Tenants living in ten apartment buildings that are part of a distressed portfolio of buildings now in foreclosure are taking the lending bank to court, suing it to make needed repairs since the landlord is now unable to so.
The ground breaking legal claim was filed in Bronx Surpreme Court on Wednesday, April 21, on behalf of tenants in the Bronx buildings, arguing that once a forclosure action is initiated, and a court-appointed receiver is in place, the mortgage holder can be held liable for maintaining building conditions.
The annoucment of the lawsuit by Legal Services for New York City drew a crowd of tenants and elected officals at one of the properties at 3018 Heath Avenue on April 21 for a press conference. City Council Speaker Christine Quinn, Borough President Ruben Diaz Jr., Councilman Fernando Cabrera, members of the Northwest Bronx Community and Clergy Coalition, and tenants deplored conditions that included exposed wiring, pealing lead paint, broken locks on entrance doors, useless intercoms, rat and roach infestations, busted boilers, and electrical fires, which they claimed was commonplace throughout the properties.
“As properties like these move into forclosure, tenants are left in a state of limbo, not knowing who is responsible for critical repairs,” Quinn said. “Through this lawsuit, we’re saying that lenders must be held accountable for the properties they help finance. No family should have to live in deplorable conditions because of the unsustainable investments someone else made.”
The case involves over 500 familes in buildings that have been in a steady state of decline since its owner, a private equity firm known as Millbank Real Estate, defaulted on its $35 million mortgage. In March 2009, the mortgage holder, a $3 billion commercial mortgage-backed security trust controlled by Wells Fargo and serviced by LNR partners, initated forclosure proceedings.
The forclosure judge appointed a receiver who is charged with collecting rents and managing the properties. Due to the high number of vacancies in the buildings, along with the already severly distressed conditions in many of the units, the income from the rent collection is not adaquate to properly maintain the portfolio.
“These tenants deserve better,” said Teresa Anderson, NWBCCC president. “They pay their rent, work hard, and are suffering because of the irresponsible lending practices of Wells Fargo, and irresponsible management by the previous landlord. Wells Fargo and other irresponsible banks and landlords will soon learn that when you mess with one tenant in the Bronx, you mess with us all.”
Borough President Diaz said that the tenants currently in the buildings deserve the best. He believes that the bank should make needed repairs and peform maintaince even if the real estate boom never fully materialized.