The pied-à-terre chess game continued yesterday with the City being dealt a blow but not a knockout! Yesterday, the Supreme Court in Staten Island] issued a decision concerning New York City's implementation of the new pied-à-terre surcharge in O'Brien v. City of New York, Index No. 85217/2026. The surcharge drew attention when DOF posted a roll listing more than 900,000 properties and mailed notices to roughly 17,000 owners. The O’Brien Decision (in one of the lawsuits about the tax) essentially held the rollout was not done properly and must be redone.
Here is what boards and property managers should know.
What the Court Decided
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The Supplemental Roll must be removed. The Court directed the Department of Finance to remove the current Supplemental Roll from its website and permitted it to replace the roll with a more limited list reflecting properties actually subject to the surcharge.
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The Court found issues with the mailed notice process. The decision concluded that DOF had not properly made individualized primary residence determinations before issuing notices and criticized the process of placing the burden on owners to establish that their property was a primary residence.
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Previously mailed notices are to be cancelled. The Court's order expressly directs that all previously mailed notices be cancelled.
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Any new notices must follow a different process. Before sending a new notice, DOF must make an individualized determination using the most recent available information. The notice must identify the basis for determining that the property is not a primary residence and explain the owner's right to challenge the determination.
What the Ruling Does Not Do
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The ruling does not strike down the surcharge itself. The underlying law remains in place. The surcharge applies to qualifying nonprimary residences with value thresholds of $1 million for cooperative and condominium units and $5 million for one to three family homes.
Essentially the decision addresses how the City is administering the law. The Court's ruling focuses on the Supplemental Roll, the City's determination process, and the notices issued to property owners.
What Happens Next
The City has indicated that it is appealing the decision. Further proceedings may determine whether the September 29 order remains in effect while the appeal is pending. If an appellate court does not overturn the decision, the City would have to start all over on the process to collect the tax.
DOF's current deadline for applications was recently extended to October 6, 2026. Given the Court's decision and anticipated appellate proceedings, the City may provide additional guidance or adjust applicable deadlines as well.
For Boards and Property Managers
Boards and property managers should inform their affected shareholders and unit owners of the circumstances and make sure they are aware of the impending tax. Let them know to stay alert on this ever-changing situation and owners should continue to watch for formal communications from the City and consult their own legal or tax advisors regarding their individual circumstances.
Schneider Buchel LLP is monitoring the matter and will provide additional updates as developments occur.
If you have any questions regarding how this development may affect your community, please contact our office.
