As developers seek to cash in on New Yorkers’ seemingly limitless appetite for luxury condominiums by converting rental apartment buildings, a recent housing court verdict could make it more difficult for landlords to evict existing tenants.

A New York City housing court judge, David Cohen, ruled on Tuesday to affirm the rights of marketrate tenants in condominium conversions.

Judge Cohen ruled that 23 tenants at the Sheffield apartment building on West 57th Street who had been defending against eviction proceedings are “protected tenants” under the Martin Act, a section of the state’s general business law that governs the condominium conversion process. As “protected tenants,” the Sheffield residents are now entitled to a lease at market rate from the landlord, the principal of Swig Equities, Kent Swig.

The rights of market-rate tenants have long been murky territory. Under the Martin Act, it is unclear whether all tenants or only those living in rent-stabilized units can lay claim to legal protection against eviction.

A lawyer with the Rent Stabilization Association, a landlords’ group, Mitchell Posilkin, said the Martin Act does not seem to grant market-rate tenants the right to renew their leases during a condominium conversion. But during the trial, lawyers representing the Sheffield Tenants Association, Samuel Himmelstein and Kevin McConnell, argued that the Martin Act affords the same protection to all leaseholders, and the judge agreed.

Originally, 1,050 tenants resided in the Sheffield’s 845 units. When Mr. Swig began the conversion process in 2005, he tried to depopulate the building and began an extensive renovation.

At that point, the vast majority of market-rate tenants left the building, but 23 stayed on, and Mr. Swig sued to evict them.

In response to Tuesday’s ruling, the president of the Sheffield Tenants Association, Nancy Rovelli, said Judge Cohen’s ruling is a “victory for all New York City tenants.” Now that the tenants have leverage against Mr. Swig, they will likely try to buy their apartments at discounted rates.

Mr. Swig, who purchased the Sheffield for $418 million in 2005, said in a telephone interview that it was well within his rights to deny lease-extensions to market-rate tenants. He said Judge Cohen’s ruling is an “assault on property rights that could have frightening ramifications nationwide.”

As Mr. Swig sees it, the court has overreached its traditional “interpretive” role and has effectively created a new law. “The court,” he said, “has intruded into the legislative branch’s territory by bestowing new rights upon market-rate tenants.”

Mr. Swig said he will appeal Judge Cohen’s decision.