The New Yorker
In June 2018, a strange California-by-way-of-Brazil visitor booked a room at the New Yorker Hotel in Midtown Manhattan. His one-night stay cost $200.57. If you think that’s a bargain for Midtown New York, you haven’t seen the New Yorker. Once an Art Deco masterpiece, it’s been falling apart since it was bought by the Rev. Sun Myung Moon in 1976 for use as his headquarters in the United States.
Still, it’s a landmark building within walking distance of Madison Square Garden and Times Square, awash in history. The visitor, Mickey Barreto, was given Room 2565 – the room next to his is where Mohammed Ali went the night he lost to Joe Frazier.
An Obscure Law
Barreto occupied the 200-square-foot room (with free HBO) with his partner, Matthew Hannan. At some point, Hannan mentioned what many thought was a New York myth – that anyone staying at a large New York City hotel (the New Yorker is certainly that) built before 1969 had the right to a discounted lease.
In other words, a hotel guest could request and would automatically receive a lease, making them long-term residents.
Barreto and Hannan hit their laptops to ‘track down the myth.’ They quickly found that it was indeed true. New York passed the Rent Stabilization Act in 1969. An overlooked and never-used section of the bill made “a swath of hotel rooms” subject to leases for long-term residency.
As the New York Times reported:
“According to the law, a hotel guest could become a permanent resident by requesting a lease at a discounted rate. And any guest-turned-resident also had to be allowed access to the same services as a nightly guest, including room service, housekeeping, and the use of facilities, like the gym.”
It should be noted that hotels fell under this provision only if they charged less than $88 a week in 1968.
A Request and A ‘Legal Filing’
The next morning, Barreto went to the front desk and handed the desk clerk a letter for the manager, requesting a six-month lease. The clerk called the manager, and the manager said there ‘was no such thing as a lease’ and reminded Barreto that checkout was at noon.
Barreto and Hannan left their possessions in the room, and, true to the hotel’s word, bellhops dutifully removed them that afternoon.
Barreto immediately went downtown to the New York City Housing Court, where he filed a suit against the hotel.
He handwrote a “three-page, handwritten affidavit that ‘cited state laws, local codes, and a past court case.’ He argued that the request for a lease made him a “permanent resident of the hotel.” Then he added that “removal of his items amounted to an illegal eviction.”
It seemed silly in a city where the average studio apartment is around $1800 (without free HBO).
That’s certainly how the hotel took it; no one showed up for the hearing a few weeks later. The judge found for Barreto and ordered the hotel “to restore petitioner to possession of the subject premises forthwith by providing him with a key.”
Something Missing in the Court’s Order
Barreto and Hannan, the judge’s ruling in hand, were back in room 2565 a few days later. That’s when they noticed that the judge’s ruling made no mention of the hotel providing a lease, did not mention rent of any kind, and put no limit on the length of their stay.
Barreto and Hannan would stay in the New Yorker Hotel until July 2023 without ever paying rent.
Something In the Court’s Order
The judgment didn’t say anything about rent, lease, or time of stay, but it did prominently mention ‘possession.’ The order specified that Barreto was given “final judgment of possession.”
Barreto would claim that when he called the clerk’s office and said he was told that the phrase meant exactly what it looked like, he was in possession. Barreto went to the New York City Department of Finance – the place that housed city records.
When he tried to register a deed for Room 2565, in essence treating it as a coop, he was told that hotels, unlike apartments, could not be ‘split up’ in city records by room.
So he tried to file a deed for the entire building. The New Yorker, Block 758, Lot 37 in the New York City records.
He tried six times but was stopped for technical reasons. His seventh time was the charm. In May 2019, Barreto was listed as the owner of a 1.2 million-square-foot building in Midtown Manhattan.
The New Yorker Hotel’s management team was oblivious.
Save Your Business Records – Forever!
Meanwhile, the hotel’s owners were concentrating on trying to evict Barreto. They claimed that the hotel was exempt from the housing law’s hotel provision because the New Yorker – a four-star hotel at the time – charged more than $88 a week for stays. They couldn’t, however, provide a single piece of evidence to prove it.
No evidence, no eviction. The judge dismissed the suit.
Barretto Lets Ownership Go to His Head
This matter may have stayed, like some legendary New York real estate stories, exactly like this – Barreto and Hannan living rent-free in the middle of the most expensive real estate in the world—for decades if Barreto had kept a low profile.
He did not. He sent a demand notice to management looking for his share of the hotel’s profits ($15 million). He tried to collect rent from some of the restaurants that leased space. He wrote to the management about renovations. He “sent a memo to M&T Bank, the hotel’s lender, and asked for all accounts to be put into his name.”
The Real Owners Regroup
Lawyers for the hotel finally got into a courtroom where they were able to lay out the entire matter, while also proving that over the last year, they had offered several leases to Barreto, and he had turned them all down. He also refused to pay the rent invoices the hotel belatedly started to send. A Judge ordered his eviction last summer.
The lawyers were then able to correct the city deed. What they missed was getting a specific order to rescind the original court order granting Baretto ‘possession.’
Despite being evicted, Baretto hoofed it down to the City Hall Park area, filed a new deed, and put the New Yorker back in his name. This time, changing the deed cost the New Yorker a tax exemption and resulted in $2.9 million in additional taxes.
It Ends in an Arrest
A few weeks ago, Baretto was arrested for creating ‘fraudulent deeds.’ How strong the case is may be measured by how much his bail was - $0.
A six-year odyssey finally ends, and the Netflix series is surely on the way.
Of course, none of this would have happened if the hotel had shown up for the housing court hearing in 2018. None of it.
