There’s no shortage of landlords in New York City who use scummy tactics—harassment, neglect, or worse—to intimidate tenants, and today, the New York Times has laid out the tale of one such notorious property owner. The subject is none other than Raphael Toledano, the 27-year-old developer who, until very recently, held a parcel of more than a dozen buildings in the East Village. (Why until recently? We’ll get to that.)
Toledano hasn’t been in the real estate game for too long, but he’s already emerged as a controversial figure, both for his dealings with tenants and with those in the real estate biz. The Real Deal has an in-depth profile that gets into why, but a short list: He’s been sued several times by tenants alleging harassment (one of whom told TRD that “This guy is second in line to [Steve] Croman”), and was recently under investigation by the state over those claims; he’s also fought accusations that several of his buildings have hazardous lead levels that far exceed federal standards.
The success of Toledano’s East Village portfolio—a deal he made with $124 million worth of financing from Madison Realty Capital—was contingent on getting rent-stabilized tenants to accept buyouts, allowing the landlord to make improvements and jack up the rents in those buildings.
The trouble is, those buyouts—in total, about $7 million worth, according to Toledano—largely did not materialize. All told, 15 of his tenants did not receive the promised buyouts, even though some had already moved out of their apartments. As the Times notes:
To shield himself from personal liability, Mr. Toledano had purchased each of his properties using limited liability companies. Last summer, the L.L.C.s that owned the buildings in the Madison Realty portfolio went into default and Madison stopped funding the buyouts. “He wasn’t able to renovate the properties as quickly as he expected,” said Brian Shatz, a managing principal of Madison Realty. He “wasn’t able to implement the business plan.”
Madison Realty eventually moved to foreclose on the buildings, which led Toledano, through his company Brookhill Properties, to file for bankruptcy; Madison later assumed control of those East Village properties, at least for the day-to-day management.
Some tenants who are waiting for their buyouts, meanwhile, are now living in their apartments for free, though it’s little comfort considering the uncertainty of the situation. “I have a free apartment in New York; I’m living in one of these folklore tales,” Jen Bekman, one of the tenants, told the Times. “But I’ve felt like I’m moving in 30 days for more than a year now.”
Is there a lesson to be learned here for tenants? If you’re facing similar problems, organize: SaMi Chester, a tenant advocate with the Cooper Square Committee, told the Times that tenants in this instance were able to see some resolution to their problems because of “good legal representation and good organizing.” Tenants in Toledano-owned buildings also started a blog, the Toledano Coalition, to band together when problems arose.
For his part, the landlord at the center of this is apparently also ready to move on—though he’s setting his sights on other neighborhoods. “I kind of want to get out of the East Village walk-up business, to be honest,” Toledano told the Times. “There is so much scrutiny of the buyouts.” (Which, you know, is to be expected when you renege on your promises to people.)