The Real Deal New York

Kushner pays tenants $100K to cover for rent overcharges

Move comes amid class-action lawsuit alleging illegal deregulation at 89 Hicks Street
December 05, 2018 06:00PM

Charlie Kushner (Credit: Sasha Maslov) and 89 Hicks

Kushner Companies agreed to pay five tenants at its Brooklyn property 89 Hicks Street a combined $100,000 to compensate them for alleged rent overcharges and for illegally deregulating their units.

The company is also returning the apartments to rent-regulated status, Crain’s reported. The move comes in response to a class-action lawsuit filed in April 2017 by tenants with the help of the nonprofit Housing Rights Initiative.

“Once the issue was brought to my client’s attention, it immediately and voluntarily acted in good faith to address the issue,” Rosenberg and Estis attorney Deborah Riegel, who represents Kushner in the case, told Crain’s. “Not only did my client make refunds to the existing tenants, and in some cases former tenants, but it also registered the units as rent stabilized. Rather than wait for an adjudication, as some owners have chosen to do, my client proceeded expeditiously to remedy the issues raised.”

Newman Ferrara’s Lucas Ferrara, who is representing the tenants, countered that Kushner deliberately deregulated the units. “Any landlord worth their salt knows whether the units in a building they’re buying are or should be regulated or not,” he said. “Kushner was aware of the risks and took a gamble that no one would notice what they were doing.”

Ferrara told Crain’s that the payouts won’t stop the lawsuit. Kushner bought the former Brooklyn Law School dorm for $14.3 million in 2014.

Ferrara also represents tenants at 18 Sidney Place, which, like 89 Hicks Street, was a rent-stabilized building before Brooklyn Law School used it for dorms. The academic use of the property allowed the school temporary release from rent stabilization, but if the buildings returned to the market as rentals, they were required to be brought back under stabilization laws, according to the lawsuit. Kushner did not return the units to stabilization when it bought the building in 2014, the suit claims. [Crain’s] — Konrad Putzier