The Peter Stuyvesant ruling that effectively denied rent increases to landlords if they also had received certain government tax breaks did more than wipe out a few billion in various pension funds’ investments in that particular complex. Because of the ruling’s possible retroactive application, it has frozen the entire market in rent-stabilized apartments in New York City.
But lawyers on both sides of the issue said on Friday that it could take years of litigation to determine if the owners of Stuyvesant Town and other landlords must repay tenants for years of rent overcharges, or simply adhere to the court’s decision from now on. There could also be lawsuits over whether the owners, a partnership of Tishman Speyer Properties and BlackRock Realty, owe triple damages (the ruling did not specify a remedy).
Further, there could be dozens of lawsuits brought by tenants of other buildings claiming that their landlords also improperly raised rents and deregulated apartments while getting tax breaks for major renovations.
“Unfortunately for the real estate industry, I’m going to make a lot of money before this gets resolved,” said Stephen B. Meister, a lawyer who filed an amicus brief on behalf of the Real Estate Board of New York. “It’s going to take a long time.”
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But, Mr. Meister said, “the overarching issue is retroactivity.”
“The tenants could win anything from hundreds of millions of dollars to zero,” he said. “They may not get a dime.”
Whatever the outcome, Mr. Posilkin said, the decision will immediately freeze the market for buying and selling residential buildings, because the potential liabilities are so unclear. Lenders may also be reluctant to provide landlords with loans for improvements, he said.
This obviously has no direct bearing on the Greenwich market, but if the New York apartment market freezes, a lot of lenders are going to be damaged even more than they already are.
