NYC homeowners sue over pied a terre tax notices and roll

New York City homeowners sued the city and Mayor Zohran Mamdani on Friday, challenging how officials rolled out the so-called pied-à-terre tax on high-value homes.

The lawsuit does not dispute the underlying tax. Instead, the owners argue the rollout swept in thousands of primary residences that should not owe the surcharge.

Mamdani warned owners of second homes valued at $5 million or more to check their mail. But the city later extended the deadline for owners to submit proof to mid-September, citing summer travel among many wealthy homeowners.

“We brokers were running around checking people’s mail trying to get the notices,” Ian Slater, chief executive and co-founder of Trover Partners, told HousingWire TBD.

The case marks the second recent lawsuit against a major Mamdani administration action. Landlords sued last month over the Rent Guidelines Board’s freeze on roughly 1 million stabilized apartments.

The two lawsuits share another connection beyond the Mamdani administration. Randy Mastro, the attorney representing homeowners in the tax case, is also co-counsel in the rent freeze lawsuit. Mastro served as deputy mayor under former Mayor Eric Adams.

Mamdani won the mayoral election last Fall on a pledge to improve housing affordability. He took office facing a separate landlord lawsuit against New York’s statewide 2019 rent-stabilization law.

Causing confusion

The city created the surcharge to help close a budget gap. It targets non-primary residences above set value thresholds: $5 million for one- to three-family homes and $1 million for co-ops and condos. State law requires the Department of Finance to first determine that a property is not a primary residence, using records already available to the agency.

Instead, the department mailed roughly 17,000 homeowners notices saying their properties “may be subject” to the surcharge. The notices told owners to apply for an exemption and prove they live in their own homes.

Homeowners and brokers say they are struggling to determine who qualifies and how to prove it.

“The City has arbitrarily and capriciously foisted onto New York City residents the burden of proving they are not subject to the Surcharge,” the lawsuit states.

It also states that the process recasts primary-residence status – a threshold condition for the tax – as something owners must affirmatively claim.

“The frustration behind this lawsuit comes from a process that many homeowners feel has placed the burden on them to untangle unclear requirements,” Jessica Chestler, co-founder of The Chestler Jacobs Team at Douglas Elliman, told HousingWire TBD. “Regardless of the policy itself, any new regulation affecting property owners needs to be implemented with clarity, accuracy and transparency.”

The petition says the city had access to tax returns and other records that could have identified owner-occupied homes upfront. It argues officials skipped that step entirely.

Seeking relief

Compounding the issue, the city posted a supplemental market-value roll in July listing more than 900,000 properties by name, address and assessed value. Officials initially described it as tied to the surcharge. They later acknowledged it covered nearly every eligible property type – not just homes potentially subject to the tax.

The plaintiffs want the court to void the roll and the mailed notices. They also want the court to block further city action based on either while the case proceeds.

“This is a beauty,” Stuart Saft, an attorney with Holland & Knight who has no connection to the lawsuit, told HousingWire TBD. “Assuming Randy gets the relief that he’s seeking, it would result in the court throwing out all of the notices that were already given.”