Tuesday, November 24, 2015

NYC Landlord/Developer Who Allegedly Sneaked Early Termination Clauses Into Tenant Leases In Effort To Ultimately Give Them The Boot As Part Of 150-Unit Building Condo Conversion Agrees To Cough Up $1.5 Million To Get State AG Off Its Back

From the Office of the New York State Attorney General:
  • Attorney General Eric T. Schneiderman [] announced that he has reached a settlement with 165 E Residences, LLC – the developer of a condominium conversion at 165 East 66th Street on Manhattan’s Upper East Side – for improperly terminating leases for market-rate tenants.

    An investigation by the Attorney General’s Real Estate Finance Bureau found that the developer terminated 82 leases during the conversion and only allowed tenants to stay for an additional six months if they waived standard legal protections. The settlement, which offers new leases to the 82 residents and legal protections for the tenants, brings to a close the investigation.

    ***

    The 150-unit East 66th Street building has been home to residential renters, including rent-stabilized tenants, for more than 50 years. The developer, 165 E 66 Residences, LLC, bought the almost fully-occupied building in late 2013. Soon thereafter and continuing over the next year, the developer began inserting early termination clauses into market-rate lease renewals, which some residents alleged were inserted under false pretenses, including oral promises that the developer would not exercise the termination clause.

    Then, beginning in November 2014, the developer sent notices terminating leases by declaring that a tenant’s apartment would be undergoing substantial renovations, and also attempted to identify tenants for buy-outs. Soon thereafter, the Attorney General launched an investigation into the developer’s tactics, which has resulted in today’s announced settlement.

    Under the settlement obtained by Attorney General Schneiderman, 165 E 66 Residences, LLC has agreed to pay $1.5 million to New York City’s Affordable Housing - AG Settlement Fund, which was established in June 2014 to help finance affordable housing for low-income New Yorkers. This brings the total funds from AG settlements to more than $7 million. An additional $225,000 will be paid to the Attorney General’s Office to cover the costs and expenses of the investigation.

    Under the agreement, the developer will offer all remaining tenants new leases, which will extend to at least June 30, 2016, and ensure that tenants receive an exclusive right to purchase their unit. Additionally, the developer will ensure that the offering plan allows market-rate senior and disabled tenants to elect to become non-purchasing tenants, thereby guaranteeing them the right to annual lease renewals and ensuring there will be no unconscionable rent increases if they choose to remain renters.
For the entire news release, see A.G. Schneiderman Announces $1.75 Million Settlement With NYC Developer Over Improper Condo Conversion Tactics (Developer Disregarded Rights of Renters During Upper East Side Building Conversion).

For the settlement terms, see In re: 165 E. 66 Residences, LLC.

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