Two New York City co-op corporations overcharged renters for decades by operating apartment buildings as for-profit rental buildings instead of as co-ops, the New York Attorney General said recently.
According to New York Attorney General Letitia James, the two buildings in question were converted from residential rental buildings to co-ops in the late 1980s, but shortly thereafter, the co-ops stopped selling shares as they are required to do to operate as a co-op.
Instead, Labe Twerski, who is the president of the co-op corporations in question, began rebuying all of the outstanding co-op shares and then rented out the apartments at market rate, thereby denying residents the homeownership opportunities that come with a co-op and overcharging them for their apartments.
And according to the New York AG, this overcharging continued from the late 1980s until recently.
In a co-op, residents typically buy shares in the co-op corporation that owns the building in exchange for the right to live in one of the units. Buildings that operate as co-ops are usually exempt from rent-stabilization laws, given that the residents are buying into the building itself.
But in Twerski’s case, the two buildings were operated as traditional rental buildings, which allowed Twerski to deny residents their share of the building and enabled the buildings to skirt rent rules.
Under the terms of a settlement with the state, all tenants in the buildings in question will be entitled to rent-stabilized leases at affordable rents and all apartments in each building are now subject to rent stabilization rules.
The buildings in question are 447-448 Central Park West on the Upper West Side, which was 31 units, and 4395 Broadway in Washington Heights, which has 59 units.
“My office is dedicated to preserving and promoting access to affordable, rent-stabilized housing for the people of New York,” James said. “Landlords should be on notice that they cannot circumvent our state’s rent stabilization laws through the use of sham co-ops. We will always crack down on landlord greed and protect the rights of tenants.”