McMansion legal beef continues; Landlords win appeal

By Sarah Ferguson

Tenants fighting to stop a wealthy couple from turning their E. Third St. tenement into a private McMansion suffered a big legal setback this month when a state appeals court ruled that there is nothing in the law that limits the number of rent-regulated apartments a landlord can take over for his or her personal use.

In a 5-0 decision, the Appellate Division ruled that the new owners, Catherine and Alistair Economakis, do not need state approval first before seeking to evict all of the building’s rent-stabilized tenants.

Tenants at 47 E. Third had argued that such a move should require permission from the state’s Division of Housing and Community Renewal, which governs rent-regulated apartments.

Two New York Supreme Court judges had already ruled in the tenants’ favor.

But the Appellate judges reversed those decisions, arguing that the law clearly spells out the right of an owner to recover “one or more dwelling units” for personal use, without D.H.C.R. approval, “as long as good faith intent to use the premises as a primary residence is established.”

There is nothing in the letter of the law to prevent an owner interpreting “one or more” to mean “all” of the apartments, the Appellate judges maintained. They added that if tenants and their advocates aren’t happy with it, they should petition the State Legislature to change or clarify the law.

Tenants of 47 E. Third vowed to take their fight to the Court of Appeals in Albany. They fear the ruling could give a green light for landlords to pursue similar mass evictions across the city.

“If they are allowed to do this, then landlords can use the law to make McMansions everywhere and use that as a way to get rent-stabilized tenants out,” said Dave Pultz, who has lived in his small $625-a-month one-bedroom apartment for the last 29 years.

But Jeffrey Turkel, an attorney for the Economakis family, downplayed the impact of this decision, noting that the legal battle over 47 E. Third is far from over.

“This does not authorize any evictions,” Turkel told The Villager. “It just says that the owner can try to go into Housing Court and prove that he has a good-faith intention to live there.”

That means the Economakises must pursue separate eviction cases against each of the nine remaining leaseholders.

“Before this case is made, there’s going to be discovery on both sides, then a trial or trials, and then, no doubt, appeals,” Turkel noted, adding, “It will be months if not years before anyone is out, assuming the owner even wins.”

The Economakises insist they plan to transform the 100-year-old, five-story walkup into an 11,600-square-foot dream home for themselves, their two young children and live-in nanny.

Since they took over ownership of the building in 2003, the couple has succeeded in emptying six of the building’s 15 apartments. Over the past year and a half, workers have combined these vacant units into two separate living spaces: a duplex on the fourth and fifth floors and what tenants complain is an “illegal” triplex running from the first to third floors.

Buildings Department records show there is currently a stop-work order on the building because the triplex “does not conform to approved plans.”

Both Catherine and Alistair Economakis were out of town and did not return calls for comment for this article. But Turkel dismissed the stop-work order as just a temporary hitch caused by the tenants’ efforts to stop the renovations “any way they can.”

“They make lots of claims. The bottom line is the work is almost entirely finished and when it’s done, my clients are going to move in,” said Turkel, who predicts moving trucks could arrive “within weeks.”

“They are going to live in as much of the space as they can recover either through the judicial process or through settlement,” Turkel added.

If the Economakises do succeed in evicting or buying out all or most of the remaining residents, by law they only have to live in the building for three years before they are free to sell it or covert it into condos or fancy rentals.

Tenants say they’ll be holding a press conference with elected officials to denounce this and other “loopholes” in the Rent Stabilization Code’s owner-occupancy provision.

“I think it’s just shocking this decision says there’s no limit on the amount of space a landlord can claim,” said Barry Paddock, a production assistant who pays $950 a month for his one-bedroom apartment at 47 E. Third, where he’s lived since 1993. “Obviously, in our case, I think 15 units sounds like a lot. But if they prevail here, then landlords could start claiming even larger buildings for their own personal use.”