Community Development Project Saves Church from Unjust Foreclosure, Reported by City Limits

Posted on November 10, 2017

CityViews: The Council Must Protect Nonprofits from Lien Sales

Originally Posted by City Limits on November 9, 2017
Written by Richard Hartley

Haven Ministries paid off a million-dollar mortgage in August — in just 15 years. A great accomplishment for a community church in Far Rockaway, Queens. When making the final payments, Paula Segal — an attorney with the Community Development Project at the Urban Justice Center informed the church that it had a tax lien and was about to get another one because of property tax debt and overdue water bills. The news came as a surprise since the church functions as a nonprofit charity exempt from property taxes and paying for city water. The buyer of the first lien had already filed a suit against Haven Ministries to foreclose on the building but the church never received notice of legal proceedings. The city takes tax, water, and sewer debt and converts it into liens, which subsequently are sold to a private trust. The trust can collect 18 percent interest (compounded daily), pursue collection, and foreclose on the lien. After foreclosure, buyers can do whatever they want to the properties, including demolish hundreds of old churches and other community institutions — many of which are active. There were more than 175 properties owned by charities that were included in this year’s sale. Losing the Church building would have been a hardship for the whole community: they have a successful mentoring program for young men’s/young women’s empowerment, their gospel choir tours the world, and the church is a beacon of light to people in Far Rockaway. The city didn’t attempt to fix the error until the church got in touch. There is a bill before the City Council that would exempt any property owned by a nonprofit organization that filed its exemption paperwork in the past five years from the tax lien sale. The bill also would provide an exemption for any property with a pending application or appeal.

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