Agencies Try to Block Owner’s Eviction-through-Bankruptcy Attempt

An East Village owner is asking a bankruptcy court to terminate tenants’ leases on the grounds that a proposed $8.2 million sale of the building can’t go through while the rent-stabilized leases are in place. The building has 16 rent-stabilized units and eight tenants at the building have been withholding rent for months over a range of problems, including lack of heat, failure to make necessary repairs, and rodents. The building currently has 68 outstanding violations, including citations for lead-paint hazards, rat droppings, and defective floors.

In response to the request, Attorney General James, NYSHCR Commissioner RuthAnne Visnauskas, and HPD Commissioner Maria Torres-Springer recently announced that the city and state are seeking to join the case in the United States Bankruptcy Court for the Southern District of New York on behalf of the tenants. Both the city and state are opposing the building owner’s application to reject tenants’ leases, an application that’s a thinly veiled attempt to flout rent regulation laws and displace tenants.

The city and state’s joint motion argues that the owner is seeking to avoid state protections given to rent-stabilized tenants, who have a right to withhold rent if an apartment is uninhabitable. The Attorney General and her partners are concerned that the use of the bankruptcy court to bypass state protections for tenants would set a bad precedent and would encourage other owners to file bankruptcy solely to avoid state law and its protections.