Home / Business and Economy / NYC Co-op Owners Face Eviction Amidst Ground Lease Crisis
NYC Co-op Owners Face Eviction Amidst Ground Lease Crisis
7 Jan
Summary
- Ground lease reset threatens 300 co-op shareholders with unaffordable costs.
- Landowners, tied to real estate magnates, bought land for $261 million.
- Monthly costs for some residents could jump from $5,000 to $13,000.
New York City co-op owners at Carnegie House are confronting a severe financial threat as their ground lease is slated for a significant reset in 2025. Richard Hirsch, president of the Carnegie House board, described the situation as a "devastating blow," with many of the building's approximately 300 co-op shareholders potentially unable to afford their homes. The current landlord, a limited liability company connected to real estate magnates Rubin Schron and David Werner, acquired the land beneath the building in 2014 for $261 million.
The ground lease arrangement, originally intended to make homeownership accessible, has become increasingly problematic. As land values on Manhattan's Billionaires' Row have surged due to luxury development, landowners are pushing rents higher. For residents like Hirsch, monthly costs could leap from around $5,000 to approximately $13,000. James Yolles, a spokesman for the landlord, stated that the owners "appreciate the court's thoughtful decision" and are prepared to work with permanent residents needing rental assistance, while noting many apartments are investment properties.
This legal battle has impacted the building's market value, with major banks hesitant to issue mortgages due to uncertain future costs. If Carnegie House defaults on its ground lease, the building could revert to rent-stabilized apartments, erasing owners' equity. Longtime resident Lou Grumet anticipates his own monthly rent will jump from about $3,700 to $9,000, expressing concern about the viability of an appeal and the affordability for many shareholders.
