A $68.8 million settlement has been reached between the tenants of Stuyvesant Town-Peter Cooper Village, MetLife, and CW Capital Asset Management after alleged rent overpayment. According to plaintiffs, the companies forced at least 25 percent of residents to pay market rents while the owners received $25 million in tax breaks.
The settlement was approved by a New York State Appellate judge, according to a statement made by the tenants' attorneys. The settlement is slated for final approval at a hearing April 9. CWCapital is a servicer for the $3 billion primary loan on the property. The firm has controlled the complex since the mortgage defaulted in 2010. Since taking over property operations, the company was working towards settlement in the interests of both residents and bondholders.
The settlement is paving the way for the eventual sale of the sweeping apartment complex, which has been at the center of the debate around rent-stabilized property. Landlords are uncertain about how high legal rents can be for the stabilized property, which makes the value of the commercial property difficult to ascertain. The approval of the settlement will give more certainty to rent values and determine the potential cash flow of the property, according to a lawyer for the property ownership company.
Negotiation and settlement in such cases can reduce court costs and help both parties come to a resolution. Whether you are a landlord, tenant, or investment company, it is critical to work with an experienced advocate who can effectively protect your interests. This case reached a settlement after the case was brought to appellate court.
Source: Bloomberg, "Stuyvesant Tenants Reach $68.8 Million Settlement," Don Jeffrey and Oshrat Carmiel, Nov. 29, 2012