A Housing Court judge has dismissed eviction proceedings against a group of tenants at the famed Manhattan House building on the Upper East Side, a decision that could set back one of the biggest condo conversions in the city’s history.
Manhattan House tenants had argued that after the new owners bought the luxury rental complex for a record $625 million in 2005, they failed to renew the leases of hundreds of tenants. Lawyers also argued that the new owners offered bogus renewal leases for at least 11 tenants by asking for excessive rent hikes or lease terms of less than six months.
“The lease offerings were at exorbitant rates that were designed to intimidate and demean us,” said Dr. Douglas Altchek, a long-time Manhattan House resident and a plaintiff in the case. “I was never offered a lease, but was told to get out 12 days after my lease expired.”
In late October, Manhattan House put more than 70 apartments on sale, with some listing for more than $6 million. The building has 196 rent-stabilized tenants, 58 market rate tenants, 327 vacant apartments and a resident manager, according to the Manhattan House Tenants Group. A total of 31 units have been renovated.
Judge David Cohen ruled on Nov. 28 that the 31 market-rate tenants at the landmark apartment complex were protected from eviction under the Martin Act, a state law that regulates the conversion of residential rental buildings into condominiums. The tenants’ attorneys learned of the decision today.
Manhattan House officials declined comment.
According to court records, the owners submitted a non-eviction offering plan to state Attorney General Andrew Cuomo in February 2006. Under a non-eviction plan, tenants cannot be evicted for failure to buy their apartments, and must be allowed to continue as rent-paying tenants, according to the attorney general’s website.
Judge Marc Finkelstein denied a motion to dismiss the case on March 23. By the end of March, Cuomo’s office approved the non-eviction plan to convert Manhattan House from a rental building to a condominium.
However, a long-running dispute between the owners Jeremiah O’Connor and Richard Kalikow delayed the conversion until October, when O’Connor bought out Kalikow and secured $750 million in financing from Germany-based HSH Nordbank AG to continue the conversion.
Cohen ruled that the landlord could not justify an eviction because there were no other qualifying causes, such as failure to pay rent or failure to grant access to the apartment.
“Here, the only basis for the eviction of these tenants is the fact that their lease terms have expired and have not been renewed,” Cohen wrote. “Consequently, respondents are protected from ‘no cause’ holdover eviction proceedings by the Martin Act.”
The ruling echoes a similar decision by Cohen in March, when he dismissed eviction proceedings against 23-market rate tenants at Sheffield57 (formerly The Sheffield), on West 57th Street.
“If it’s upheld by the appellate court, it certainly will have a significant impact on the rights of landlords to come into a building with a significant amount of market-rate tenants and simply clear the building out and evict them,” said Kevin McConnell, the lawyer for tenants in both the Manhattan House and Sheffield cases.