The Dysfunctional City
As a result of the urban decay that plagued New York City in the 1970’s, eleven old tenement buildings in Manhattan’s Lower East Side were abandoned by their owners and became the property of the City through tax foreclosure proceedings.
The City’s Department of Housing Preservation and Development (HPD) did not have the resources to maintain the buildings, left them vacant, and boarded them up. The buildings soon became havens for drug dealers and vandals who stripped the buildings of their heating, electrical, and plumbing fixtures.
The Coming of the Homesteaders
Nevertheless, despite the uninhabitable condition of the buildings and the dangerous condition of the neighborhood, people who were either homeless or who could not afford to live anywhere else in Manhattan saw these buildings as a refuge they could move into, rehabilitate through their own “sweat equity,” and make a “home” from premises no one else at the time wanted or cared about.
In the late 1970’s and into the early 1980’s, both individuals and whole families of low or no income folks, with backgrounds primarily in the arts, theatre, music, or dance, moved into the buildings. After moving in as urban homesteaders, they formed ad hoc cooperative committees to control and rehabilitate the premises of each building. At the same time, they worked to eliminate the unsavory, seedy, and criminal elements present in the neighborhood.
Transforming Blight into Homes
Over the next twenty years, despite constant threats of eviction by the City who called them “squatters,” the residents worked to restore the buildings to habitable condition. They did so at great personal effort and sacrifice, without the benefit of normal funding sources or construction loans, by cooperatively contributing their time, physical labor, and organizing talents, while pooling their money and paying collectively, over the years, more than $2,000,000 for needed building materials and supplies. Depending upon the cohesiveness of the individual building cooperatives, some buildings were restored faster than others, but, ultimately, they all were made habitable and truly became the “homes” that the homesteaders had envisioned when they first moved in.
Overcoming City Opposition to Homesteader Ownership Rights
As a result of their back-breaking “sweat equity”, the homesteaders, early on, sought legal ownership of their buildings, but, despite the evident improvements they had made both to the buildings and to the neighborhood, the City, over a twenty-year period, continually rebuffed their claim to building ownership. However, in 2000, the City finally relented and became willing to consider a nominal “sale” of the buildings to low-income cooperative corporations (HDFC’s) and to their current homesteader residents as “shareholders.”
False Hopes Dashed
Nevertheless, despite this seeming progress toward ownership of the buildings which, against all odds, the homesteaders had restored to New York City’s housing stock, their dream of ownership ran aground. Due to bureaucratic fumbling and mismanagement by Urban Housing Assistance (U-HAB), Inc. (UHAB), the private, non-profit developer the City chose to work with to implement transfer of the buildings, ownership by the residents was delayed for nearly another decade. As part of its program, in 2002, the City transferred title to all the buildings to UHAB HDFC for eventual transfer to individual building HDFC’s.
UHAB sought to have the individual building cooperatives sign on to the City’s program and promised transfer of title within two years to each building’s HDFC corporation. As part of the process, UHAB sought to obtain construction loans that were intended to help the homesteaders complete rehabilitation of their buildings and receive Code approval from the City’s Department of Buildings. Despite its promises of assistance to advise the homesteaders on how to become eligible for HDFC ownership and for obtaining construction loans to finish the rehabilitation, the promised financing was delayed, the homesteaders were forced to pay excessive fees to a construction manager (CM) hired by UHAB when UHAB failed to pay the CM , and they bore the cost of finishing the Code required work without the loans for which they ultimately became responsible at rates they were given no opportunity to negotiate for themselves.
The Homesteaders Turn to ALBPC
As time dragged on, several of the buildings believed that UHAB was not fulfilling its promises and was doing a poor job in getting them ownership. These buildings then turned to ADAM LEITMAN BAILEY, P.C. (ALBPC), to represent their interests in negotiating with UHAB the terms of a Regulatory Agreement that would govern their ownership rights upon conversion of the buildings to HDFC corporations under the City’s program.
ALBPC rallied all of the buildings to act together and to agree on a set of common demands to present to UHAB regarding the terms for ultimate homesteader ownership of the buildings. Initially, UHAB led the homesteaders to believe that their demands would be met, but UHAB later repudiated the ownership terms the homesteaders had proposed. Negotiations continued over several months, together with solicitation of the homesteaders’ governmental representatives, constant meetings, petitions, rallies, and aggressive nagging, but without any positive result. ALBPC concluded, therefore, that, win or lose, the most viable course of action that would lead to homesteader ownership would be to exercise the “nuclear” option, a lawsuit.
The “Nuclear” Option
To spur the negotiations and get UHAB to move the process along to ownership, ALBPC advised the homesteaders that one or more of the buildings could by-pass the City’s program and claim ownership through adverse possession that was continuous, open, hostile, exclusive, and under claim of right for ten or more years from the time the homesteaders first took over the buildings. ALBPC advised the homesteaders to sue to void the record title to the buildings that UHAB had acquired from the City and also to sue UHAB for damages because of its failed promises of assistance, its mismanagement of the loan negotiations and mishandling of the loan proceeds, and for defaulting on the loan for which the homesteaders had become liable. Upon ALBPC’s advice, a lawsuit against UHAB and the City was commenced on behalf of one of the buildings.
The Happy Ending
ALBPC’s aggressive approach forced UHAB to increase its efforts to move all of the buildings to HDFC ownership on a faster track with a more favorable Regulatory Agreement, greater equity rights, and better loan terms. As a result of ALBPC’s strategy, the homesteaders’ thirty-year quest to obtain ownership was finally achieved. Today, the residents of all eleven buildings, which ALBPC represented at one time or another, have home ownership of apartments for which they paid no more than $250.00, in an area of the City where apartments now sell for millions of dollars. One of the beneficiaries of ALBPC’s representation was the mother of the author of the best-selling memoir The Glass Castle who lives in one of the eleven buildings that is now owned by its HDFC shareholder residents.
Adam Leitman Bailey and John M. Desiderio represented the homesteaders in this matter.
See pages 266-267 from The Glass Castle, attached hereto, which describe the finding of this building by the