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Rent-Stabilized, but Storm-Damaged: An NYC Landlord-Tenant Dispute

When Hurricane Sandy terrifyingly ripped through New York and surrounding states last fall, the amount of damage in the aftermath was seemingly insurmountable.

For some New York City residents, the nightmare hasn’t ended.

One loft property in TriBeCa has become the center of an ongoing landlord-tenant dispute.
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The city’s Buildings Department has red-stickered the structure at 31 Desbrosses Street, condemning it as unsafe to be inhabited in the wake of the storm. It’s one of eight structures in the city that still retain this designation.

The tenants have been forced to relocate, for the time-being, as flooding has damaged the structure’s already aging electrical wiring.

Now, the landlord says there is too much damage to repair. He says it will cost more to fix it than the structure is worth. However, the tenants, who have secured rent-stabilized housing within the building, say that isn’t so. They have filed a civil lawsuit to force him to make the necessary repairs so they can move back in.

Many of those tenants have been in the structure since the 1970s. Back then, loft residences had a very different meaning than they do today. In modern real estate, we think of “lofts” as an open, airy space that is probably priced at a premium. But 45 years ago, it meant you could get an empty commercial space, where individual units didn’t come equipped with amenities like bathrooms or kitchens. The “loft” residents at the building on Debrosses Street paid for those things to be put in.

(At one time, the building was home to the Pertussin cough medicine factory.) But by the late 1960s and early 1970s, the area surrounding that neighborhood was practically dead. Residents got in for cheap. But there was a reason. They have worked for decades to make it their own.

Today, rent costs residents there about $1,000 per floor. Across the street, rents are as high as $4,000 monthly for a 1-bedroom unit.

The tenants recognize that the storm wasn’t the only thing contributing to the disrepair of the structure. The building has some significant cracks. The vault beneath the sidewalk has also deteriorated.

Not all of it would have to be fixed to be once again deemed habitable. However, the question is whether the landlord has the right to decline to fix the structure, leaving the tenants out of the rent-stabilized deal they had enjoyed.

Part of the dispute centers on the building’s actual value. A private appraiser has valued the structure at $3 million. The city in 2009 put it closer to $325,000.

Rent stabilization is treasured by tenants, but property owners tend to despise it. The arrangement means heavy restrictions on how the building can be used and what kind of value landlords can receive for it. Opponents say it makes rents pricier for those who have to pay market rate.

Tenants say they recognize they have a great deal, but say they invested in the place during the early years. They deserve to now reap the benefits.

The Law Offices of Ira S. Newman provides employment litigation representation in New York City, Long Island, Great Neck and throughout the area. Call 516-487-7375 or send us an e-mail.

Additional Resources:
Where Rent Is Stabilized, Reopening After Storm Is No Certainty, July 29, 2013, By Elizabeth A. Harris, The New York Times
More Blog Entries:
New York Landlord-Tenant Legal Disputes Over Subleases Continue, Aug. 5, 2013, New York Landlord Tenant Lawyer Blog