Letitia James, the New York Attorney General, has filed a lawsuit against Peak Capital Advisors, alleging that the Brooklyn-based landlord illegally deregulated more than 150 rent-stabilized units across 30 properties in Queens and Brooklyn. The legal action, brought in conjunction with the Division of Housing and Community Renewal, claims that Peak used the state’s “substantial rehabilitation” program to remove apartments from rent regulation without meeting the necessary requirements for full-system replacements.
According to the lawsuit, Peak also attempted to obscure its actions by reassigning apartment numbers and allegedly had a consultant draft false affidavits regarding building conditions. The state agencies are seeking repayment of overcharged rents and unspecified damages. They are also requesting that an independent administrator audit Peak’s real estate holdings.
Peak Capital Advisors did not respond to requests for comment from The Real Deal.
The case comes as Balanced Housing Solutions, an organization affiliated with Peak, is challenging recent changes to state rules on substantial rehabilitations. Last week, Balanced Housing Solutions filed its own lawsuit against New York’s Division of Homes and Community Renewal. The group argues that new regulations concerning substantial rehabilitations should not be applied retroactively to projects completed before November 2023.
Governor Kathy Hochul approved changes to these rules but removed their retroactive application. Under current policy, only renovations initiated on or after January 1, 2024 require owners to submit applications within one year of completion in order to legally deregulate buildings.
Balanced Housing Solutions’ counsel Jim Walden criticized the attorney general’s actions: “the billy club of Governor Hochul’s naked attempt to wipe out private investments worth hundreds of millions.” He added that investors had improved housing stock that was previously “seriously degraded,” warning that if state officials succeed in their efforts “the buildings will go into foreclosure. No tenant is served by that outcome.”
