The Daily Dirt: Housing court takes forever. LeFrak lawsuit finally holds it accountable

What do Feb. 29 and housing court have in common?

It’s Leap Day, people. We’ve been waiting four years since the last one.

For New York landlords, housing court cases seem to take almost that long. Two years is not uncommon. The minimum is about a year.

Landlords have been increasingly frustrated with the court, especially because about 90 percent of eviction cases involve nonpaying tenants and (in landlords’ view) are straightforward. By the time owners reclaim an apartment, the arrears can easily be $20,000, $40,000 or more.

Yet they seem to accept this as a cost of doing business — and rarely do they try to collect what the departed tenant owes. Some even pay delinquent tenants to leave.

As a result, tenants have every incentive to drag cases out as long as possible. Why turn down the chance for years of free housing and a buyout, especially if you’re not paying for a lawyer? The city’s right-to-counsel program provides free legal services.

Owners have to pay their own legal costs. They end up wasting thousands of dollars sending attorneys to court appearances that result in no action — only adjournments.

But now one big landlord says the court has a legal obligation to move faster.

According to a lawsuit by the LeFrak Organization, under the state’s real property law, if a tenant answers a non-payment suit, a trial date or hearing should be three to eight days later. In practice, housing court is setting the initial date two months out, according to the complaint.

When tenants finally show up in court, the judge routinely gives them two or three months to find a free lawyer, which are in short supply. When the city passed the right-to-counsel law, it did not allocate enough funding to hire all the lawyers needed. That exacerbated the backlog.

But right-to-counsel is not really the problem. One landlord attorney told me cases are actually easier to resolve when the tenant has a lawyer, because there’s someone to negotiate with — and someone who shows up for the court dates.

The problem is housing court itself. It’s a dysfunctional hellhole that operates with no sense of urgency.

One landlord told me it took eight months to evict a tenant who owed $90,000, had abandoned her apartment, was ignoring all correspondence and could not be located despite an extensive search. The judge nonetheless adjourned the case four times to give her more time to respond, keeping the apartment empty and producing no revenue.

A recurring example is the adjournment that judges grant at the initial hearing when advising tenants to find a lawyer. The sensible policy would be to notify tenants about their right to counsel as soon as an eviction notice is served, rather than at a hearing two months later.

Some cases legitimately take time because the tenant’s attorney finds evidence that the landlord charged market-rate rent for a unit that should have been rent-stabilized or did not address building violations.

But what about the simple cases? The Legal Aid Society argues that LeFrak’s lawsuit “doesn’t even make sense.” The court can’t clear its backlog, Legal Aid says, because it doesn’t have enough personnel.

That logic is baffling. Repeatedly adjourning cases only makes the backlog worse. Reducing it requires judges to make decisions, not postpone them.

Funding for more judges and staff would certainly help, but the Kafka-esque stories told by housing court regulars are no fiction. Improving the court would free up apartments to be rented to the many New Yorkers willing to pay for them.

Landlords, for their part, should acknowledge that not trying to collect unpaid rent is penny-wise and pound-foolish. It might make sense in an individual case, but letting everyone skate encourages tenants to milk the system for as much free housing as possible.

What we’re thinking about: Was Gov. Kathy Hochul thinking of housing court when she pledged “to make sure that this court system, this judiciary continues with the preeminence that has always been associated with the state of New York”? Email eengquist@therealdeal.com.

A thing we’ve learned: Rep. Ritchie Torres is monitoring the struggles of the city’s most important housing lender. “I worry about the instability at New York Community Bank and what it could mean for the multifamily housing market in New York City,” the Bronx House member said in a phone interview Thursday morning. Hours later, the CEO was bounced and the bank revealed problems with internal controls. The bank’s share price had stabilized since plunging from $10.38 on Jan. 30 to $4.20 on Feb. 6, but fell in after-hours trading Thursday on the disclosures.

Elsewhere in New York…

— E-bike batteries caused 268 fires in New York City last year and killed 31 people, prompting NYCHA to propose banning them from its apartments. But this week, after feedback from tenants, it backed off. Instead it imposed a bunch of rules that seem impossible to enforce because NYCHA has no way of knowing what goes on inside tenants’ units.

Among the new rules:

• Residents may charge only one e-bike, e-scooter, or battery at a time
• Someone 18 years or older must be awake in the apartment for the entire time the battery is charging 

• Extension cords or power strips must not be used
• Any lithium-ion battery that has been assembled, refurbished, or reconditioned in a way prohibited by city law cannot be kept or stored 
• Lithium-ion batteries cannot be charged within five feet of a radiator or any other direct heat source
• Lithium-ion batteries or micro-mobility devices cannot be charged next to an apartment entrance door or any other place that could prevent escape in the event of a fire.

— Three weeks after The Real Deal requested comment from City Council member Cheryl Hudson about her rejection of a rezoning for a $115 million Crown Heights project, her office responded with a statement denying that an intermediary had reached out to the developer with a possible deal.

The alleged offer was rather specific, calling for the applicant to build affordable housing for seniors at another site and to contribute $5 million to $10 million to an affordable housing fund managed by an independent third party. Hudson’s office said that was “categorically false.”

— The so-called Covid defense didn’t work for one rent-controlled tenant who moved out of her apartment of 40 years during the pandemic. But it might have, had she returned sooner from her Hudson Valley country house.

She was in her West 88th Street pad for just 16 nights between March 21, 2020, and July 13, 2022, and filed tax returns from upstate, according to a housing court decision announced by Belkin Burden Goldman, who represented the landlord. Rent-regulated units must be the tenant’s primary residence.

Landlords no longer have an incentive to kick rent-paying absentee tenants out of rent-stabilized units, but they do for rent-controlled units, which have incredibly low rents. The apartment in this case will become rent-stabilized unless the ruling — apparently the first on a Covid-defense case — is reversed on appeal.

Daily Dirt Data

Residential: The priciest residential closing Thursday was $16.9 million for co-op unit 8A/9A at The Prasada, 50 Central Park West in Lincoln Square.

Commercial: The most expensive commercial closing of the day was $26.7 million for a 39,000-square-foot retail property at 5 East 59th Street in Midtown.

New to the Market: The priciest residential property to hit the market Thursday was a townhouse at 313 West 20th Street in Chelsea asking $12.5 million. Vicky Barron of Compass has the listing.

Breaking Ground: The largest new building filing of the day was for a 17,400-square-foot, mixed-use building at 334 Douglass Street in Gowanus. Future Made Architecture filed the permit application.