Foreclosure Fallout: The Brooklyn Real Estate Market Is Hot, But Tenants Still Suffer Housing Crash Aftershocks

545 46th Street.
545 46th Street.

These days, the housing crisis seems a distant memory in many areas of Brooklyn, as buyers arrive at overcrowded open houses in Park Slope and Cobble Hill, ready to sign a contract on the spot and sellers from Red Hook to Greenpoint vie to set new neighborhood records. But the crash and its aftereffects have not vanished from the borough, as the plight of tenants in a trio in Sunset Park buildings illustrates.

While billionaires grapple over ever-loftier trophies, tearing out onyx to install carrara or vice versa, the tenants of 545, 553 and 557 46th Street in Sunset Park are still mired in the foreclosure crisis, living in decaying buildings with 684 housing violations spread over 51 apartments, according to the department of Housing Preservation and Development.

The Sunset Park buildings, like a number of other overleveraged apartment buildings in the city, fell into disrepair when their owners realized that they would not be able to flip the buildings quickly, or at all. The tenants were trapped in a hell not of their own making. In 2011, Astoria Savings Bank foreclosed on the three buildings and sold the note to private equity company Seryl LLC.

But unlike any other distressed assets that can be bought and left to lie fallow until the time is ripe to sell, apartment buildings with tenants in place must be repaired and maintained—a responsibility that numerous politicians and tenants rights’ activists say Seryl has neglected. In January, the buildings entered the HPD’s Alternative Enforcement Program, which targets the 200 most physically distressed buildings in the city to hold the landlords accountable for their repair.

While the market turnaround might be helping homeowners in the tonier precincts of Brooklyn, its impact has yet to be felt in many of the multi-unit buildings that fell into disrepair during the recession. The all-too familiar tale of two Brooklyns? Yes, but when it comes to real estate in New York, no owners needs to be stuck with a property that they can’t afford to maintain. This isn’t Detroit, after all, or the Inland Empire, and recently, residents, tenants advocates, as well as city council speaker Christine Quinn, congresswoman Nydia M. Velázquez and council member Sara M. González rallied to ask Seryl LLC to sell the building to an owner willing or able to make repairs.

“To the landlords who refuse to respect their residents and our community I have only one message: just leave. Brooklyn has no room for delinquent property owners—we have some of the most sought after real estate in the country and it should be no problem for this company—and others like it that refuse to take care of their tenants’ needs—to find a willing and responsible buyer,” Marty Markowitz said in a release asking Seryl to fix the violations or sell.

The only question is whether Brooklyn’s new housing boom will ultimately prove a boon for such tenants or a curse—as any long-term resident of Williamsburg or the East Village can attest, having some of the most sought after real estate in the country does little to safeguard tenants’ rights. In a housing market like New York, low-income tenants suffer in both boom and bust. Foreclosure Fallout: The Brooklyn Real Estate Market Is Hot, But Tenants Still Suffer Housing Crash Aftershocks