East 5th Street, west of 2nd Avenue, where several buildings are in foreclosure
The call to action follows years of alleged hazardous conditions, including illegal construction, lead dust exposure, and multiple foreclosures.
The residents, part of the Tenants Taking Control Coalition (TTC) — a group that first formed as the Toledano Tenants' Coalition in 2015 when the buildings were purchased by the infamous landlord Raphael Toledano, then in his mid-20s — say they've had enough instability and want a long-term solution.
Madison Realty Capital (MRC) initially financed Toledano's acquisition of the buildings through a securitized loan from Signature Bank. (At the time, experienced real estate professionals raised concerns about Toledano's heavy reliance on debt.)
Toledano's notorious tactics, which included widespread tenant harassment and construction abuse, led to a lifetime ban in January 2022 from the New York real estate industry. In its findings, the Attorney General also stated that Madison Realty Capital "aided and abetted tenant harassment" and "knew landlord Toledano was engaging in fraud and harassment."
Eventually, the buildings entered foreclosure, and ownership passed to MRC — the same firm that had initially funded Toledano.
As The Real Deal reported in March:
Madison got pulled in by association. [NY AG Letitia] James sued the firm for lending Toledano $124 million on an East Village portfolio with the understanding the landlord would aggressively and illegally deregulate units. Madison eventually settled, admitting no wrongdoing. But in 2021, it ended up with that East Village collateral —15 buildings half-gutted by Toledano's half-baked deregulation plan. Madison paid $153 million for the deal in a credit bid after Toledano liquidated the assets.
But for tenants, the change brought little relief. In 2021, they say, MRC initiated construction aimed at combining smaller, rent-stabilized units into large, high-rent "Frankenstein" apartments, some reportedly listed for $9,000 or more. The work was disruptive and often dangerous, they allege, contributing to deteriorating living conditions across the buildings.
When Signature Bank failed in 2023, the federal government intervened to prevent widespread fallout, establishing a joint venture to oversee the affected loans. That venture, composed of four entities, is managed by Community Stabilization Partners, with the Community Preservation Corporation serving as the managing partner.
Earlier this year, after trying to bring the Signature loans back to good standing, Community Stabilization Partners took a subset of sponsors described as "unresponsive and uncooperative" to court, as The Real Deal reported on March 11, including Madison Square Realty.
Now, TTC members are demanding two things: that the Community Preservation Corporation meet directly with tenants about ongoing problems in the buildings and that the properties be sold to a nonprofit preservation buyer committed to long-term housing stability.
Adding to the urgency, the New York Post recently reported that MRC has not made a mortgage payment since January 2024 — despite managing more than $23 billion in assets, including the new high rise on 14th Street and Avenue C.
For tenants, this raises concerns that MRC is angling for more favorable loan terms than those originally extended to Toledano, echoing the very cycle that led to years of instability in the first place. (The Post reports this is part of a broader trend of landlords stopping making mortgage payments and ultimately making rent-stabilized units even more scarce in NYC.)
For TTC members, the message is clear: after a decade of disinvestment and displacement, the time has come for meaningful, community-centered change.
"For many tenants of the 15 East Village buildings, this has been home for decades," Kathy Berry, a long-time tenant of 325 E. 12th St. and member of the Tenants Taking Control Coalition, said in a release distributed by the Cooper Square Committee. "Over the years, we have dealt with slow response to do repairs, sloppy repairs, and harassment (no cooking gas for 14 months). Basically, we want safe and clean buildings. Tenants want a preservation buyer to purchase the buildings rather than another private equity firm."
Jodie Leidecker, an organizer with Cooper Square Committee, said in a statement: "After everything Madison Realty Capital has put these tenants through, it's sad to think they could be rewarded with the terms they prefer on these buildings while CPC does nothing to help tenants. That would be like all Madison's wishes come true at the tenants' expense. The tenants, however, are rightly standing up and demanding a voice in the process. I wouldn't bet against these tenants."
The 15 former Toledano East Village buildings involved in foreclosure are:
• 27 St Mark's Place
• 66 E. Seventh St.
• 514 E. 12th St
• 223 E. Fifth St.
• 229 E. Fifth St.
• 231 E. Fifth St.
• 233 E. Fifth St.
• 235 E. Fifth St.
• 228 E. Sixth St.
• 253 E. 10th St.
• 323-325 E. 12th St.
• 327 E. 12th St.
• 329 E. 12th St.
• 334 E. Ninth St.
• 510 E. 12th St.
There is a single foreclosure action for all the former Toledano buildings: SIG RCRS D MF 2023 VENTURE LLC v. EVP 27 ST MARKS PL LLC et al.
Gerald Lebovits, a judge of the New York Supreme Court 1st Judicial District, is assigned to this case,
The defendants have until June 23 to respond.
