Everybody Out?

Everybody Out?



Tenants of a rent-stabilized building at 47-49 East Third Street in the East Village; the building's tenants are fighting a decision by their landlords, Alistair and Catherine Economakis, not to renew their leases.



By DENNIS HEVESI
Published: June 26, 2005

NEARLY two years ago, Alistair and Catherine Economakis became the owners of a six-story tenement building at 47-49 East Third Street, between First and Second Avenues, in the East Village. The building has 15 apartments, with tenants paying rents of $500 to $950 a month.

Within weeks, the Economakises began notifying tenants that their leases would not be renewed, even though the apartments were rent stabilized, because the couple planned to live in the building with their infant son and take over all 11,600 square feet.

The notices said the new owners planned to renovate the building, which has a total of 60 rooms, to create five bedrooms, six bathrooms, a den, a playroom, a gym, a library, a study area, a dining room, a kitchen and a living room.

Under the law, landlords have the right to terminate the leases of rent-stabilized tenants if they plan to use the space for themselves. They must notify the tenants at least four months before their leases expire.

"It needs to be remembered that an owner owns his or her building and has a constitutional right to reside in that property," said Sherwin Belkin, a landlord lawyer in Manhattan. "A tenant, on the other hand, has a privilege to occupy. And rights are superior to privilege."

The tenants at 47-49 East Third Street are fighting hard against being evicted. "We were absolutely stunned when we got the first nonrenewal notice," said Ursula Kinzel, the president of the tenants association. "It was totally unbelievable that someone would get a 15-unit, rent-stabilized building in order to turn it into a private home. The natural thing would be to just go out and buy a house."

In November, four tenants in the East Third Street building who have not yet received nonrenewal notices filed suit in State Supreme Court in Manhattan, asserting that the Economakis plan violates the rent-stabilization law on the ground that the law never contemplated an owner taking over an entire building for personal use.

"The idea," said Stephen Dobkin, the lawyer for the tenants association, "is to prevent the landlord from starting proceedings against these tenants while the judge decides whether it is legal for a landlord to try to get an entire tenement building for his own use." Acting State Supreme Court Justice Paul G. Feinman has not yet ruled in the case brought by the four tenants.

Tenant lawyers say they have seen increasing numbers of such cases as neighborhoods gentrify. But there is no way to determine if there has been an upsurge because no government agency monitors how many are filed or whether the owner or a family member actually occupies the apartment or apartments. State Supreme Court Justice Fern A. Fisher, the administrative judge for the city's Civil Court, which includes Housing Court, said the system's computers are not programmed to specify owner-occupancy cases.

The rent-stabilization law does state that an owner can claim one or more apartments for his or her personal use. "I don't believe the law is vague," said Todd Rose, the lawyer for the Economakises. "It says that the standard for recovering all the apartments in a building is the same standard employed by the courts if a landlord is going to seek only one apartment - the landlord must prove that he has a good faith intention to live in the apartments."

But Andrew Scherer, the author of "Residential Landlord-Tenant Law in New York" (West Group, 2005), said: "The size of the space that somebody claims they intend to live in must pass what lawyers call the 'giggle test' - the notion that the claim is believable and will not cause a judge to start to giggle. The idea that someone would take 15 units with 60 rooms as a primary residence is absurd."

By law, said Mr. Scherer, who is also executive director of Legal Services for New York City, which represents poor people in civil cases, a building owner can recover an apartment or apartments for use by himself or herself, a spouse, a child or stepchild, a parent or stepparent, a parent-in-law, a sibling, a sibling-in-law, a grandparent or a grandchild. And the apartment must be occupied by the family member for at least three years.

Although there are no hard numbers, Mr. Scherer believes there has been an increase in owner-occupancy litigation in recent years, including several high-profile cases like the one on East Third Street in which landlords have attempted to empty entire buildings.

"Anecdotally, at least, it appears that owner-occupancy proceedings are becoming increasingly common," he said.

Samuel J. Himmelstein, a tenant lawyer in Manhattan, said he has handled 75 to 100 owner-occupancy cases in the last eight years. Previously, Mr. Himmelstein said, most of his cases involved claims by landlords that tenants were not using the apartment as their primary residences. But two to three years ago, he said, owner-occupancy proceedings became the bulk of his caseload.

The litigation over 47-49 East Third Street, which has five residential floors over one commercial, may help answer the question of how many apartments an owner can recover.
During pretrial depositions, Mr. Economakis testified that the only permanent residents would be himself, his wife and their infant son, but that they hoped to have other children.
In an interview, Mr. Economakis, a real estate management consultant, said, "Absolutely, I intend to make 47 East Third Street my home for my family." He said he had offered to post a bond to assure that he would occupy the building, "and, to date, we have never had one response from the tenants to our proposals on how we can guarantee our good faith."

The Economakises, who had been partners with 12 other people in a corporation that owned the building, would not disclose how much they had paid for the property in August 2003, after the corporation was reorganized under federal bankruptcy laws. By law only an individual owner, not a business entity, can recover an apartment or apartments for personal use.

They decided to live in the building, Mr. Economakis said, after looking for a new home and finding nothing that appealed to them. "When my wife became pregnant, we began looking for a home," he said. "

It is at that point it dawned on me that we already own a building. Once we decided to make this building our home, quite frankly there was nothing else that compared."

Mr. Economakis said the tenants have refused to meet with him. "I believe my wife and I have approached this whole process with sensitivity and respect for the tenants affected," he said.

Mr. Dobkin said, however, that he and several members of the tenants association did meet with the Economakises. "We've listened to their settlement proposals," he said, "which always involve all the tenants giving up their apartments, which is something that the tenants will not do."

The fight has taken its toll on the tenants, many of whom have lived in the building for decades, and who were planning a rally in front of the building on June 25 to call attention to such battles. "It's pretty much been a nightmare, the insecurity," Ms. Kinzel said. "It's really turning our lives upside down."

"I wake up around 4 in the morning and I can't sleep," she said. "My thoughts are just turning around. How are we going to sustain the legal bills?" So far, the 11 tenants represented by Mr. Dobkin have paid equal shares of the approximately $85,000 in legal fees.
"Should we lose, where are we going to go?" Ms. Kinzel asked. "We'll probably have to leave Manhattan."

There is no precise way to determine whether landlords or tenants tend to prevail in owner-occupancy litigation. But of the 75 to 100 cases that Mr. Himmelstein has handled in the last eight years, he said, about one-fourth resulted in the landlord losing on procedural grounds. Almost all of the others, he said, were settled, with the tenants moving out after receiving payments of at least $10,000 (and, in six cases, more than $200,000). In a Brooklyn case not handled by Mr. Himmelstein, five of six tenants facing eviction received rent waivers or settlements of up to $6,500.

There were, however, no settlements in a convoluted case, won by three Manhattan tenants last year, in which the legal standard that the owner prove his intention to occupy the apartments was sorely tested.

In that case, Mr. Himmelstein originally represented four tenants at 450 West 57th Street, where the landlord, Abe Haruvi, sought to recover all of their apartments so that he and his wife could create a 6,000-square-foot quadriplex. (For technical reasons, the Haruvis soon dropped one of the four cases.)

During the trial, Mr. Himmelstein demonstrated that the Haruvis had a long history of owner-occupancy petitions. "Other than the four at 450 West 57th Street," he said, "there had been six prior owner-use cases commenced by the Haruvis in three other buildings."

In three of those earlier cases, the Haruvis simultaneously sought, in 1996, three apartments in different buildings for the same family member, Mr. Himmelstein said. In one of those cases, he said, "they actually recovered possession, but never moved into the building and subsequently re-rented the apartment at a destabilized rent of at least $4,000."

Since then, the Haruvis have brought two other owner-use cases, he said, "and in only one case did a family member, a daughter, actually take occupancy."

In her April 2004 ruling denying the Haruvi eviction requests at 540 West 57th Street, Judge Maria Milin of Housing Court wrote that the Haruvis had "engaged in a pattern of commencing meritless owner-occupancy proceedings."

In a written statement read by his lawyer, Bruce H. Lederman, Mr. Haruvi said, in part: "We strongly disagree with Judge Milan's decision. We believe she drew the wrong conclusion from completely lawful and proper actions on our part."

Mr. Haruvi pointed out that his brother, Arthur, had offered to post a $1 million bond to guarantee that the family would occupy the three recently sought apartments, at 450 West 57th Street. The prior owner-occupancy cases, Mr. Haruvi wrote, "were dismissed for very technical reasons, or prior cases were settled or abandoned because of changed circumstances in the years it takes to go to trial."

"The fact that we have kept trying unsuccessfully to enforce our rights to live in homes in property we own has been unfairly held against us," he wrote.

Notable owner-occupancy cases are not restricted to Manhattan. In a four-story, 20-unit building in Borough Park, Brooklyn, six tenants received nonrenewal notices from the landlord, Harry Stern, in late 2003 and early 2004, so that Mr. Stern could give apartments to his two sons, two daughters, his wife's sister and her brother, even though four apartments were already vacant.

Since then, said Irene Ginsburg, the Legal Services lawyer who represented one of the six tenants at the building, at 973 47th Street, the case against her client was dropped. But the other five, Ms. Ginsburg said, accepted settlements giving them varying combinations of a delayed move-out date, a rent waiver until they had to move out or a payment of $5,000 to $6,500.

Two other apartments in the building became vacant after Mr. Stern sued the tenants on grounds other than owner-occupancy. "So, that's a total of 11 apartments vacated in a 20-apartment building," Ms. Ginsburg said.

"To our knowledge," she continued, "of the five apartments that the landlord obtained under owner-use, two have gone to new tenants who are not family members; one has gone to the landlord's daughter, who already lived in the building but expanded into the next apartment; a fourth apartment is still being renovated; and the fifth apartment, the tenant hasn't left yet."

Pointing out that the landlord also obtained six other apartments on grounds other than owner's use, Ms. Ginsburg said she wondered, "If his family members needed to move into the building, why didn't he give those other apartments to his family?"

Mr. Stern's lawyer, Scott Gross, said: "Each and every owner's-use case brought by my client was settled amicably without the need for a formal trial. In each situation, my client has complied with his obligations under the rent-stabilization laws, and continued to comply with these laws."

Asked how many of Mr. Stern's family members have moved into the building, Mr. Gross said he had to check with his client, but then did not respond to four telephone messages.