Selling a Brooklyn Property With Property Tax or Water Liens

Start Here

Find Out Exactly What Is Owed on the Property

Owners often know there is a tax bill or a water problem but not the full picture. A buyer’s title company will search everything, so it is better to see the numbers first. Most of it is public and searchable by address or borough, block and lot.

• Department of Finance statement of account: property taxes, interest, HPD charges billed through Finance and other property charges.
• DEP water and sewer account: balance, payment history, estimated versus actual readings, and any open disputes.
• Lien sale notices: if your property was on a past eligibility list, check whether a lien was actually sold and to whom.
• HPDONLINE: emergency repair charges, relocation charges and open violations.
• ACRIS: recorded mortgages, sold tax lien certificates, mechanic’s liens and other recorded documents.
• Judgment and lien searches: your attorney or a title company can search the Kings County Clerk for docketed judgments, state tax warrants and federal tax liens.

Separate the list into two groups: debts that are liens on the property and will be paid at closing no matter who buys, and debts that are personal to you and may be negotiable. That split drives everything that follows.

The Lien Sale

How the NYC Tax Lien Sale Works, and Where It Stands in 2026

Since 1996, New York City has collected much of its unpaid property debt by selling liens to a trust, which then collects from the owner. The city sells the right to collect the debt, not the property itself. The sale was canceled in 2020, held in 2021 without water and sewer liens, and lapsed when the City Council declined to reauthorize it for 2022.

Reauthorization and Reform

Local Law 82 of 2024 brought the sale back with reforms aimed at resolving debts before they are sold, including more outreach and notice, payment and deferral options for small owner-occupied homes, and eligibility rules that vary by property type and how long the debt has gone unpaid. Commercial properties, larger rental buildings and vacant land can become eligible sooner than small homes, and certain owner-occupied one- to three-family homes with qualifying exemptions are excluded. A sale under the new rules was held in June 2025, with water and sewer liens included.

The 2026 Pause and the Land Bank

In early 2026 the City Council overrode mayoral vetoes to pass laws creating a New York City land bank, intended to take over the role of the private lien trust starting around 2029, and authorizing annual sales through 2028 subject to postponement by the mayor. In spring 2026 the administration paused the 2026 lien sale for a review of the system. The Independent Budget Office reported in April 2026 that no lien sale would be held in 2026.

Two cautions. First, a pause is not forgiveness: interest keeps accruing on unpaid city charges, and liens sold in earlier years remain fully enforceable. Second, policy is moving quickly, so confirm current status with the Department of Finance or 311 before relying on any timeline. The city sends notices before a sale, historically at 90, 60, 30 and 10 days.

Water & Sewer

How DEP Water and Sewer Liens Work

In New York City, water and sewer service is billed by the Department of Environmental Protection to the property owner. Even when a tenant or a former owner ran up the usage, the charge belongs to the property, and unpaid charges are a lien that can be sold in the lien sale once the debt meets the eligibility rules.

• Estimated bills. Many large balances in older Brooklyn buildings come from years of estimated readings, a broken meter or a leak. Ask DEP to replace or read the meter and rebill if estimates were wrong.
• Disputes. DEP has a complaint and review process for contested bills, with appeals to the Water Board. A dispute can take months, so start it before you list.
• Assistance. DEP offers payment agreements and a Water Debt Assistance Program for eligible owners. Ask DEP what applies to your account.
• At closing. Title companies routinely order a water search and require the balance to be paid or escrowed, so expect the water bill to be settled at closing even if it is disputed.

If a large water balance is the only problem, it is often worth resolving the dispute before selling. If it is one of many issues, a buyer who prices the debt into a cash offer may be simpler. See also our guide to selling a building with violations, since water and HPD problems often travel together.

Sold Liens

When Your Lien Has Already Been Sold

Once a lien is sold, you no longer deal with the Department of Finance for that debt. A trust owns it, and a private servicer collects it. According to the city’s Independent Budget Office in April 2026, a 5 percent surcharge and an administrative fee are added at sale, and the servicer’s interest rate can reach 16 percent, compounded daily.

• Foreclosure timing. The lienholder can generally start a foreclosure if the debt is unresolved a year after the sale, sooner if interest goes unpaid or current taxes are not kept up.
• It is a real foreclosure. Lien foreclosures go through the courts like mortgage foreclosures and end in an auction. Surplus above the debt can go to the former owner, but costs and fees reduce it.
• Payment plans. Servicers offer payment plans, but they rarely reduce what is owed.
• New protections. The 2026 Council legislation also added limits on lien foreclosures against owner-occupied one- to three-family homes. Ask your attorney how they apply to your lien.

Selling with a sold lien is routine for title companies: they obtain a payoff letter from the servicer and pay it at closing. If a lien foreclosure has already started, the steps in our pre-foreclosure guide apply, including the notice of pendency and the auction timeline.

Other Liens

Judgments, State and Federal Tax Liens, and Mechanic’s Liens

City property charges are only part of what can show up on a Brooklyn title report. Each of the following is handled differently.

• HPD emergency repair and relocation charges. When HPD makes repairs an owner did not, or relocates tenants after a vacate order, it bills the property. Unpaid charges billed through Finance become tax liens with interest.
• OATH and agency judgments. Unpaid penalties from DOB, sanitation and other agencies can be docketed as judgments against the owner. They are generally personal to the owner who was named, but a docketed judgment can be a lien on that owner’s real property in the county.
• Money judgments. A judgment docketed with the County Clerk is generally a lien on the debtor’s Brooklyn real property for ten years and can be renewed.
• Mechanic’s liens. Under the Lien Law, contractors generally have eight months after their last work to file, or four months for a single-family dwelling, and a lien typically expires after one year unless extended or enforced. They can be bonded off or paid at closing.
• New York State tax warrants. Filed with the County Clerk for unpaid state taxes and paid or released at closing.
• Federal tax liens. The IRS can issue a certificate of discharge for a specific property so a sale can close, usually with the lien paid from proceeds.

Personal judgments, older penalties and contractor claims are where negotiation is most often possible. Property taxes and water charges owed to the city are rarely reduced, except through exemptions, abatements or correction of billing errors.

Selling

How Liens Are Paid When You Sell

In a New York sale, the seller’s attorney and the buyer’s title company work out a payoff list before closing. At the closing table, the buyer’s money pays each lien in order of priority, and you receive what is left.

• Order payoff letters early for the mortgage, any sold tax lien and any judgment creditor, good through the expected closing date.
• Budget for transfer taxes and closing costs. Both New York State and New York City impose real property transfer taxes, generally paid by the seller.
• Escrows. Disputed or unconfirmed amounts, often water bills, may be held in escrow by the title company until resolved.
• Contract terms. A well-drafted contract states which liens the seller must clear and what happens if the payoffs exceed the price.
• Underwater situations. If the debts exceed the price, your attorney negotiates with the creditors who can compromise, typically the mortgage lender, judgment creditors and contractors.

Waiting is costly in both directions: daily interest on sold liens, accruing interest on city charges, and the risk that a foreclosure adds legal fees. A sale that closes sooner usually leaves more for you.

Protect Yourself

Lien Sale Lists Attract the Wrong Kind of Buyer

Lien eligibility lists and foreclosure filings are public, and they bring a wave of letters and calls. Be careful with anyone who offers to pay your taxes in exchange for signing over the deed, promises to stop a foreclosure for a fee, or asks you to sign papers without your own attorney.

New York’s Home Equity Theft Prevention Act, Real Property Law 265-a, protects owners of one- to four-family homes they live in when the home is in foreclosure, a term the statute defines to include a property on an active property tax or utility lien sale list. An investor buying such a home must use a written contract with specific disclosures, and, under the statute as amended in 2023, the owner can cancel until midnight of the fourteenth business day after signing. Sign up for the Department of Finance’s free Notice of Recorded Document alerts so you learn immediately if anything is recorded against your property.

Your Options

Pay, Resolve and List, or Sell Direct

Pay or Enter a Payment Plan

If you want to keep the property and the debt is manageable, Finance and DEP payment plans, exemptions and assistance programs may solve the problem. Seniors, people with disabilities and veterans should check whether they qualify for exemptions they are not receiving.

Resolve Disputes and List With a Broker

If the property is in good shape and the liens are a fraction of its value, resolve billing errors, get payoff letters and list. Liens are paid at closing like a mortgage, and a retail buyer may pay more for a clean, well-maintained property.

Sell Direct to Red Hook Development

Selling to us makes sense when liens come with other problems: violations, an estate, tenants, deferred repairs, a sold lien in foreclosure, or debts that are close to the property’s value. Our price reflects buying as-is for cash, so it may be below a retail price for a property in top condition. In exchange you get a written offer that shows every lien and how it is paid, no financing contingency and a closing date you choose. We also buy rent-stabilized buildings and 421-a buildings; see everything we buy.

How It Works

How We Buy Properties With Liens

• Send the address. We respond within one business day and pull the Finance, DEP, HPD and title records.
• One walkthrough, occupied or vacant.
• Written cash offer with a lien-by-lien estimate of what is paid at closing and what you net.
• Attorney-run contract and closing, with your attorney involved. No upfront fees.

We buy across Central Brooklyn, East Brooklyn, North Brooklyn and South Brooklyn. Start with the quick form above or our detailed property form.

This guide is general information as of October 2026, not legal or tax advice. Lien rules and the status of the city’s lien sale are changing; confirm with the Department of Finance and DEP, and consult a New York real estate attorney before you act.