The Real Deal New York

Stuy Town tenants cleared to pursue $215M in rent overcharges

November 03, 2011 05:52PM
By David Jones

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Stuyvesand Town and City Council member Daniel Garodnick
The New York state appeals court ruled today that tenants in the
blockbuster lawsuit at Stuyvesant Town and Peter Cooper Village
will be able to pursue millions in rent overcharges, tossing a move to dismiss the case by MetLife, the original landlord of the Manhattan complex (note: correction appended).

In 2007, Stuy Town residents, led by tenant Amy Roberts, filed
a class action suit against Tishman and the previous landlord,
Metropolitan Life, alleging they illegally deregulated apartments
while receiving J-51 tax benefits, which are designed to help
landlords renovate apartment buildings in return for keeping rents
affordable.

The decision means that thousands of current and former tenants
will be able to pursue more than $215 million in excess rent that
was paid to previous landlord Tishman Speyer or MetLife, which
had sold the complex to Tishman.

“The class members who were overcharged are now entitled to be
reimbursed,” said Wolf Haldenstein attorney Alex Schmidt, who
represented the tenants in the Stuy Town lawsuit.

Tenants have been negotiating with the former landlords on a
settlement for more than five months, Schmidt said. City Council
member Daniel Garodnick, a lifelong tenant at the complex and
an advocate for tenants, said the ruling should help bring a final
resolution to the case.

“The harm done to Stuyvesant Town and Peter Cooper Village
residents extends years in the past, and today’s victory will help
ensure that they can be made whole for their landlord’s flouting of
the law,” Garodnick said in a statement.

Tishman Speyer and BlackRock acquired the 11,000-unit complex
in 2006 for a record $5.6 billion, and later defaulted when the
market crashed and the value of the complex fell underwater. The
property was later taken over by CW Capital
, the special servicer
that managed the defaulted loans.

The collapse of the deal was considered one of the biggest
debacles of the real estate boom, and this decision will add further
pain to landlords across the city.

The decision affirms a landmark ruling in August where Bernard
and Cora Gersten were awarded retroactive rent at a small
Greenwich Village apartment at 56 Seventh Avenue.

“It was always clear to me that retroactivity was a no brainer,” said
attorney William Gribben, who represented tenants in the Gersten
case. “This was something that the landlord world thought might
come to their rescue and relieve all their pain.”

The original ruling was widely criticized by the real estate industry, as
landlords across New York feared that tenants would file suit to
get refunds in buildings that were illegally deregulated.

A spokesperson for Tishman Speyer declined comment and a
spokesperson for MetLife was not immediately available for
comment.

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