NEW YORK – New York Attorney General Letitia James and New York State Homes and Community Renewal (HCR) Commissioner RuthAnne Visnauskas today filed a lawsuit against Zara Realty Holding Corp. (Zara Realty), its principals, and affiliated entities for repeatedly violating rent stabilization laws and overcharging rent-stabilized tenants in Jamaica and Elmhurst, Queens. The lawsuit alleges that Zara Realty illegally took advantage of tenants who paid their rent through New York City Department of Social Services (DSS) housing subsidy programs and brazenly disregarded rent reduction orders issued by HCR’s Office of Rent Administration. Zara Realty would then sue tenants who did not pay these unlawfully inflated rents, putting multiple tenants at risk of eviction. The Office of the Attorney General (OAG) and HCR’s Tenant Protection Unit (TPU) are seeking a court order to stop Zara Realty from charging or collecting illegally inflated rents and force them to refund all tenants who were overcharged.

“While hardworking families are battling an affordable housing crisis and fighting to make ends meet, Zara Realty shamelessly took advantage of vulnerable tenants,” said Attorney General James. “New Yorkers should not have to worry that their landlords are willfully deceiving them just to line their own pockets. Let this be a warning: any landlord who tries to cheat their tenants and evade our rent stabilization laws will be hearing from my office.”

“Our Tenant Protection Unit is fighting for New Yorkers every day by protecting them from predatory landlords who try to illegally overcharge their tenants and defy our State’s rent laws,” said HCR Commissioner Visnauskas. “The message from our office and Attorney General James is clear – if landlords fail to abide by the rent laws, if landlords seek fraudulent rent increases, or initiate unlawful evictions – we will not hesitate to take action on behalf of millions of rent-regulated tenants in New York.”

New York City’s rent stabilization laws place limits on how much a landlord can increase rent in a renewal lease or after a vacancy. The lawsuit filed today argues that since at least 2022, Zara Realty ignored the legal limits to exploit tenants who received DSS housing subsidies, charging them the highest possible amount allowable under their program, regardless of the legal rent for their unit as dictated by the Rent Guidelines Board. As a result, OAG and TPU contend that tenants were charged rent increases that were significantly higher than the legal amount.

In addition to violating legal rent increase limits, Zara Realty also ignored rent reduction orders issued by the Office of Rent Administration (ORA). The ORA orders landlords to reduce rent when a landlord fails to provide essential services or maintain the property to required standards. Tenants filed complaints with ORA, which then ordered Zara Realty to reduce and freeze their rents. Despite receiving these rent reduction orders, the lawsuit alleges that Zara Realty continued to overcharge tenants.

The OAG and TPU allege that Zara Realty’s complete disregard for rent stabilization laws forced multiple tenants into financial distress and put them at risk of eviction. In one case cited in the lawsuit, a DSS voucher-holder signed a one-year lease with a company owned by Zara Realty in 2022. The following year, the company increased her rent by eight percent, even though the legal limit for increases was just 3.25 percent. The next year, Zara Realty raised the same tenant’s rent by 44 percent. When the tenant refused to pay, Zara Realty took her to court. Another tenant’s rent had been frozen pursuant to a court order, but Zara Realty continued to overcharge the tenant for a period of two years. When ordered to provide the tenant with a rent credit and stop overcharging him, Zara Realty refused and continued to attempt to collect the inflated rent. When the tenant stopped paying the illegal rent, Zara Realty began eviction proceedings.

With this lawsuit, OAG and HCR are seeking a court order requiring Zara Realty to:

• Stop charging or collecting illegally inflated rents,
• Identify every former and current tenant that was illegally overcharged,
• Refund all illegally collected rent to former and current tenants,
• Pay damages to all former and current tenants, and
• Correct all rent registrations with HCR and issue new leases to tenants.

Attorney General James and HCR previously sued Zara Realty in March 2019 for targeting immigrant middle- and low-income tenants in at least 38 rent-stabilized buildings by charging excessive fees, coercing them into signing improper leases, and illegally raising rents. Litigation is ongoing.

“We applaud Attorney General James and HCR Commissioner Visnauskas for holding these bad actors accountable and for sending a clear message that this type of predatory behavior will not be tolerated,” said DSS Commissioner Molly Wasow Park. “The allegations are particularly appalling since the defendants sought to enrich themselves by taking advantage of subsidies intended to support low-income New Yorkers with a history of housing instability. DSS has taken concrete steps to change rental subsidy processes to prevent bad actors from being able to overcharge tenants in receipt of city-administered rental subsidies in the future. We look forward to further collaboration with the Office of the Attorney General and HCR to ensure vital government resources are protected.”

“For years, Zara Realty has lined their pockets by exploiting and harassing low-income and immigrant tenants, blatantly disregarding rent laws,” said Maansi Shah, Tenant Organizer at Chhaya Community Development Corporation. “This lawsuit is a major victory for tenants to recover stolen rent and a critical first step in holding this predatory landlord accountable. But the fight for justice is far from over—we need stronger oversight, increased penalties, and closed loopholes to prevent landlords from weaponizing the system against vulnerable tenants.”

“For years, our clients living in Zara-managed buildings have worked hard to ensure Zara provides all essential services for every tenant. Zara must be held responsible for ongoing violations and the hardship they have caused so many families,” said Carlos Ortiz, Tenant Organizer at Catholic Migration Services. “We thank the Attorney General’s Office for taking this legal action to help all Zara tenants get the justice they have waited for and often been denied. This lawsuit and the stories it highlights should remind HCR and our elected officials that we urgently need stronger laws and real accountability. We continue to call on HCR and our elected officials to pass and enforce measures that protect New York’s tenants from landlords like Zara who ignore their responsibilities and duty to provide a decent place to call home.”

This case is the latest action in Attorney General James’ ongoing efforts to protect tenants’ rights and enforce New York’s rent regulation laws. In February of this year, Attorney General James and Commissioner Visnauskas announced the re-regulation of 21 rent stabilized apartments and return of more than $50,000 to tenants who were overcharged. In September 2024, Attorney General James, in partnership with HCR’s TPU, re-regulated 263 illegally deregulated apartments and reduced rents in 43 additional units. In August 2022, Attorney General James secured $4 million from a group of 29 New York City landlords after uncovering an illegal kickback scheme to deregulate hundreds of rent-stabilized apartments in New York City. In January 2022, Attorney General James banned Raphael Toledano from real estate business in New York after he failed to uphold his 2019 $3 million agreement with Attorney General James for harassing tenants and violating rent stabilization laws. In December 2020, Attorney General James also won more than $1 million in rent credits from Madison Realty Capital for aiding and abetting Toledano’s harassment and illegal deregulation.

For HCR’s TPU, the investigation is conducted by Assistant Commissioner and Legal Director Argyro Boyle, Director of Investigations Lewis Gray, Associate Counsel and Deputy Legal Director Jonathan O. Hurt, and Staff Attorneys Brittany Taylor and Michelle Blaifeder and overseen by TPU Deputy Commissioner Jooyeon Lee. In 2023, through continued forensic analysis, the TPU implemented an updated audit algorithm, with several key identifiers to target patterns of non-compliance, harassment, criminality, and unlawful deregulation. Last March, the TPU imposed a $400,000 settlement on an owner 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.

For OAG, the matter is being handled by Unit Chief Brent Meltzer, Senior Enforcement Counsel Rachel Hannaford, and Legal Assistant 2 Cecily Mills of the Housing Protection Unit. The Housing Protection Unit is part of the Division for Social Justice, which is led by Chief Deputy Attorney General Meghan Faux and overseen by First Deputy Attorney General Jennifer Levy.