On weekends, Tobias Everke and Barbette Havriliak are active members of the Harlem open house circuit, a victory lap of sorts for those who bought into a gentrifying neighborhood at just the right moment.

Their Harlem brownstone is a shining example of a well-timed and well-executed real estate investment. In 1999, they bought a threestory townhouse on West 121st Street, a wide, sunny block near Morningside Park. They paid $360,000 and remade the former single-room occupancy dwelling into a single-family home, with many of its original century-old details intact. Similar properties in their neighborhood are now being listed for close to $1.5 million.

It was with this experience in mind that Mr. Everke and Ms. Havriliak, who are married, moved confidently into their next real estate purchase. In January 2004, Mr. Everke, a freelance photographer, saw a “for sale” sign go up on a dilapidated brownstone across the street.

That day, after few phone calls and a quick look around the building, Mr. Everke faxed in a $500,000 bid.

Together with Ms. Havriliak and her brother and wife – Herbert and Linda Morscher – Mr. Everke started making plans to renovate the building so they could convert it into a rental property. Ms. Havriliak, a photo researcher, would move her office into the building, and she and Mr. Everke would manage it from their home across the street. Mr. Morscher, a butcher, and Ms. Morscher, who works for Lufthansa, live in Middle Village, Queens.

Thus began a two-year Harlem real estate nightmare, as Mr. Everke and Ms. Havriliak describe it. It ended up costing the four investors hundreds of thousands of dollars in settlements, legal fees, mortgage payments, and lost rental income.Worse, they say, their frustration took a personal toll.

“You couldn’t make it up even if you tried,” Mr. Everke says.

“We knew about the changes happening on the block. We thought we had insider knowledge,” Mr. Everke said, looking through a stack of thick binders filled with legal documents. “I thought, ‘Wow.That’s a great deal.'”

In January, after negotiations with the building’s previous owner, the investors raised their original bid to $575,000, entered a contract, and paid $45,000 as a down payment. They immediately began interviewing architects for a gut renovation. The investors were aware of 248 violations cited by the city’s Department of Housing Preservation and Development, but since they planned to rebuild it completely, they thought the violations were irrelevant.

Three months after entering a contract to purchase the building, the investors learned from neighbors that the bank had foreclosed on the property in April 2004 and sold it on the auction block to another buyer for $670,000. The buyer did not want a lawsuit, Mr. Everke said, so she sold her rights to the building for $38,000. The group closed on the property in August 2004.

Like most of the brownstones in Harlem, the one at 347 W. 121st St. had been converted into a single-room occupancy dwelling.Although the contract said the building would be delivered vacant, the investors knew that an elderly, single woman lived there. Mr. Everke said they had a gentleman’s agreement with the tenant to compensate her and find her a new place to live.

Mr. Everke winced as he described the building’s interior – filled with carcasses of dead animals, human and animal feces,and see-through floors covered in burn marks. For more than a year, the building lacked water, since a pipe burst, and there was no gas line. Electricity was illegally supplied to the building via jerry-rigged extension cords running from street with wires exposed and held in place with duct tape.

“Human beings should not live like that,” Mr. Everke said. “Especially in this city, the richest city in the world.”

After they signed the contact but before closing on the deal, Mr. Everke saw a young woman he had never seen before going in and out of the building with her dog. Mr. Everke said the new occupant was a squatter. The woman, Lakeesha Tyler, lived in the building in the late 1990s and had moved out, Mr.Everke said.She maintained a permanent residence in upstate New York, where she received public assistance, he said. When the investors informed her that they intended to evict her, she asked for a settlement of $50,000.

They refused, and in September 2004 the investors sent her an eviction notice. Shortly afterward, on advice from their electrician, the investors called Con Edison to report the illegal electric hookup, and the utility cut off the electricity from the street.

Enraged, Ms. Tyler called the city inspector and went to landlord-tenant court to stop her eviction.The city’s housing department then issued a series of violation notices to the investors. Because of the number and seriousness of the violations, HPD issued a vacate order, so in October 2004 city officials padlocked the building and moved two occupants to hotels, where they stayed for about six months.

The investors were told by HPD that to remove the vacate order, they needed to make dozens of costly repairs, including installing water, gas, electricity, and sprinklers throughout the building.

In order to get the permits to go forward with their planned gut renovation, the investors had to first fix the building – before they could tear it down.

“Somebody is bleeding to death, and the city tells us to put a Band-Aid on him,” Ms. Havriliak said.

So, over the next several months the investors set out to meet the city’s demands, meeting with architects, engineers, and contractors to refit the unoccupied brownstone.

As part of the HPD request, they were required to “restore” a community kitchen that they say had never been there in the first place. Mr. Everke and Ms. Havriliak, self-described creative types, installed appliances, left the price tags on, and later returned them. They decorated the walls with paintings they had in storage. On each floor, they installed one electrical outlet and one light bulb to show the building had power.

As they worked on the repairs, they tried and failed for months to evict the “squatter” occupant in the city’s landlord-tenant court.

At the same time, the investors took steps to obtain a certificate of non-harassment from HPD, which they needed to move forward on their renovation. According to HPD, the granting of the certificates are intended to ensure that owners do not harass tenants into leaving so they can begin demolition or construction projects. If HPD found that their actions to empty the building qualified as harassment, the investors would have to wait three years to proceed with construction.

Since HPD determined that they had reasonable cause to believe that harassment had occurred, the case was referred to the Office of Administrative Trials and Hearings (OATH).

At OATH hearings in March 2005, the investors were told by an HPD lawyer that they must settle with the existing tenants, even though they were convinced that one of the tenants was an opportunistic squatter.

They paid the existing tenant $10,000. For months, the investors tried to find her another apartment and were planning to help pay several months of her rent. They were shocked that even for apartments designated to house low-income residents, and even with their willingness to put a year’s rent in escrow, they were unable to relocate her. Eventually, she found a room through a relative.

Two months later, at another OATH hearing, they reluctantly paid the squatter $17,000.

Mr. Everke recalls his anger when within a month of the settlement, the squatter parked a brand new sport utility vehicle in front of his brownstone.

Convinced that they had satisfied the demands of the HPD – made the necessary repairs and settled with the tenants – the investors thought the vacate order would be removed and a certificate of non-harassment would be issued.

When they applied to have the vacate order removed, however, the city declined, claiming that there was still a lien on the property. Eight months earlier, the investors had paid $5,000 to remove the lien, and while the city cashed the check, the investors say it forgot to remove the lien.

About a month later, in July 2005, after fixing the clerical error and after inspectors made three additional visits, the vacate order was finally removed.

The investors were certain then that the HPD would then issue a certificate of non-harassment, but to their surprise, it was declined. HPD officials said the vacate order had not been lifted within a timely fashion, as required, and the necessary repairs had taken too long complete.

The investors felt duped. They had never even heard of a deadline. Given the extent of the renovations required, the investors were incredulous that the city chose to go to court rather than settle at this stage.

A spokesman for HPD, Neill Coleman, defended the agency’s decisions in their dealings with the owners of 347 W. 21st St. Mr. Coleman said the agency had reasonable grounds to believe that harassment of the tenants had occurred, and he cited the lack of water, gas, and electricity in the building.

“They entered into agreements with the tenants,” he said. “They essentially bought out the tenants. That was the way that was resolved, instead of correcting the violations.”

Ms. Havriliak has a different perspective.

“Four people buy a building with only good intentions. It’s good for the block. It’s good for the neighborhood. It’s good for the city, and it’s good for preservation,” she said. “But you get thrown and spit at by the city, by HPD, as the mayor is running for re-election on creating better housing and jobs. We could not create anything.”

The OATH court wrote a letter to the commissioner of HPD urging the agency to drop the time complaint and to issue a certificate of non-harassment to the investors.

HPD refused and decided to take the case to trial. But the investors said that the agency had never served the vacate order properly – it was sent to a person and an address with no relation to the building.

Finding no evidence of foul play, in a trial in December 2005, the OATH court judge recommended to HPD after the trial that it issue the certificate of non-harassment. HPD followed the judge’s recommendation and issued that certificate late last month.

Mr. Coleman of HPD said that generally it has dual roles in a conflict like this one.

“We are balancing interests in these situations. Of course a lot of what we do is about rebuilding communities and neighborhood renewal and so forth,” Mr. Coleman said. “On the other had, we have an obligation to protect tenants in buildings and to make sure they are not being harassed. Especially in Harlem, where there are issues around gentrification. It is something the community is sensitive to, and we are sensitive to as well.”

Looking back – and with their certificates in hand – the investors say they’re angry.

“We did everything exactly how we were supposed to do it,” Ms. Havriliak said.

Mr. Everke said, “HPD is corrupt. There are corrupt people there.”

Over the two years, the investors paid between $20,000 and $30,000 for emergency repairs, but Mr. Everke said that by looking at the building, it appears that many of those repairs – which the agency documented and billed as being completed – never took place. His view is that the agency lacks the appropriate level of oversight.

Referring to Mayor Bloomberg’s recent firing of a city employee caught playing video games on the job, Mr. Everke said that if the mayor made a surprise visit to HPD, “Many employees would have to look for new jobs the next day.”

“It all defeats the purpose. The purpose should be to support a neighborhood that is rejuvenating itself,” Mr. Everke said.

He estimated that so far, before starting on a gut renovation, the investors have spent $800,000 on the unit. This week, they expect to receive the appropriate building permits so demolition and construction can begin.

Four Investors Struggle To Rebuild

January 16, 2004: A group of four investors, Tobias Everke, Barbette Havriliak, and Herbert and Linda Morscher, make a written offer of $500,000 for the building at 347 W. 121st St. Later that month, they entered a contract to buy the building.

April 5, 2004: The investors file application for a certificate of non-harassment with the city’s Department of Housing Preservation and Development.

April 28, 2004: A foreclosure auction is held, and the building is sold to another buyer.

July 13, 2004: The investors settle with the woman who bought the house in the auction.

August 30, 2004: The investors close on the property.

September 7, 2004: The city receives a check for $5,000 to remove an existing lien.

September 16, 2004: ConEdison is informed by the tenants that the building is illegally wired, and the utility cuts power.

September 22, 2004: The investors try to evict tenants with a letter.

September 29, 2004: HPD issues a vacate order.

October 2004 to March 2005: The investors make repairs to the building to try to lift the vacate order and attempt to evict tenants through landlord tenant court.

March 21, 2005: After HPD refers the case to the Office of Administrative Trials and Hearings, investors have their first hearing.

April 20, 2005: Second OATH hearing. The investors settled with the “squatter” tenant, Lakeesha Tyler, for $17,000.

May 3, 2005: The investors settle with the existing tenant, Deborah Ashby.

June 2, 2005: HPD recognizes that the investors paid for existing liens.

June 6, 2005: The investors file to remove vacate order. July 8, 2005: HPD lifts vacate order.

September 6, 2005: HPD says it will not issue a certificate of non-harassment because vacate order was not lifted in timely fashion. HPD proceeds with an administrative hearing at OATH.

November 30, 2005: OATH judge makes a written request that HPD issue a certificate of non-harassment because timeliness was never an issue discussed at any time in front of OATH proceedings.

December 16, 2005: The investors go to trial to OATH court with HPD over the issuance of a non-harassment certificate.

January 13, 2006: A judge from OATH court recommends that HPD issue the non-harassment certificate.

January 26, 2006: HPD grants a certificate of non-harassment.

February 16, 2006: Investors are awaiting permits from the Department of Buildings to begin renovation.