In a recent legal action initiated in Manhattan’s Supreme Court, a band of tenants residing in upper Manhattan alleged that their property owner engaged in a recurring tactic designed to inflate their rents beyond permissible levels. This alleged tactic involves creating falsified records of building improvements, a case that underpins the demand for robust execution of state housing laws. The plaintiffs seek to gain class-action representation for hundreds of past and existing occupants of rent-stabilized units across three buildings situated in Harlem and Hamilton Heights, where they argue that the contrived ploy was enacted.
The facilities in question, namely the one on Riverside Drive near W. 151st St, the second on W. 151st St itself, and the third tucked away in W. 135th Street, are in the possession of various LLCs. Edward Ostad, as stated by the lawsuit, is the managing member of these LLCs. The suit, which enlisted the services of Newman Ferrara law firm based in Manhattan, directs its charges against the LLCs rather than Ostad personally.
Under preexisting regulations set by the state, owners of buildings have the legal leeway to forego certain rent stabilization safeguards – regulations designed to limit rental increases annually – provided they execute considerable enhancements to either individual apartments or entire buildings. The seven plaintiffs, who are all residents of rent-stabilized units, claimed in the court documentation that entities under the control of Ostad have rationalized rental hikes in numerous apartments across the three sites by citing supposed building improvements.
Moreover, the lawsuit leverages findings from an evaluation into the rental chronicles of 175 units spread across the contested buildings. The study conducted by the Housing Rights Initiative advocacy group posits that many of the property enhancements claimed by the landlord LLCs as rationale for heightened rents did not actualize. In various cases, the property owner fully rescinded rent stabilization safeguards by asserting bogus refurbishments as per the allegations in the lawsuit.
In addition to this, the entities linked to Ostad are accused of unlawfully curtailing rent stabilization in a few units by neglecting to inform new tenants of the longstanding rules. The probe from the Housing Rights Initiative that underpins the lawsuit suggests that the named plaintiffs and others in the same boat are collectively entitled to $1 million in rent reimbursements and decreases, given the purportedly illegitimate deregulatory actions.
In response to these allegations, the Housing Rights Initiative, via official commentary, argued that such purported disregard for rent stabilization directives by the Ostad-related firms speaks to regulatory lapses that the institutions tasked with implementing these laws should address. The watchdog group criticizes the State Division of Housing and Community Renewal for its inability to identify and address these sorts of alleged transgressions, and Governor Hochul for not advancing initiatives to bolster such oversight.
Requests for comments from representatives of Governor Hochul’s office and the State Division of Housing and Community Renewal were unreturned at the time of reporting. This lawsuit emerges amidst an ongoing severe housing shortage faced by the city, as well as a rise in evictions against the backdrop of soaring rent charges.
Data from the public domain suggests that city marshals executed approximately 12,000 residential evictions in 2023. This figure is nearly thrice the count from the preceding year, during which pandemic-induced eviction protections were active. Concurrently, rental rates have experienced an upward trajectory as the number of available rental apartments reaches all-time lows.
A report from both StreetEasy and Zillow published in the spring discovered that last year, rental rates grew at a rate that was seven times faster than salary increments in the city. This figure represents the greatest gap across the top 50 metro regions throughout the nation.
In response to this escalating housing predicament, both Governor Hochul and Mayor Adams suggest that the primary remedy lies in constructing more residences on a wider scale. Yet Lucas Ferrara, a partner at Newman Ferrara and a representative of the plaintiffs in the recent lawsuit, emphasizes that effective enforcement of rent stabilization laws and other protections for tenants should also be integral to any comprehensive solution for the housing crisis.
Ferrara expressed, ‘This case underscores the principle that profit-driven motives should never compromise the execution of our state’s housing laws,’ an important reminder amidst the complexities and challenges of modern urban living. The lessons here are already steering conversations about future housing policies and reforms, ensuring the protection of residents’ rights.