The lawsuit is a result of a two-year of investigation by the governor’s Tenant Protection Unit (TPU). Zara has approximately 2,500 rent-stabilized apartments in 38 buildings across the borough.
“Tenants are routinely forced to pay excessive fees for set services that should be free, and being coerced into signing leases that increase their rent and force them to give up many protections,” said James at a press conference in Jamaica last Friday announcing the legal action.
The complaint accuses Zara of collecting broker's fees through a second company called Jasmine Holmes, a violation of the Rent Stabilization Code.
The complaint also alleges the company charges both new tenants and current tenants when they move to a different unit in the building with security deposits that are three to four times more than their rent, another violation of the Rent Stabilization Code, which only allows for one month of rent to be collected as security.
“Some tenants have been charged more than $11,000 to simply move into their rent-stabilized apartments,” said James.
Other fees include charges to obtain keys and room reservation and AC-unit fees. Some tenants alleged that their rent checks are held and cashed late, forcing them to pay late fees.
Zara was also criticized for abusing the Major Capital Improvement (MCI) program, which allows landlords to pass on the cost of repairs to tenants through permanent rent increases.
There is push by some legislators in Albany to end the state-run program. However, attorneys Niles Welikson and Randi Gilbert said in a statement that Zara often purchases older buildings “which have a long history of neglect by prior owners,” and that the company is investing in its properties for the benefit of its tenants, and the community.
“Zara has offered the Tenant Protection Unit (TPU) and the Division of Housing and Community Renewal (DHCR) its full cooperation in resolving any issues deemed potentially unlawful involving rent regulation,” the statement continued. “Zara is proud to invest in its properties for the benefit of the tenants, and all MCIs are approved by DHCR itself.”
They also called the allegations in the lawsuit factually inaccurate.
Thomas Grech, president and CEO of the Queens Chamber of Commerce, of which Zara Realty is a corporate member, defended the company. “Zara Realty is a local, family-run business that buys older residential buildings, many of them with a history of neglect by prior owners, and modernizes them, improving critical infrastructure, implementing lacking and much-needed security upgrades, adding tenant amenities and transforming formerly underinvested-in Queens neighborhoods for the better,” he said.
At Friday’s rally, tenants also said they were tricked into signing leases that would increase their rent.
“Sometimes they request tenants sign a new lease just for a key, which means they'll increase the rent by up to 20 percent by treating them as new tenants,” added Constantino Tejeda, a lead organizer at Woodside On The Move.
Zara's attorneys said all terms of their leases are in compliance with the law, including late fees and costs for extra keys.
Nick Camu, who has lived in a Zara building for over 20 years, said he was only asked for one month’s security deposit when he moved in. A tenant since 2006, Roselyn said Zara’s key system is “pretty straightforward.” She said she’s not sure why tenants are causing “such a ruckus” about it.
“They have shown their commitment to the community by hosting multiple tenant appreciation events throughout the year,” she said of Zara Realty. “They’ve done right by me.”