Tenants of 10 Fifth Ave. sue Madison Realty Capital for $2.8M

Don’t call it a block party.

Roughly three years before a lavish penthouse at 16 Fifth Ave. recently listed for a breathtaking $45 million, construction kicked off at the luxury condominium where it’s housed. During the time in between, the high-end development deeply rankled a group of locals who live down the block. Not only were they displaced for more than two years due to damages to their own building from the nearby work, but the condo’s developer paid only to put them up briefly in a hotel after they were forced to flee.

“When we had to leave, I didn’t expect to be away for two and a half years,” one displaced tenant told The Post. “So much of it is a blur. There’s a lot that needs to be done, both in my apartment and in my mind.”

Now, the owners of 10 Fifth have sued the condo’s developer, Madison Realty Capital, and assorted construction companies, for $2.8 million for wrecking their building. That’s in addition to an earlier subrogation claim, with 10 Fifth’s insurance carrier, Merrimack Mutual, chasing down reimbursement for the $3 million they paid out in insurance.

The displaced tenants at 10 Fifth, a modest 14-unit rowhouse located two doors down, were allegedly given 10 days in a hotel funded by Madison Realty Capital, and then scattered to the winds for the remainder of their time away.

After excavation began for No. 16, No. 10 started cracking, the displaced tenants allege. In mid-December of 2022, tenants notified management of interior cracks.

“The corner of a wall was separating and you could feel a draft,” one tenant said at the time.

Then, the situation worsened. Just two months later, “the building was raining little brownstone chunks,” one resident also said at that time, with the sight prompting a passerby to alert authorities.

The tenants there, facing imminent collapse, were given two hours to vacate, they claim in the lawsuit.

The four stabilized households — who paid rent of $1 a month to maintain their tenancy, and were allowed to return when the building was declared safe — generally bunked with friends and relatives. Tenants were allowed back twice a year to retrieve some possessions and swap out winter and summer clothing.

“It’s a horrible feeling and the landlord didn’t do anything to help us,” another returning tenant said, adding that the apartment was coated with dust.

“Madison Realty Capital, those creeps, put us in a hotel for 10 days and that’s all they did,” the tenant said. “This is a billion-dollar company. They just threw us in the street. They screwed us really bad.”

A spokesperson for Madison Realty Capital declined to comment for this story.

That vacate order was finally lifted in June, with the stabilized tenants allowed to return after those years away — and the other units freshly renovated.

Lower Fifth Avenue, a prime location just north of Washington Square Park, is in the Greenwich Village Historic District. After a three-year fight with preservationists, the city’s Landmarks Preservation Commission allowed for the demolition of the two small, nondescript, “no-style” rental buildings at 14 and 16 Fifth Ave., where half of the 20 units were rent-regulated, to make way for the luxury condo.

Typically, it’s the properties right next door to a construction site that are under threat. Damage to a property two doors down is very unusual, said the lawyer for 10 Fifth Ave., Jacob Levine of Lerner, Arnold & Winston.

Twelve Fifth Ave., the building directly between 10 Fifth and the construction site, “had no damages whatsoever as far as we are aware,” he told The Post.

But 10 Fifth was especially vulnerable. Constructed in the 1800s, it was much older than the block’s other buildings, and it was built on rubble. What’s more, the block sits atop the course of an underground waterway, Minetta Creek, which was covered in the 1800s.

The developer “failed to take into account the soil conditions,” the lawsuit states.

According to the city’s building code, “the developer has the duty to safeguard the public and property affected by the operations,” Levine told The Post.

In the past two decades, lawsuits involving construction that impinges on neighboring properties have increased in both frequency and contentiousness, said Benjamin Fox Tracy, a partner at Braverman Greenspun. He wrote an article for the New York Law Journal on proposed changes to the state statute that addresses access between neighboring properties for improvements and repairs.

That increase is likely due to a rise in construction, along with stringent city requirements such as Local Law 11, designed for facade safety and responsible for many of the scaffolds that have long shrouded the city.

But the statute, known as RPAPL 881, is murky, and court decisions have been inconsistent, Tracy said. Still, an affected nearby neighbor should not be bearing the costs of damages.

In a historic district, the developer must perform a pre-construction survey and monitor the area within 90 feet of the excavation with crack gauges as well as optical and vibration monitors.

“Foundation and excavation work inherently presents the riskiest part of any construction project,” Tracy told The Post. “It can damage the stability and really jeopardize the structural integrity of adjoining buildings.”

When tenants at 10 Fifth reported cracking, representatives for the developer took photos of the cracks and placed vibration monitors in the building, which detected no issues, a spokesperson said at the time. Tenants said that no meaningful action was taken; two months later, they were ordered to vacate.

Meanwhile, 10 Fifth has been rebranded as “The Village Landmark,” with the renovated apartments charging monthly rents of $4,995 to $6,495.

Stabilized rents were not available, but a previous lawsuit showed that, as of 2020, one stabilized tenant paid just under $1,000 a month for a one-bedroom.

Now, the “impeccably maintained” building “blends historic charm with modern upgrades,” according to StreetEasy. Some units include dishwashers, washer/dryers, dining nooks and decorative fireplaces.

The corner retail space, formerly occupied by a Le Pain Quotidien location, is now held by Carmela, a South Florida-based coffee, breakfast and lunch chain.

The condominium units at 16 Fifth have also started to sell. That $45 million penthouse, a duplex with nearly 7,000 square feet, is touted as a “townhouse in the sky.” It has five bedrooms, eight bathrooms and a terrace, along with monthly charges of nearly $23,000. Smaller, but equally lavish, units are $13.5 million.

“This story is a tragic reflection of the worst of how things operate in our city,” said Andrew Berman, executive director of Village Preservation, which sought to preserve the existing side-by-side buildings on the site.

He noted that the Landmarks Preservation Commission approved the demolition of two buildings in a historic district, displacing elderly, rent-stabilized tenants, in order to erect a luxury high-rise.

Then, when the developer compounded its acts by damaging 10 Fifth and displacing even more tenants, “the city did virtually nothing,” Berman wrote in a statement to The Post.

“No significant penalties have been levied for this egregious act . . . and the developer was quickly allowed to continue work. It’s indicative of a broken system where the most deep-pocketed developers get their skids greased by City Hall, while everyone else is left to pick up the pieces.”

For the second time, Madison Realty Capital has been accused of undermining an adjacent property. Less than a year after the 10 Fifth tenants were ousted, another of the company’s projects — this one on far East 14th Street, on the site of a former auto-parts store — caused severe damage to the five-story, 16-unit walkup next door, with all tenants there also forced out.

“Investigation revealed that the building’s structural stability had been compromised due to construction operations taking place at the neighboring property,” according to a Department of Buildings statement.

At that time, a representative for the developer deflected blame, claiming that the walkup had been long neglected and suffered from pre-existing structural issues.

The future of that building — 642 E. 14th St. — is in question. The owner has filed an application for full demolition, according to the DOB, but it has not been processed or approved, due to a stay order from housing court.

The 24-story building now looming above it, variously called “14+C” or “The East,” has nearly 200 apartments, with 30% set aside as affordable.