Major Harlem Landlord Sued For Illegaly Deregulating Units

HARLEM, NY — A major New York City landlord is being sued for illegally deregulating rent-stabilized units in a Harlem building while collecting a tax abatement that rewards landowners for keeping apartments regulated, a housing watchdog announced.

A lawsuit filed in state supreme court by two tenants of 260 Convent Ave. — a 62-unit building located on the corner of West 140th Street — recently achieved class certification, the Housing Rights Initiative announced. The certification means that the courts have recognized the defendants' claims and that tenants can move forward in their lawsuit against their landlord, the Scharfman Organization.

The tenants claimed that upon moving into 260 Convent Ave. they were provided market-rate leases and a rider that claimed their apartments had been taken out of rent stabilization, according to legal documents. In 2016, the tenants received signed lease extensions that indicated their units were stabilized but that rents had been hiked "in excess of Rent Guidelines Board increases," according to the documents.

The lawsuit claims that the Scharfman Organization benefited from the J-51 tax abatement program at 260 Convent Ave. The J-51 program allows landlords to conduct repairs and improvements in a building and receive a tax break on the condition that 100 percent of the building's units are rent stabilized.

Only 19 of the 62 apartments in 260 Convent Ave. were listed as rent stabilized while the J-51 benefit was active, the lawsuit claims. The attempt to hike rents in 2016 above the legal rent may have been an attempt to bring the building's units back into stabilization — to receive J-51 benefits — while still gaming the system.

A Housing Rights Initiative investigation into the Scharfman Organization revealed the landlords own more than 100 buildings in the city, many of which receive the J-51 benefit illegally, a spokesman for the watchdog group said.

"HRI's research shows that Scharfman is one of the biggest, if not the biggest, J-51 tax cheats in NYC. HRI's ongoing investigation into Scharfman has led to nine class action lawsuits against them. HRI has called it a travesty and an abomination that the State has yet to open an investigation into Scharfman Organization and the City has yet to suspend or revoke Scharfman's tax benefits," the group said in a statement.

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