The Real Deal New York

APF, accused of overcharging tenant, faces possible class action suit

Major landlord accused of overstating leased space, passing along renovation costs

October 02, 2012 11:30AM
By David Jones

From left: Krishnan Chittur, John Fitzsimmons and 286 Madison Avenue (credit: PropertyShark)

APF Properties, a major commercial office landlord in Manhattan, is facing a potential class-action lawsuit for $10 million, amid allegations that it illegally overcharged commercial tenants at 286 Madison Avenue and other buildings by overstating the amount of leased space, among other practices.

The lead tenant, the Manhattan-based law firm of Chittur & Associates, alleges that APF, has been charging the tenant for rent based on 840 square feet of space, however the actual square feet being used by the law firm is 344 square feet.

In addition, an amended complaint filed September 24 in New York State Supreme Court, alleges that starting in March 2011, AFP tried to pass on a $3,382 charge, citing Local Law 11, which allows landlords to pass on the costs of alterations and improvements onto tenants. However, the law firm, led by its president, attorney Krishnan Chittur, countered that the law only allows landlords to pass on the costs of improvements that are mandated by the city or are considered critical to the operation of the building.

The firm has been a tenant in the building since 2007 and claims that it and other tenants have been overcharged by the landlord trying to pass along the cost of repairs that are the landlord’s responsibility.

When the tenant asked for a justification of charges, the landlord cited a city Environmental Control Board violation from August 2011, for failure to maintain an exterior wall, according to the suit. But the tenant maintains that the charge was imposed in March 2011, which was five months before the violation.

“You have a million things on your mind, and when the bill comes you trust the bill,” Chittur told The Real Deal.

The 23-story building, originally built in 1908, is 131,000 square feet, with recent leases signed with G&M Real Estate, Global Relay USA, Lincrea Corp. and Remedy Systems.

The suit seeks class action status, which would allow tenants at other APF buildings to join in as plaintiffs. APF’s portfolio includes the 370,000 square-foot Club Row Building at 28 West 44th Street, a 184,000 square-foot office and retail tower at 25 West 45th Street and an 82,000 square-foot office tower at 1156 Avenue of the Americas.

A Buildings Department spokesperson confirmed the ECB violation and told The Real Deal that it remained outstanding.

John Fitzsimmons, vice president of real estate at APF, told The Real Deal that the suit was a “frivolous” case in response to a suit it filed against Chittur for unpaid rent. He could not confirm the date of the filing.

Chittur denied that the rent claim was previously filed, saying he only received the suit from APF on September 25. And he disputed the rent claims by the landlord.

APF is facing another lawsuit from RIS Real Properties, alleging the landlord began renovation work on the firm’s terrace in April 2012 without prior warning. The landlord filed in a counterclaim that the repairs were required by the DOB because of an incident in which a piece of limestone fell to the sidewalk on 40th Street, nearly killing a pedestrian.

4 Responses to “APF, accused of overcharging tenant, faces possible class action suit”

  1. October 02, 2012 at 1:03 pm, bitterpill said:

    How could they possible be that far off on square footage?

  2. October 06, 2012 at 6:01 pm, AvoidStupidity said:

    The difference between rentable and usable space has been questionable for at least the last 50-60 years maybe longer. Get three different architects to measure and I guarantee you will get three different numbers. I can attest to this as fact after 47 years in commercial real estate in NY. It all boils down to what the market will bear.

  3. October 07, 2012 at 8:53 pm, ann said:

    It is about time someone take on commrcial landlords. Landlords and greed is ruining this city. Brokers need to understand they must stop telling landlords about rents that are not sustainable. High rents are killing the economy and all these pass alongs to the tenants are killing the tenants. I wish these tenants the very best of success and hope that it is all published so landlords and brokers and building manaders understand that we need to to use common sense. Gouge the tenant and they are going to go to someother city.

  4. October 07, 2012 at 8:57 pm, ann said:

    @AvoidStupidity. what you are saying is not correct. I have been in this business for more than 35 years and not until the the 1990′s when we had a new breed of broker and greedy landlords did this massive over measuring take place. Yes some buildings had huge loss factors where the loss factor might he 25 percent and the landlord would say its about 15 percent or maybe 20 when pressed. Irregular shaped buildings had that problem in a huge way. Some dishonest landlords came up with the idea of remeasuring space when the market was very soft and going through a correction. But that was dishonest then and it is dishonest now. What kind of people have we become where honesty and integrity and morality is left on the sidewalk? That kind of behavior is making large companies look at other cities with more reasonable considerations. We are doing ourselves a disservice.

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