Landlords score in Manhattan House and Sheffield57 cases

TRD New York /
Dec.December 03, 2008 09:56 AM

In a major victory for residential landlords, a New York State appeals court late last month overturned two controversial rulings that prevented the eviction of market-rate tenants at Manhattan House and Sheffield57, two of the biggest condominium conversions in the city’s history.

In March 2007, Housing Court Judge David Cohen blocked Sheffield57 sponsor Kent Swig from evicting 23 market-rate tenants and later that year hindered Manhattan House’s sponsors, O’Connor Capital Partners, from evicting 29 tenants.

In his decisions, Cohen said that the intent of New York State’s 1982 Martin Act was to protect all tenants from losing their homes in case of condo or co-operative conversions.

However, the three-judge panel argued in the November decision that since the leases had expired prior to the state Attorney General accepting the “red herring” plan, which outlines the specifics of the conversion, the Martin Act does not protect them.

“Where the tenant holds over after the expiration of the lease term, the landlord is not required to allege or prove any basis for eviction other than the expiration of the lease,” the court wrote in the Manhattan House case.

In 2005, a partnership led by Swig Equities acquired the Sheffield, which later changed to Sheffield57, at 322 West 57th Street, then an 845-unit rental building, for $418 million. That same year, O’Connor Capital Partners teamed up with developer Richard Kalikow to buy the 583-unit Manhattan House, at 200 East 66th Street, for $623 million, a U.S. record price for a single residential building. In late 2007, O’Connor bought out Kalikow after a lengthy court battle.

In each case, the sponsors sought the eviction of all market-rate tenants so they could convert the non-regulated rental apartments into condo units. The Manhattan House conversion is valued at $1.1 billion, making it one of the most expensive condominium conversions in U.S. history.  

Lawyers for the tenants still maintain that market-rate tenants should be protected under the Martin Act.

“I think Judge Cohen’s decision — the decision that they reversed — was consistent with the legislative intent and consistent with good case law,” said attorney Kevin McConnell, who represents Manhattan House, as well as tenants at Sheffield57.  

“I virulently believe these tenants deserve protection from eviction,” he said.

At the time of the March 2007 Sheffield ruling, more than 7,000 rental apartments at 60 buildings were being converted in the city. Many of those conversions have slowed down or stopped, as the credit markets have made it difficult for apartment buyers to get financing.

McConnell said tenants at Manhattan House are deciding whether to appeal. He added that he could not comment on behalf of his Sheffield57 clients, because he had not discussed the case with them at press time.

Manhattan House and Sheffield57 officials were not immediately available for comment.


Related Articles

arrow_forward_ios
(Image by Wolfgang & Hite via Dezeen)

Hudson Yards megadevelopment inspires a new line of sex toys

Hudson Yards megadevelopment inspires a new line of sex toys
Cammeby's International Group founder Rubin Schron and, from top: 194-05 67th Avenue, 189-15 73rd Avenue and 64-05 186th Lane (Credit: Google Maps)

Ruby Schron lands $500M refi for sprawling Queens apartment portfolio

Ruby Schron lands $500M refi for sprawling Queens apartment portfolio
Wendy Silverstein (Credit: Getty Images)

Wendy Silverstein, co-head of WeWork’s real-estate fund, is out

Wendy Silverstein, co-head of WeWork’s real-estate fund, is out
100 East 53rd Street,  China Vanke chairman Yu Liang and RFR's Aby Rosen (Photos via Structure Tone and Getty)

Aby Rosen accuses Chinese partner of “power grab” after condo loan default

Aby Rosen accuses Chinese partner of “power grab” after condo loan default
(Getty)

When the music stops: Guitar Center could file for bankruptcy

When the music stops: Guitar Center could file for bankruptcy
Jules Trump talks luxury towers and assembling in Sunny Isles Beach in TRD's Coffee Talks

Jules Trump talks luxury towers and assembling in Sunny Isles Beach in TRD’s Coffee Talks

Jules Trump talks luxury towers and assembling in Sunny Isles Beach in TRD’s Coffee Talks
Sam Chang and 140 West 28th Street (Gene Kaufman Architects)

Sam Chang sells hotel in Chelsea for $147M

Sam Chang sells hotel in Chelsea for $147M
New York Attorney General Letitia James and 63-36 99th Street in Rego Park (Getty; StreetEasy)

“Not on my watch”: AG Tish James fines developers who violated 421a

“Not on my watch”: AG Tish James fines developers who violated 421a
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...