The case and the holding
The decision that annulled the rollout now has a name and a number: O'Brien v. City of New York, Index No. 85217/2026, Supreme Court, Richmond County, decided September 29, 2026, by Justice Wayne M. Ozzi. According to Thomson Reuters' tax news desk, which reviewed the decision, the court held that the Department of Finance's implementation of the non-primary residence surcharge was arbitrary, capricious and unlawful, and that by publishing an overinclusive list of properties potentially subject to the tax the Department "improperly shifted the burden of proof to homeowners."
Two separate failures carry the ruling. The first is the list. The second is what the city did, and did not do, with the tax data it already held.
Finding one: the 900,000-property roll was "the lazy route"
In July the Department published a "supplemental roll" of more than 900,000 properties and mailed notices to about 17,000 owners. The court agreed with the plaintiffs that "a much more narrowly tailored list was contemplated, and indeed required, by the Legislature" when the surcharge was enacted. Instead, per the decision as quoted by Thomson Reuters, the Department published a list where "98-99% of the data is irrelevant," an action the court called "capricious and without legal support," and took "the lazy route" by simply relabeling the regular real-estate tax roll.
That matters beyond this case. The statute, on the court's reading, obliges the city to identify the properties actually subject to the surcharge before it tells the public who might owe it. The order therefore requires the current roll to come down and be replaced only with properties the Department has determined are subject.
Finding two: the city had the data and made owners prove it anyway
The court found that the Department's "refusal to use the tax data that was 'sufficiently available' to DOF unfairly shifted the burden to thousands of homeowners to prove their basic residency." The Department originally built its list from 2024 taxpayer data; the decision faults it for failing to use available 2024 tax returns to determine residency before mailing. By requiring owners to file for an "exemption" instead, the city "irresponsibly and unnecessarily caused homeowners to expend time and money."
The court also addressed what those filers faced once they tried: they "lacked any real guidance as to the proof required" and risked penalties for "negligent" submissions. For an owner who has already filed, that finding cuts two ways. It validates the confusion many felt about which documents to send, and it is a reminder that the negligence-penalty provision in the law is real, so keep the application accurate and keep copies of everything you submitted.
The record also shows how the city's position moved during the litigation. After the suit was filed, the Department obtained 2025 state income-tax data, began a new round of letters in late August, cleared 1,210 owners of liability with revised notices, and sent "updated letters" to roughly 10,800 others saying their tax data did not establish the property as a primary residence. It also extended the exemption deadline twice, finally to October 6.
What a lawful notice must now contain
This is the part of the decision that will outlast the appeal fight. The court directed the Department to make an "individualized initial determination" using all available tax information before sending any new notice, and specified that each new notice must do three things: state the factors the Department used, disclose the documents supporting its determination, and advise the owner of the right to challenge it.
William McCracken, a tax attorney at Moritt Hock & Hamroff, told Thomson Reuters that "there's no question that the Court's directed form of notice will provide significantly more useful information to taxpayers, including what factors and information were considered, and disclosing records or documents used to make the initial determinations." Compare that with the July letter, which named no factors and attached no records.
The appeal, and what is not at stake
The city filed its notice of appeal to the Appellate Division, Second Department, on the same day the decision was issued, and has invoked the automatic stay that New York law gives a government appellant, as we reported on September 30. McCracken's advice to taxpayers was to "expect another few days of uncertainty" while the appellate court sorts out the stay. Randy Mastro of Dechert, for the plaintiffs: "We're gratified that the court has recognized we were right all along."
One sentence from McCracken deserves to be quoted in full, because it answers the question we hear most on the phone line: "It's important to understand that the new law itself is not, and never was, at risk of being invalidated by this proceeding." O'Brien is about how the city ran the rollout. The separate constitutional cases filed this week by Steve Wynn and Wilbur Ross and by a second group of owners are the ones that attack the statute, and they are months from any answer.
What to do this week
Nothing in the decision relieves an owner of the October 6 deadline while the stay is in place, and the Department's website still shows it. If the home is your primary residence, or a family member's or a tenant's, file the exemption before October 6 and keep the submission accurate; the negligence-penalty language the court flagged is a reason for care, not a reason to wait. If you are a genuine second-home owner, the ruling means your next notice, whenever it comes, must tell you why the city thinks you owe and show you the records; until then, confirm your DOF market value and have your documents ready. Our legal tracker follows the appeal.
Questions owners ask
What is the name of the case that annulled the pied-à-terre tax rollout?
O'Brien v. City of New York, Index No. 85217/2026, Supreme Court of the State of New York, Richmond County (Staten Island), decided September 29, 2026 by Justice Wayne M. Ozzi. The plaintiffs are homeowners who received the city's July notices; they are represented by Randy Mastro of Dechert.
Did the court say the pied-à-terre tax is illegal?
No. The ruling concerns the city's implementation: the overinclusive 900,000-property roll, the decision not to use available tax data before mailing notices, and the lack of guidance to exemption filers. Practitioners quoted by Thomson Reuters note the law itself was never at risk in this proceeding. Separate constitutional challenges to the statute were filed this week and are at their earliest stage.
What does a lawful notice have to include under the ruling?
An individualized initial determination made with all available tax information, and a notice that states the factors the Department of Finance used, discloses the documents supporting the determination, and tells the owner of the right to challenge it.
Do I still have to file the exemption by October 6?
Yes, treat the deadline as live. The city appealed the same day the decision came down and has invoked the automatic stay, so the rollout continues while the Appellate Division decides; DOF's site still shows October 6. A filed exemption counts whatever the appellate court does, and the court's note about negligence penalties is a reason to file carefully, not late.
Sources
- Thomson Reuters Tax & Accounting — Court finds New York City's pied-à-terre tax improperly shifts burden to homeowners (O'Brien v. City of New York, 85217/2026, Sept. 29, 2026)
- Our prior coverage: the September 29 ruling · the city's appeal, the automatic stay and the two constitutional suits · the live legal tracker