Nelson v. City of New York

Background

Two trustees owned two improved city properties with several years of unpaid water charges far smaller than the properties’ assessed values. New York City filed long lists of delinquent parcels under a statute that starts a foreclosure by posting, publishing, and mailing notice. The trustees received mailed notices to the trust address but took no action during the short redemption and answer periods, and judgments were entered by default; the City took title to one parcel and later sold it, keeping the proceeds. The trustees later offered to pay, sued to set aside the deeds and recover surplus proceeds, and the state courts denied relief before the case reached this Court.

Reasoning

The main question was whether the City’s foreclosure procedure denied the trustees fair process or treated them unfairly. The Court found the statutory notices — including mailed copies and tax bills marked “ARREARS” — were adequate, and the City was not responsible for the trustees’ bookkeeper who concealed notices. The Court distinguished a prior case involving a known incompetent owner, and it held the City acted consistently with the statute’s requirement to include all delinquent parcels in a section. The Court also found nothing in the Federal Constitution that forbids the City from retaining foreclosed property or sale proceeds where owners fail to act after adequate notice.

Real world impact

The decision means cities can use this foreclosure method to collect long-unpaid utility and tax charges and may keep property or sale proceeds when owners default. Property owners must monitor mailed notices and act promptly to redeem or answer, or they risk losing substantial property for small arrears. The New York Legislature later added a reconveyance option for some properties, offering a possible state-law remedy.