Zara Realty hit with suit from AG alleging tenant harassment, rent-stabilization violations

UPDATED, 2:54 p.m., Mar. 1: Attorney General Letitia James and Gov. Andrew Cuomo are taking action against multifamily landlord Zara Realty for allegedly harassing tenants with illegal broker fees, rent increases and late fees.

James’ office and the state’s Division of Housing and Community Renewal filed suit against Zara Realty on Friday for repeatedly violating New York’s rent-stabilization laws. The suit claims that the company “prey[s] upon their tenants, many of whom have limited proficiency in reading and writing English, by relentlessly forcing them to acquiesce to oppressive and illegal fees, pay rents in excess of their legal regulated rents, and consent to illegal lease terms.”

The lawsuit accuses Zara of charging its tenants excessive security deposits and fraudulent vacancy fees. It also claims the company forces existing tenants to sign new leases that waive several of their important rights and illegally charges them money for keys.

Zara owns and manages at least 2,500 rent-stabilized apartments in 38 buildings near Jamaica. HCR’s Tenant Protection Unit spent two years investigating the firm leading up to the lawsuit.

The lawsuit requests an injunction against Zara Realty on behalf of HCR, along with restitution and other equitable relief to address their alleged violations of the rent-stabilization laws.

James announced the lawsuit against Zara Realty at a press conference on Friday morning near one of their buildings at the corner of 150th Street and 88th Avenue.

“We are here today to tell Zara Realty that their days of harassing tenants, evading rent stabilization laws and grossly overcharging residents for fake apartment services have come to an end,” she said.

Zara’s attorneys Niles Welikson and Randi Gilbert said in a statement that Zara has been cooperating with HCR for more than a year and planned to vigorously contest the allegations in the lawsuit, “many of them factually inaccurate.”

“The terms of the leases Zara offers its tenants are in compliance with the law,” the statement reads, “as are any late fees, or costs for extra keys, which provide the high level of security Zara’s tenants expect and deserve.”

James handily won the race to become the state’s new attorney general in November, and the lawsuit against Zara Realty marks one of the first major actions she has taken against the real estate industry since assuming office. She had previously clashed with the sector in her prior position as public advocate, where she published an annual “Worst Landlords List.”

However, an analysis of campaign contributions during the race by The Real Deal found that she was still attracting donations from the real estate industry, receiving just over $280,000 from about 80 real estate donors as of the end of August. This included $15,000 from Red Apple Group CEO John Catsimatidis and $10,000 from Omni New York managing director Eugene Schneur.

This story has been updated to include a response from Zara Realty.