The lawsuit comes the same day Staten Island homeowners came out victorious in a suit against the tax filed this summer. 

The plaintiffs, represented by former NYC First Deputy Mayor Randy Mastro and Dechert LLP, filed the lawsuit in New York Supreme Court on Sept. 29. They allege that the new pied-à-terre tax unconstitutionally discriminates against out-of-state property owners, burdens interstate commerce and retroactively creates tax liabilities that can fall on co-op boards and shareholders.

“This tax was conceived in discrimination, enacted in haste, and rolled out in chaos. It is unconstitutional several times over, and it represents state overreach of exactly the kind the Framers sought to prevent when they drafted and ratified the U.S. Constitution,” Mastro said. “That is why our clients have brought this case, to overturn this illegal and unconstitutional tax.”

The complaint argues that the tax violates several constitutional protections, including the Privileges and Immunities Clause, the Dormant Commerce Clause, the Due Process Clause, the Equal Protection Clause of the U.S. and New York State constitutions, and the Contracts Clause. 

The plaintiffs also challenge the law under provisions of the New York State Constitution governing taxation and home rule. 

According to the complaint, the tax places new financial obligations on certain property owners and could expose entire co-op buildings to liabilities stemming from individual shareholders. The plaintiffs specifically challenge the law’s Jan. 5, 2026, taxable-status date, arguing property owners had no opportunity to anticipate or plan for the tax before it was enacted.

The complaint also alleges the tax raises the cost of owning and renting covered properties for nonresidents and could discourage interstate real estate activity. 

At issue is the tax’s rollout, including the publication of a supplemental property roll containing more than 900,000 properties and the issuance of roughly 17,000 notices telling recipients they could be subject to the surcharge unless they qualified for an exemption. 

The plaintiffs said that the process created widespread confusion, raised privacy concerns and “improperly shifted the burden onto homeowners” to prove eligibility for an exemption.

“We warned from the moment this tax was proposed that it was being rushed forward without sufficient consideration of its legal, practical, and economic consequences,” said James Whelan, president of the Real Estate Board of New York (REBNY). “This lawsuit raises serious constitutional questions, but it also highlights broader concerns about a policy that has been marked by confusion, administrative challenges, and unintended consequences.

A win on Staten Island, a setback for Mamdani

Meanwhile, on late Tuesday afternoon, a Staten Island judge ordered New York to cancel all notices for the pied-à-terre taxes—marking a victorious lawsuit in the case against the tax. 

Judge Wayne M. Ozzi sided with a group of homeowners, led by Mastro, and delivering a major setback to Mamdani’s “tax the rich” agenda.

“We’re gratified that the court has recognized we were right all along,” he said. “The fact is that this administration failed to follow state law when it burdened New York City homeowners with proving they live in their own homes or be on the hook for paying a new surcharge.”

Whelan applauded the Staten Island judge’s decision, but warned that the legal fights, including Tuesday’s filing, will continue. 

“This is an important victory for the thousands of New Yorkers who were wrongly swept into an arbitrary and confusing process. While the court’s ruling focuses on the implementation of the tax, it reinforces broader concerns about the legality and fairness of the tax itself,” he said. “The legal challenges are far from over, and we remain confident that New York homeowners will continue to prevail as these cases move forward.”

Borough President Vito Fossella said he agreed with the court ruling, adding that it was “fundamentally wrong to put more than a million people” on the luxury second-home tax list.

“And, the vast majority of those who were on the list did not belong there at all,” he said. “In being irresponsible and arbitrary, the city artificially created an atmosphere of confusion and fear about receiving this tax, and their information being wrongfully exposed, for no good reason. After doubling down countless times and leaving the erroneous list up for months, at a minimum, the city should apologize for needlessly putting hundreds of thousands of people in distress.”

Matt Rauschenbach, a spokesperson for the mayor, called today’s ruling “wrong” and said the city will continue to “fairly” implement the tax with a stay.

“Today’s decision is wrong, and we will invoke a stay of the injunction,” he said. “With a stay, we will continue implementing the surcharge fairly, efficiently, and in full compliance with the law, as we have since day one.”