Governor Hochul Announces $3.1 Million Settlement with Lefrak Organization for Unwarranted Water Surcharges

Governor Kathy Hochul and New York State Homes and Community Renewal Commissioner RuthAnne Visnauskas today announced a $3.1 million settlement with Lefrak Organization following a Tenant Protection Unit (TPU) investigation that uncovered improper water use surcharges at 59 rent-regulated buildings across New York City. The settlement terminates these unlawful charges, ensures full refunds with nine percent interest for nearly two thousand affected tenants, and requires ongoing independent monitoring to safeguard compliance. The settlement includes all of Lefrak Organizations' rent regulated portfolio and current tenants will receive a credit that refunds all money paid for water consumption from the beginning of their tenancy.

"We are committed to making the State more affordable and livable for all New Yorkers and will not allow illegal fees to drive up costs for millions of rent regulated tenants," Governor Hochul said. "Today's settlement will refund these prohibited charges back into the pockets of tenants and send a powerful message that our Tenant Protection Unit is working tirelessly to defend millions of New Yorkers by upholding our rent laws and preserving our rent regulated housing stock."

TPU's investigation began in 2024 when they engaged Lefrak who immediately agreed to cease charging tenants for water until a legal appeal was decided by the Office of Rent Administration (ORA). The settlement agreement was executed shortly after the ORA affirmed on appeal that Lefrak was improperly charging tenants for water. In its settlement, the Lefrak Organization agreed to relinquish their right to related appeals, agreed to discontinue all pending Article 78 proceedings before the State Supreme Court, and to promptly provide relief to all affected rent regulated tenants throughout its portfolio.

The terms of the settlement include:

• Cessation of charges: Lefrak has represented that all collection of water usage charges beyond monthly rent stopped as of Oct. 31, 2024, and will permanently cease billing or collecting such charges in the future.
• Tenant relief: Current tenants will receive rent credits covering every dollar they paid in water charges since moving into their apartments.
• Refunds with interest: Lefrak will pay a nine percent interest rate on all refunds owed.
• Independent oversight: Lefrak will retain, at its own expense, an independent auditor to monitor ongoing compliance with the settlement terms.

New York State Homes and Community Renewal Commissioner RuthAnne Visnauskas said, "This is a good day for tenants and for the LeFrak Organization, which chose to swiftly engage in resolving this regulatory dispute and ensure that relief extended well beyond the original complaining tenants. This is how government works best, delivering decisive successes for New Yorkers and safeguarding affordability. I commend the Tenant Protection Unit for recovering more than $3.1 million for nearly two thousand tenants, and their continued work protecting a million rent regulated households."

About the Tenant Protection Unit
TPU preserves renters' rights by detecting and curtailing patterns and practices of landlord fraud and harassment through proactive audits, investigations, and legal actions. The TPU also encourages compliance with the law by informing tenants and owners of their rights and responsibilities under rent regulation.

Last March, the TPU imposed a $400,000 settlement on Bottem Realty for fraudulent and late apartment registrations, rent overcharges, and tenant harassment. In February 2024, the TPU announced a $514,000 settlement against Steve Croman for overcharging tenants and violating the rent laws.

If a tenant believes they are being overcharged and/or harassed, they should contact the Tenant Protection Unit at: 212-872-0788 or via email: [email protected].

Contact the Governor's Press Office