Buying or selling: who ends up paying the surcharge?

This is a property tax surcharge. It is billed on the property tax bill, starting January 1, 2027 with the second semi-annual installment, and an unpaid amount becomes a lien. On a cooperative it is assessed against the corporation rather than the shareholder. In each case the obligation sits with the real estate.

No mid-year proration

Nothing in the rule splits a year's surcharge between a seller and a buyer at closing. Mid-year sale proration does not exist. If the cost is going to be allocated, that allocation happens in the contract of sale, because there is no city mechanism that will do it for the parties.

A buyer can inherit the exposure

The audit window runs six years, with subpoena power, and a materially inaccurate certification that would lower the surcharge draws a penalty of 300% of the difference, capped at 50% of the surcharge. A response filed before a closing is a document the next owner lives with. Diligence on a covered unit should cover what was certified, by whom, and on what proof.

What should you check before signing?

• Whether the unit appears on the supplemental market value roll DOF published July 24, 2026, listing properties that may be subject, with Phase One values. The final version is due December 31, 2026. How is that number arrived at? Valuation: how the number on the notice is set.
• What is DOF's market value, as opposed to what the unit last sold for? The $1 million threshold for condominium and cooperative units is a DOF market value. See wrong value.
• Whether a response was filed on the current notice, what it claimed, and whether the documents behind it still exist.
• For a cooperative, what the board has done. The corporation must forward notices to shareholders, and DOF declined to regulate the shareholder payment obligation, suggesting co-ops consider proprietary lease amendments. The board's side of it is the co-op board checklist.

The valuation method changes in 2028

From July 1, 2028, cooperatives and condominiums move to comparable-sales valuation, and a single $5 million threshold with the Class 1 rate ladder applies. A unit sitting below the line today on an income-method value is not necessarily below it then, which matters on a long hold.