Mr. Dorce did not live to see the outcome of the case.
For homeowners like Mr. Dorce, the properties at issue were not simply buildings. They represented decades of work, family security, and the opportunity to build generational wealth.
A landmark settlement, but not the end of the case
The proposed $60 million settlement covers properties seized during the City’s 10th round of TPT transfers in 2017 and 2018. Those 64 properties included approximately 839 housing units.
It does not resolve claims involving every property seized through the TPT program.
According to reporting by The New York Times, the City ultimately transferred more than 590 properties containing more than 7,300 homes during the program’s 10 rounds. More than 500 additional properties remain part of the broader litigation.
That distinction matters.
The proposed settlement represents significant relief for the homeowners covered by this round of the case, but it does not erase the questions raised by the City’s broader property seizure practices.
What happens next
The proposed settlement must still receive preliminary approval from a federal judge before it can take effect. It covers 64 properties seized during the program’s 10th round, containing approximately 839 housing units. The broader litigation involves claims concerning more than 500 additional properties.
The settlement also comes at a consequential moment for the TPT program itself. The program has been effectively paused since 2019, while City officials have discussed ways to modify and potentially revive it.
The City has maintained that the property transfers did not violate former owners’ rights and has said that any future version of the program would address concerns raised by the litigation.
As Matthew L. Berman, of Valli Kane & Vagnini LLP, explained to The Real Deal, the mechanism that would allow owners to recoup surplus value of a property once it’s sold is designed to give owners the minimal amount possible. “If that law goes forward, and if the city actually does grab properties under that law, we’re going to be right back to square one suing the city again,” said Berman.
For homeowners and their families, the central issue remains clear: If the government takes your property, constitutional and other legal protections do not disappear simply because you owe a debt.
Fighting for homeowners’ rights
Valli Kane & Vagnini is proud to represent homeowners seeking accountability for the loss of their property and the wealth they worked for over generations.
This case is about more than the value of 64 properties. It is about the fundamental right to be treated fairly when the government takes something you own.
“The city should not be in the business of using Black and brown properties to solve its rental housing problem,” said Yolande Nicholson of Yolande I. Nicholson P.C. “There’s no legal justification, and there should be no political justification.”
For homeowners who believe their property was wrongfully seized, or who have questions about their rights when facing government action involving their home or property, Valli Kane & Vagnini can help you understand your legal options.
Contact Valli Kane & Vagnini to speak with an experienced attorney.
Additional Press
New York Post
NYC agrees to shell out $60M to property owners whose buildings were seized under program Mamdani vows to revive
The Big Apple has agreed to pay $60 million to property owners whose buildings were seized under a controversial city program that Mayor Zohran Mamdani has vowed to revive.
Under the settlement agreement filed in Manhattan federal court Friday, owners of 64 properties seized by the city over unpaid tax debts will receive the payouts, nearly a decade after the class-action lawsuit was filed.
The New York Times
New York Seized Their Property. Now It’s Offering a $60 Million Payout.
The settlement resolves a 2019 lawsuit that argued that a city program intended to seize buildings from negligent landlords had stripped homeowners of their equity without proper compensation.
The Real Deal
Policy Pro: NYC property seizure settlement casts shadow over program revival
Property seizure saga: The city on Monday agreed to pay $60 million to partially settle a federal class-action lawsuit that argued the city’s Third Party Transfer program illegally stripped dozens of homeowners of their equity.
