NY Dirt: New Ownership for Three Brooklyn Buildings in Legal Web

The Mamdani administration in a press release Thursday celebrated the “transfer” of three long-neglected Brooklyn buildings to new ownership. 

The mayor’s office said the buildings were “sold” the previous day to investor Mark Schwartz. That’s not exactly what happened with the properties, which have made headlines. But you almost can’t blame the mayor for simplifying: The reality is far more complicated. 

The mechanism behind the transfer wasn’t an enforcement action from the city, as might be expected from the mayor’s stated goals. The transfer was instead due to a judgment in a personal injury case dating back more than 15 years. A legal web left the buildings with no clear and involved owner, but now a new sponsor says he’s ready to step up to the plate. 

The trio of crumbling Crown Heights buildings — 1018 and 1074 Eastern Parkway, and 1392 Sterling Place — present something of a mystery, with no landlord appearing to claim responsibility for them. 

The buildings were once owned by Rikud Realty and the Dukler family. But problems began in 2017, when the Duklers tried to sell half their stake in the buildings to a company called Iris Holdings. 

That deal never closed. Iris tried to get out of it and recover its deposit after finding out new information about the buildings, arguing that they were sold on false grounds. 

Around the same time, Rikud was also facing accusations tied to a 2010 personal injury suit over lead poisoning. 

In 2017, the plaintiff in that lead case was awarded a judgment of $2.2 million against Rikud, according to court records. To prevent a sale of the buildings to satisfy that judgment, Iris had its investor purchase the debt. The lead poisoning victim signed the judgment over to Iris’s investor. 

Then the patriarch of the Dukler family, Rubin Dukler, died in 2021. Tenants launched a rent strike over conditions in the building a few months later, working with organizers from the Urban Homesteading Assistance Board. 

Iris appears to have had a plan to work with the city to get a low-interest loan and tax exemption for the building, in return for fixing it up and maintaining it as affordable housing. 

But when that wasn’t working out, the company took a different approach. 

Iris’s investor was still owed a judgment from Rikud Realty, stemming from the lead poisoning suit. One way it could satisfy that judgment? By auctioning off the real estate. 

So on Wednesday, the Iris investor auctioned off the three Crown Heights buildings and won them in a credit bid. 

But to make things more complicated, Iris decided not to take over these buildings. Instead, the company will be letting investor Mark Schwartz and his firm, Brooklyn Affordable Housing Associates, step into its shoes and apply for low-interest loans and tax exemptions from the city (Article XI and a PLP loan, for the wonks playing at home). 

Schwartz’s company paid a total consideration of $7.6 million to Iris’s investor to take ownership of the buildings. That includes millions in municipal fines, a defaulted mortgage, and civil penalties, plus the lead poisoning judgment. 

Schwartz and his firm are not well-known, but he says he has 20 affordable housing properties in New York. (In addition to his real estate venture, he currently serves as the mayor of Teaneck, New Jersey.) 

Schwartz said he’s been working with tenants and the tenants’ union at the buildings, all of whom are eager to see the properties’ 991 housing code violations (across just 88 units) cured and cleared. 

In the end, Mayor Zohran Mamdani seems to have had little to do with the transfer. The building hasn’t even been granted any city funding or financing yet. But tenants, a key base for Mamdani, seem happy about the deal. Schwartz said he has an agreement with them to forgive any rent arrears and to collaborate on plans going forward. 

Tenant leaders, along with staff at UHAB and Brooklyn Legal Services all lent quotes to the mayor’s press release about the transfer.

“Preservation of dilapidated, rent stabilized, buildings is what we’re looking to do,” Schwartz said. “With cooperation with the residents, the unions, and the administration.”

What we’re thinking about: We are now less than one month away from New York’s rent freeze taking effect, although not if plaintiffs who are suing the city have anything to do with it.

A thing we learned: The West Indian American Day Parade is in Crown Heights this weekend. The parade began in Harlem in the 1940s before moving to Brooklyn in the 1960s. 

Elsewhere

— State Attorney General Letitia James says she’s delivered more than $6 million in restitution for would-be condo buyers. The developer behind 427 Marcy Ave “unlawfully sold units and collected down payments . . . before OAG had accepted the building’s required offering plan for filing,” according to a press release. 

— The City Council will hold a hearing on the Mamdani administration’s use of the encrypted messaging app Signal to communicate with a group of supportive influencers, the Daily News reported. The hearing comes after a Columbia Journalism Review report about the mayor’s communications with content creators. 

— The substations powering New York’s subway trains are not being properly maintained, according to an MTA Inspector General report covered by Gothamist. The audit came in response to an explosion in December 2024 that stranded nearly 4,000 riders in Downtown Brooklyn. Nearly one-fifth of all substation field maintenance checks in 2024 were not performed, the report said.  

Closing Time

Residential: The most expensive residential sale recorded Thursday was $14 million for a 4,000-square-foot condominium at 150 Charles Street in the West Village. Frayda Resnick and Alex Heydt with Serhant had the listing.  

Commercial: The most expensive commercial transaction was $47 million for a 54,053-square-foot, mixed-use property at 428 Broadway in Soho. The Chetrit Group purchased the property for $22.5 million in 2005. 

New to the Market: The highest price for a residential property hitting the market is $10 million for a 3,000-square-foot condominium at 845 United Nations Plaza in Midtown East. Liza Nematnejad at Douglas Elliman has the listing. 

Breaking Ground: The largest new filings are for five properties at 10-24, 10-26 45th Avenue, 10-25 and 10-27 45th Road, and 45-03 Vernon Boulevard in Long Island City. Combined, the project will be 506,311 square feet and 495 units. JFA / J Frankl Architects filed the permits on behalf of JCS Realty.

— Matthew Elo