A group of tenants sued Fairstead Capital, alleging that the investment firm illegally deregulated their apartments at 207 Central Park North.
Fairstead bought the 30-unit Harlem building in April for $28.4 million from Maurice Mann, whose company is also named as a defendant. In their suit, the 21 tenants allege that Fairstead “engaged in a fraudulent scheme,” raising their rents to free-market levels even though they should remain stabilized under New York law.
The tenants seek a judgment returning their rents to stabilized status, as well as damages.
According the suit, the building benefitted from the J-51 tax abatement program from 1988 to 2015. Landlords who receive the tax break to renovate buildings face limits on how much they can raise rents annually, although in practice many have flouted the rules.
A spokesperson for Fairstead called the lawsuit a “shakedown” based on “frivolous claims.” The company had been “working to resolve any inconsistencies that may exist with the previous owner’s documentation of rent stabilized tenants as it relates to J-51 case law,” the spokesperson wrote. “We have taken all the necessary steps to move applicable units into a rent stabilized status as quickly as possible and settle this matter outside of court.”
Last month, Fairstead bought the 1,790-unit rent-stabilized Harlem housing complex Savoy Park for $315 million.