Two Trees: Lawsuit claims developer broke rent rules

Two Trees Real Estate faces a new class-action lawsuit accusing the firm of illegally raising rents at a Fort Greene building. The complaint, filed on Friday, targets 300 Ashland Place. It claims the developer violated state rent stabilization rules while receiving a special property tax break.

The legal team at Newman Ferrara filed the suit in coordination with the Housing Rights Initiative. This group has previously sued major landlords, including A&E Real Estate and Blackstone. The lawsuit argues that Two Trees used a deceptive tactic to maximize profits on stabilized apartments.

Under New York’s 421a tax program, landlords must keep units rent-stabilized. They must follow strict limits on annual rent increases set by the city’s Rent Guidelines Board. The board has not approved increases higher than 3.25% since 2021. The suit claims Two Trees ignored these limits by basing renewals on the apartment’s full legal rent instead of the lower preferential rent tenants actually paid.

The complaint cites a 20th-floor unit in the building. Its legal rent is $3,990 per month. Two Trees advertised the unit with two months free, dropping the initial cost to $3,325. When the tenant renewed, the company applied an increase to the $3,990 figure. This method resulted in a potential 20% rent hike, according to the filing.

Aaron Carr, executive director of Housing Rights Initiative, said this practice cheats the public twice. He noted that landlords collect taxpayer subsidies while overcharging tenants. The lawsuit claims this tactic generated more than $30 million in extra revenue for Two Trees over the past five years.

Two Trees owns a portfolio of more than 4,000 apartments worth $4 billion. The company recently received a rare extension of the 421a tax break for its new Williamsburg project, River Ring. Lawmakers approved this extension in May despite the developers not finishing construction by the 2031 deadline. The 379-unit Ashland Place complex opened in 2016, with two-bedroom apartments leasing for up to $7,455.

David Lombino, a managing director at Two Trees, said the company is reviewing the lawsuit. He declined to comment further immediately. Councilmember Crystal Hudson, who represents the Fort Greene area, said she mailed notices to tenants about the investigation. She criticized the state’s housing agency for not enforcing the rules itself, leaving the task to private lawyers and nonprofits.