The Real Deal New York

Appeals court voids Extell’s Belnord tenant deal

Panel found that landlord could not “ignore the rent laws”

November 22, 2013 04:37PM
By David Jones

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extell-belnord

Gary Barnett and 201 West 86th Street

A New York State appeals court has thrown out an unorthodox lease agreement between Extell Development and dozens of tenants at the Belnord on the Upper West Side, finding that the landlord could not write its own rules on rent stabilization, even with the tenants’ consent.

The unanimous five-judge ruling overturns a New York State Supreme Court decision to evict Jonathan Vincent, the grandson of an elderly Belnord tenant who had moved into a nursing home. Extell sued to evict Vincent and his grandmother, Jean Uppman, in 2011, claiming the apartment was no longer her primary residence and that he was not a “tenant of record.”

However, Vincent countered that he was entitled to successor rights on the unit, since he had been living there since 2007.

The real tangle, however, arose from a one-of-a-kind 2006 agreement between Extell and the tenants association at the 201 West 86th Street building, which had previously been rent regulated.

In exchange for granting 49-year leases to about 76 tenants, Extell was allowed raise their base rent by up to 30 percent and then by 5 percent annually, regardless of state rent-stabilization guidelines. The deal also limited the rights of tenants’ family members to inherit the leases.

However, the Tuesday decision by the Appellate Division will likely revert all those Belnord apartments to standard rent-stabilization status, and result in thousands of dollars in rent refunds and rent adjustments for many of the tenants, according to lawyers for Vincent and Uppman.

“The agreement that purported to take [dozens of] apartments out of rent regulation was found to be void ab initio,” said Robert Grimble, Uppman’s attorney, referring to a legal principle that means the agreement was never valid.

“We [are] reviewing the decision, but I don’t have any comment at this point,” said Steven Kirkpatrick, an attorney for Extell. A spokesperson for Extell did not return calls.

Extell, led by developer Gary Barnett, acquired the landmark building in 1994 for about $15 million. The previous owner had already signed an agreement that year to resolve disputes over the rent-regulated status of certain apartments, according to court documents.

Modeled on its sister complex, the Apthorp at 390 West End Avenue, the Belnord is considered one of the elite rental properties in Manhattan. Two of its 215 units are currently on the market: a five-bedroom for $35,000 per month and a four-bedroom for $17,500 per month, StreetEasy shows.

In his defense, Vincent asserted that he was a legal tenant, citing his years of residency, and that Extell continued to receive J-51 tax benefits at the Belnord, meaning the company could not deregulate the units in the first place. J-51 tax benefits are awarded to landlords that make improvements to apartment buildings.

However, the appeals court found that state laws on rent regulation would trump any unique agreement, notwithstanding both parties’ willingness to enter the deal.

“Public policy in the realm of rent regulation is strong and clear,” the court wrote. “Parties simply may not agree to ignore the rent laws, even for the most noble of purposes.”

Officials with the state Department of Homes and Community Renewal, which oversees rent laws, were not immediately available for comment.

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