NYC data errors: thorn in industry's side

Real Estate Weekly, Sept 4, 1991 by Lois Weiss

Explain how registration cards will be updated to one property owner who was more than upset when a building she last owned in 1989 turned up this year on a public list with her name on it. She supposedly owing nearly $700,000 in back real estate taxes from July 1990.

Talk about keypunch errors with an owner who, in the course of his business, paid a bill he received for Block XYZ Lot 1. He realized he does not own this property only when the property which he does own, Block 1XYZ Lot 1, went in rem. He was sent the bill for the wrong block and lot.

Banks and other lenders also receive notice of outstanding charges.

Banks have the ability to check all data through computer systems, and officials said they frequently pick up city errors when they take over the administration of properties or loans.

These banking institutions are also beginning to recognize that due to mergers, there is a tremendous overcapacity of computer resources which could be put to use by the city. Melton L. Spivak, vice-president, director of Corporate Property Taxes/Legal at Manufacturers Hanover Trust, said "If you took that capacity, the personnel, the hardware and software and applied it to the city, you could implement the best tax administration in the country. It would be tremendously efficient."

Spivak believes a bank-operated property tax collection system would also create an incentive for people to pay when their credit rating is at stake.

One attorney, who represents several banks, scoffed at this idea, saying banks don't even both passing on the city' notices to their own borrowers.

Other owners have even tried legal action against the city. One owner did not file an owner's registration card when he purchased a building. He did not receive a "change by notice upward in his property tax assessment, and so was unable to file a timely protest.

Notice Provisions Constitutional

Assistant Corporation Counsel Gary F. Marton said, in 1983 the U.S. Supreme Court declared invalid the State of Indiana's public notice provision in the Mennonite case. Since that time, he said, the city's notice law has been under attack. "We've had dozens and dozens of lawsuits brought where they said the foreclosure was bad; you didn't give us notice," he said. "We won all but one or two or three of them" This past spring, Marton said, two cases were argued at the Court of Appeals and the city won both.

In Rem Actions Commenced

Real estate attorneys blame bad record keeping for the huge number of properties against which the city begins foreclosure actions. If the bills went to the right place, they charge, many owners would not have to suffer through the reclamation process. Although no records are kept, experienced professionals claim as many as three quarters of the in rem problems are due to city errors. "People who are going to abandon are going to abandon," said one expert who asked not to be identified, "but many of the others just did not know about the charges."

Marton said this year in rem actions have been commenced against 14,455 properties, while last year the city filed against 14,504.