Sham UES Co-Op Conned Tenants Out Of Rent Stabilization

UPPER EAST SIDE, NY — The New York State Attorney General has busted an Upper East Side co-op for operating as a traditional rental building and depriving tenants of the protection of the state's rent stabilization laws.

The state's top prosecutors reached a settlement with 417 E. 60 Owners Corp that will require the landlord to abandon its co-op plan for the property and pay $190,000, the attorney general's office announced. The six-figure settlement will be paid to the city Department of Finance for use by the city Department of Housing Preservation and Development to fund housing for low-income New Yorkers.

Up until 1984 the six-story residential building at 417 E. 60th Street, located between First and York avenues, operated as a rent-stabilized apartment building, the attorney general's office said. In 1984, the building was converted to a co-op and ownership was transferred to an entity called the 417 E 60 Owners Corp.

In 2015 one person acquired the entirety of the building's shares and began operating the building as a for-profit rental building, state prosecutors said. The apartments were sublet by tenants who were not protected by the state's rent stabilization laws and the building shareholder did not live at the property, violating the state's New York Executive and Business Corporation Law, prosecutors said.

"Sham cooperatives acting as rental properties diminish opportunities for homeownership and fail to provide rent stabilized protections for New York tenants," Attorney General Barbara Underwood said in a statement. "At a time when affordable housing is so scarce, my office will continue working to preserve critical protections for tenants and ensure more housing is made available to New Yorkers."

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