Tenants of 89 Hicks Street in Brooklyn filed a class -action lawsuit against Kushner Companies claiming that the company leased the majority of the building’s rent stabilized apartments at market rate. Some leases charged $1000 or more than city housing laws allow, said Aaron Carr, executive director of the tenant’s rights group Housing Rights Initiative. The group analyzed tenant rental histories based off public records and estimated that Kushner Companies potentially owes more than $1 million dollars to the plaintiffs.
“This is the most blatant, willful and egregious scheme we have seen to date,” said Carr.
Jared Kushner stepped down as CEO of the company in January and is not named in the suit.
An examination of Kushner Companies tax filings for 89 Hicks Street showed that Kushner Companies only listed five out of the 48 units as rent stabilized even though all of the apartments qualified, according to the lawsuit.
New York City housing law caps rent increases landlords can charge in designated buildings. City council first passed rent stabilization laws in 1969, according to the lawsuit. However, a landlord can receive an exemption if the owners use the building for religious or educational purposes.
The religious organization Watchtower Society owned 89 Hicks as far back as the early 90’s, according to the lawsuit. Brooklyn Law School then took over in 2006 and turned the building into student dorms. Kushner Companies then bought the building from Brooklyn Law School in 2014 and lost its exemption from rent stabilization, according to the lawsuit.
The lawsuit alleges that Kushner Companies ignored rent regulations and proceeded to charge market rate. The real estate site Streeteasy showed two room apartments going for anywhere between $2,600 and $3,000.
Lucas Ferrara represents the plaintiffs and said that any company experienced in New York City real estate would know about rent stabilization laws. He believes that Kushner Properties simply chose to ignore them.
“It's our view that the ownerships goal was the maximization of rental income at all costs - at the expense of the city's regulated tenants,” he said. “In other words greed colored what this owner did and blinded its judgement, and for that we're calling them to task.”
When asked about the building’s rent stabilization status, a Kushner Companies spokesperson said, “We are reviewing the lawsuit.”
Carr said that weak oversight allows landlords to take advantage of their tenants.
“This is part of a rent fraud epidemic,” said Carr.
Half of all New York City tenants spend more than a third of their income on rent, said Carr. Rent stabilization gives low and middle income families a lifeline. He said that he’s tired of watching landlords skirt the law.
“Look its inexcusable for any New York landlord to believe that they can sidestep the requirements of law. But if this particular owner thought it was going to escape detection and fly under the radar, boy are they mistaken,” said Ferrara.