How NYC’s Unpaid Property Tax System Has Left Some Harlem Tenants in the Lurch (2024)

For 15 years, Mark Hall lived in a rowhouse in West Harlem’s Sugar Hill historic district. The situation wasn’t perfect. The heat and hot water were spotty, and there were leaks and frequent rat sightings. But Hall, 52, had his own room with a small kitchen and shared a bathroom with others. It was home.

That was until March 2024, when the city Department of Housing Preservation and Development, citing dangerous conditions, slapped a vacate order on the house, giving Hall and six other tenants just 24 hours to leave. They’ve been living in shelters ever since, with the door to the rowhouse boarded up, locked and chained.

Over decades and through multiple owners, the property has accumulated 127 open violations, according to HPD, everything from broken light fixtures and locks to a rodent infestation and unsafe electrical wiring. About 75% of those violations were reported after a company called Harlem Family Heaven Inc. — whose president Joseph Makhani has a history of fraudulent real estate schemes and has twice been indicted by the New York Attorney General— purchased the majority stake in the building in 2017.

But the Sugar Hill rowhouse isn’t just physically distressed — it’s financially distressed as well.

Under the current city system, the city Department of Finance puts liens on properties for unpaid property taxes and sells them to privately managed trusts, some of which issue bonds to investors. sThe trusts attempt to collect the debt and have the power to initiate foreclosure. The liens placed on the Sugar Hill rowhouse that were sold are worth tens of thousands of dollars, plus interest and fees. (On top of that, the property has accumulated nearly $30,500 worth of additional unpaid property taxes in the past four years.)

That process, community advocates say, leaves tenants like Hall in a vulnerable position; in July, the rowhouse is slated to be auctioned off after being foreclosed upon by the trust that bought the liens.

It’s unclear if a future new owner will allow the previous tenants to return.

“This is my first time in my life being in this type of situation,” Hall said. “I want to move back home. I want to move back to that building. That would be the ideal thing I want to happen. It’s more convenient to me, to my work and in my community. I’ve been in this community for 30 years.”

How NYC’s Unpaid Property Tax System Has Left Some Harlem Tenants in the Lurch (1)

Richard Velasquez, a staff attorney with the Goddard Riverside Law Project who is representing the tenants, is pushing for the property to be fixed up and for the tenants to be allowed to return.

“The most immediate goal and the most important thing to us is getting the folks back in their home, however necessary, which most likely will have to be getting the repairs done to get the vacate order lifted,” Velasquez said.

The Adams administration and City Council are reworking the city’s system for collecting unpaid property taxes to protect vulnerable property owners and, to an extent, the tenants who may live in tax-delinquent properties.

But in the meantime, buildings like the Sugar Hill rowhouse — and its former tenants — are still in the lurch.

‘From Bad to Worse’

The Sugar Hill rowhome, which essentially functioned as a rooming house, sits on a leafy street lined with other homes adorned with stained glass windows, ornate stone carvings and elaborate brickwork.

Hall and the other tenants for years paid rent to a relative of the property’s original owner, who died in 2004. But about seven years ago, Hall said, some men appeared and claimed they were the new owners. He remembered being told he didn’t have to pay rent to the relative any more, but, unable to tell if what the guys said was true, he and his six fellow tenants stopped paying at all.

In 2017, Harlem Family Heaven bought shares in the property from two of the deceased owner’s three heirs. By 2022, the company gained full ownership of the building, purchasing the final share from the third heir, property records show. The company paid at least $172,500 for the property.

“Nobody came for the money,” Hall said, referring to the rent. “After a while, nobody started fixing anything or doing anything so we started maintaining as much as we can with ourselves there.”

Hall and his neighbors painted their apartments and the hallways. They bought their own oil and pooled their money to pay for heat. Each tenant contributed to cleaning the spaces, Hall said. It wasn’t the most ideal place to live, but they made do.

“That was as much as we could do,” Hall said. But then, “things went from bad to worse.”

The people who said they were the owners tried to buy out the tenants, offering them as much as $5,000, Hall said.

“‘I’m not interested in money — I’m interested in someplace to live,’” Hall said he told the men.

In the meantime, conditions deteriorated. Rats proliferated. The basem*nt flooded. The ceiling caved in.

In 2022 and 2023, Harlem Family Heaven filed lawsuits against the tenants alleging they caused “extensive property damage beyond normal wear and tear” and attempted to kick them out. Those suits were discontinued.

Velasquez filed a lawsuit in May against Harlem Family Heaven in the hopes of getting the court to mandate the owner make repairs on at least some of the 127 open violations.

The complaint alleged the owners harassed tenants in an attempt to get them to leave and did not work to improve the poor conditions in the building, which, according to the suit, included no cooking gas for at least seven years, no heat or hot water for three years, severe leaks throughout the building, uneven stairways, extensive mold, infestations of rodents and insects and no janitorial services.

“We’re hoping to get the order so that way whoever ends up getting the building next will at least be bound by that,” Velasquez said.

He is also pursuing other avenues to try to secure the tenants’ housing, including the property’s inclusion in the 7A Program, under which a court-appointed administrator runs the building and collects rent. But it’s unclear how that might work if the auction occurs.

Tangled Chain of Title

Makhani, the president of Harlem Family Heaven, has a history of sketchy and illegal real estate activities. Most recently, in July 2023, Attorney General Letitia James announced his indictment for alleged deed theft of two Harlem brownstones.

How Makhani and his associates acquired the Sugar Hill property was the subject of disputes in Surrogate’s Court after the original owner’s death in 2004.

The New York County public administrator filed a case in 2006 alleging fraud in the acquisition of the initial two-thirds interests in the property and attempted to invalidate the sale. That case is still pending.

A 2017 filing by lawyers for the New York County public administrator raised questions about the legitimacy of the deeds for the house, noting that Harlem Family Heaven registered as a corporation on the same date the company apparently acquired shares from two heirs. The filing went on to state that a lawyer for one of the heirs had indicated that his client was bed-bound and alleged her signature on the deed had been forged.

Other Surrogate’s Court records from 2017 show that an appointed guardian determined the third heir — from whom Harlem Family Heaven bought the last share of the property in 2022 — lacked the capacity to participate in the proceeding. He was hospitalized in a psychiatric facility at the time.

Lawyers for Makhani and Harlem Family Heaven did not respond to requests for comment.

Once the row home is auctioned, Makhani is poised to make money. The funds from the auction will go toward paying the lien trust, its attorneys and associated fees. After that, any leftover dollars would go to the owner.

And anyone can bid on the building.

”There is no guarantee that there will be a buyer who’s interested in preservation, who’s interested in making sure these tenants actually get safe housing, actually get to return,” said Paula Segal, a senior attorney with Take Root Justice, who is not involved with the property’s legal proceedings.

City Gave Up Control

Segal also criticized the way the city collects property taxes, saying the city gave up its control of its own debt and ability to foreclose on the tax-delinquent property itself and “decide the future of this property.”

“It could work with a not-for-profit developer to renovate it to make sure that tenants get rent stabilized leases, to make sure that tenants are living in safe housing,” Segal said, “but the city — instead of enforcing the debt owed to it by the owner, whoever they are — sold that right, sold it at a discount to the tax lien trust.”

The Department of Finance did not respond to a request for comment.

That vision in part rests on the yet-to-be-determined fate of the Third Party Transfer program, in which HPD can give properties whose owners are delinquent on taxes to nonprofit caretakers in order to preserve those properties as affordable housing.

The program, which often applied to renter-occupied abandoned properties, has been on ice since 2019, after some elected officials and community advocates charged that the program stripped homeowners, small landlords and co-op shareholders of valuable assets. Legislation for a new version of the program is in the works but has yet to be introduced.

“We wish there were more mechanisms so either tenants can take control of a building or someone else can take control where we think there’s very clear signs of neglect,” Velasquez said.

In the meantime, the displaced tenants are making due, albeit reluctantly and without all of their belongings.

“All my stuff is still in that building. I don’t know what’s gonna happen,” said 49-year-old Terrance Grant. “I would love to move back in. That’s my neighborhood.”

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How NYC’s Unpaid Property Tax System Has Left Some Harlem Tenants in the Lurch (2024)

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