Tenant Wins Round One!
Newman Ferrara recently secured an appellate win for a tenant’s daughter who faced the threatened loss of her apartment (so that the unit could be sold by a developer for a massive profit).
A housing complex on Roosevelt Island was recently removed from the Mitchell-Lama Program so that it could be converted to a “condop” building. By way of background, the Mitchell-Lama Program provided subsidized affordable cooperative housing to moderate- and middle-income families. Family members could qualify to succeed to the tenancy if they resided with the named tenant for a period of two years.
The developer of the housing complex unveiled a so-called “Affordability Plan,” by which the complex was to be removed from the Mitchell-Lama Program and the residential portion of the complex operated as a traditional cooperative housing corporation.
Under the terms of the withdrawal, existing tenants, and/or occupants who would qualify for succession under the Mitchell-Lama regulations, were entitled to purchase the cooperative shares allocated to their unit at an “Insider’s Price” which, of course, was substantially lower than market value.
Newman Ferrara was retained by a resident who lived in the complex with her mother for over twenty years prior to the Affordability Plan’s unveiling. Her mother (the tenant of record) passed away between the Affordability Plan’s announcement and the conversion’s effective date. The developer sought to use that timing (of the tenant’s passing) to deny the surviving daughter’s request to purchase the unit at the Insider’s Price and threatened to evict her (so it could be sold to a third party at fair-market value (a price some three times the Insider’s Price)).
Our firm commenced an action seeking a declaration that the daughter was entitled to purchase the apartment at the Insider’s Price, and for an injunction, among other things, prohibiting the developer from seeking to evict her or from selling her unit to a third party while the action was pending. While the Supreme Court refused to intervene, the Appellate Division, First Department (unanimously) concurred with the occupant and granted her the requested relief.
In reversing the Supreme Court’s denial, the AD1 found that the resident had demonstrated she was likely to succeed on her claim that she can purchase the unit at the Insider’s Price, that she would be irreparably harmed if the unit were sold to a third party while her claim was pending, and that a balance of the equities fell in her favor. The appellate court rejected the developer’s argument that the named tenant would have had to have vacated prior to the Affordability Plan’s issuance for the daughter to have a purchase right.
While the fight is not yet over, this victory guards against the possibility that the ultimate relief sought (i.e., an opportunity to purchase her home of over two decades) isn’t rendered moot by the sale of the unit to someone else. "The AD1’s rejection of the developer’s arguments places this occupant in an extremely strong position to ultimately prevail and keep her home – which would be an unequivocal victory against a big developer," noted partner Jarred I. Kassenoff, who along with Noe Solorzano, represented the daughter and filed the appeal on her behalf.
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Link to the decision: Bass v. WV Preservation Partners