Kushner Companies skirted rent-stabilization laws in Brooklyn Heights building: lawsuit

Back in 2014, Kushner Companies purchased a parcel of Brooklyn Heights buildings from the Brooklyn Law School, with an eye toward converting them into residences. Three became enormous single-family townhouses, while the other three were transformed into market-rate rentals.

Now, three years later, one of those properties, 89 Hicks Street, is at the center of a lawsuit filed on behalf of nine of the building’s tenants. The class-action suit alleges that Kushner Companies has waged a “deceptive, systematic and pervasive pattern of misconduct to skirt rent stabilization laws,” and may have bilked tenants out of as much as $1 million in rent overcharges.

The lawsuit comes after an investigation of more than 50 of the firm’s buildings by the non-profit Housing Rights Initiative, according to The New York Times. HRI alleges that when Kushner Companies bought the Hicks Street building—which was owned by the Jehovah’s Witnesses before Brooklyn Law School—it was legally obligated to make the apartments rent-stabilized, since the building dates to before 1974 and has more than six units. (It was temporarily exempt from the city’s rent-stabilization laws while being used for student housing.)

However, per HRI, the developer “registered a mere 10% of its units as rent stabilized, instead of registering 100% of its units, as required by law.” (That translates into five out of 48 units.)

HRI also notes that Kushner Companies did not register the de-stabilized apartments with the state’s Division of Housing & Community Renewal, as required by law; instead, “it simply wasn’t registering anything at all,” per a release from HRI.

“In the hundreds of buildings that we have investigated to date, we have never seen a scheme as blatant, willful, and egregious as this one,” said Aaron Carr, the executive director of HRI. “Kushner Companies’ blatant disregard for the law is an integral part of its business model. Their rapacious greed knows no bounds.”

When Kushner Companies purchased the Brooklyn Heights buildings, it was still being run by Jared Kushner; he has since stepped down as CEO of his family’s firm to take on a role as Senior White House Adviser. In recent months, the firm has put two of those buildings—at 18 Sidney Place and 144 Willow Street—up for sale for a combined $20 million.

A spokesperson for Kushner Companies says that they are reviewing the lawsuit.

• Tenants Sue Kushner Companies Claiming Rent Rule Violations [NYT]
• Kushner Companies looks to offload two Brooklyn Heights rental buildings [Curbed]