Real Estate Co. Accused Of Illegally Inflating NYC Rents
By Kat Greene
A proposed class of New York City tenants on Tuesday accused multibillion-dollar
real estate portfolio manager A&E Real Estate Holdings LLC of illegally
jacking up rents on apartments without doing any improvements to the units,
sometimes more than tripling the price to live in their homes.
The company violates state and city rent stabilization and housing laws
by raising rents by astronomical degrees on apartments, shooting up the
prices by far more than the city's laws allow, according to the suit.
For example, a landlord is allowed to raise rent on a vacant unit by 20
percent, but A&E has offered units for more than 100 percent increases
over what prior tenants paid, a group of about 70 renters said in their
complaint.
To raise the rents by that much, the company would have to show that it
has performed serious improvements to the homes, like installing new doors,
counters and cabinets not as repairs, but as modifications to make a unit
look nicer, according to the suit. But the company is skipping the repairs
and going straight for higher rents at several of its buildings in the
city, the tenants said.
"The scheme represents defendants' blatant attempt to circumvent
New York City's rent regulation process, at the expense of tenants
residing in buildings in the A&E portfolio," the renters said
in the suit. "Left unchecked, this conduct will force countless tenants
from their homes, and continue the demise of affordable rental housing
in New York City."
The company holds more than 100 buildings with assets valued at over 2
billion, according to the suit.
The tenants, led by John Stafford, are claiming that A&E steeply increased
rents at buildings in Harlem, Washington Heights, Astoria, Williamsburg
and other New York City neighborhoods without actually changing the condition
of those buildings and units. They're seeking to represent a class
of similarly situated A&E tenants, according to the suit.
Stafford, for example, lived in a unit on Haven Avenue in Hudson Heights,
north of Yankee Stadium, according to the complaint. Between 2011 and
2013, the legal regulated rent on his apartment was increased 354 percent,
which would have required $123,000 in improvements to be justified, according
to the suit.
No such repairs or improvements were made, the tenants said.
The tenants hail from A&E buildings all over the city, including popular
areas like Astoria, Queens, and Williamsburg, Brooklyn, according to the suit.
Lucas Ferrara of Newman Ferrara LLP, who represents the tenants, told
Law360 on Tuesday the case is "a heinous example of a landlord gaming
the system."
A representative for A&E told Law360 the real estate company has "serious
concerns" about the allegations, and that none of the claimed overcharges
were brought to the company's attention before the suit was filed.
Of the claims in the suit, 52 of them date back to prior ownership before
A&E took over the buildings, and the three remaining claims that are
related to A&E ownership are unfounded, a spokeswoman said.
"We stand by our company’s proven ability to stabilize and
improve multifamily housing that prior owners have allowed to fall in
to severe disrepair," the spokeswoman said. "We comply fully
with all laws governing rent regulated housing, and we are proud that
as owner of many thousands of apartments across NYC, our significant investments
in seriously run-down properties have greatly improved the lives of residents
and have dramatically reduced violations while maintaining affordability
as needed in this city."
Stafford and the other plaintiffs are represented by Lucas A. Ferrara,
Jarred I. Kassenoff, Jeffrey M. Norton and Roger A. Sachar Jr. of Newman
Ferrara LLP.
A&E is represented by Stroock & Stroock & Lavan LLP.
The case is John Stafford et al. v. A&E Real Estate Holdings LLC et
al., case number 655500/2016, in the Supreme Court of the State of New
York, County of New York.
--Editing by Catherine Sum.
Updated: This story has been updated with a quote from A&E.