Cuomo Breathes New Life Into Real Estate Bureau

After more than two years of dormancy, the enforcement arm of Attorney General Cuomo's real estate bureau is being revived, Mr. Cuomo said in an interview yesterday.

The attorney general's office has put forward a bill that would raise the maximum fee for reviewing offering plans to $30,000, a 50% increase. If the bill, which would affect only larger developers, passes next year, the new revenue will be used to add staff to the Real Estate Finance Bureau.

Real estate attorneys say that, since 2005, they have been unable to get the office to follow through on complaints filed against developers who refuse to fix buildings with shoddy construction.

The attorney general's office has the authority to litigate and mediate disputes with developers who commit fraud under the Martin Act, the law that allows the office to investigate and prosecute companies that issue stock fraudulently.

But personnel in the enforcement section of the bureau were moved to the section that reviews offering plans, as the number of filings rose to nearly 1,000 in 2007 from about 300 in 2002, Mr. Cuomo said.

"The number of plans we are reviewing has grown, but our staffing has been flat," he said in a telephone interview. "I heard about it on the campaign trail from tenants and developers. … This problem is infuriating to all parties." Senator Owen Johnson, a Republican of Babylon, N.Y., and Assemblywoman Helene Weinstein, a Democrat of Brooklyn, sponsored the bill, which is still in committee. It has the support of the New York City Bar Association, the Real Estate Board of New York, and the Council of New York Cooperatives & Condominiums.

When the attorney general's office gets involved with cases, developers respond much more quickly to problems, and costly litigation is less common, a real estate lawyer and a vice president of the council, Arthur Weinstein, said.

He said he has a case where a developer sold an apartment to his client as "just renovated," but when the client moved in, he discovered that it had been used as a work area during construction in the building.

"The kitchen is a wreck, the appliances have been used, the cupboards are scratched," Mr. Weinstein said. If the developer does not let the client out of the contract, the lawyer said he will file a complaint with the attorney general's office.

Another real estate attorney, Aaron Shmulewitz, said that as the number of plans increased in 2005, "the enforcement efforts effectively disappeared," leaving tenants with little recourse under the law. Individuals and condominium boards cannot bring a right of action against a developer under the Martin Act. Filing lawsuits seeking damages in civil court is usually expensive and time-consuming, so it is not done as frequently.

Mr. Cuomo has hired a lawyer, Lewis Polishook, to begin going through the cases, a real estate lawyer, Adam Leitman Bailey, said.

"We're anticipating big things," Mr. Bailey said. "I can't even take all the clients coming in with all these new construction problems."

Mr. Cuomo said he wants to increase the enforcement side's mediation efforts rather than boost litigation the way he has against student loan companies, subprime lenders, and the home health care industry.

"If a tenant calls up and says the developer put in the wrong kind of windows, we have lawyers who can mediate that type of dispute," he said.