Real estate litigation in Manhattan continues to evolve against the backdrop of rising regulatory scrutiny, tenants’ rights activism, and high-stakes developer disputes. Below, from Levy Goldenberg Law, are four recent case studies illustrating key litigation trends—and what property owners, landlords, and developers in Manhattan need to know.
Mounting Foreclosures on Rent-Stabilized Buildings
A growing foreclosure crisis is unfolding: since 2022, at least 176 rent-stabilized apartments in NYC have been foreclosed, with another 2,093 units facing imminent action as of April 2025. Landlords are often abandoning buildings that have become financially unsustainable due to post-2019 rent reforms, which capped increases and restricted vacancy hikes. Many properties, particularly those pre‑1974, now generate losses and are no longer viable investments. Some lenders even refuse to take building keys post‑foreclosure, fearing they’d be stuck with non‑profitable assets.
Class‑Action Lawsuits Over Inflated Broker Commissions
In late 2023, a class-action complaint was filed in Manhattan against REBNY and major brokerage firms—including Douglas Elliman, Corcoran, Compass, Halstead, Brown Harris Stevens, and Sotheby’s—for allegedly conspiring to inflate residential real estate agent commissions. The plaintiff claims sellers paid excessive fees when listing properties, echoing similar antitrust suits across the country. These cases highlight growing scrutiny of broker compensation models in Manhattan.
Lawsuits Over Accessibility Violations Under the Fair Housing Act
Although dating from 2019, the U.S. Attorney for the Southern District of New York filed a landmark civil rights lawsuit against Atlantic Development Group and its principal, alleging they designed 68 rental buildings (over 6,000 units) with accessibility violations—such as improper thresholds, insufficient clear floor space, and lack of grab bars—contrary to federal FHA rules. This case underscores the continued enforcement focus on inclusive design in Manhattan developments.
Condo Board Enforcement Actions on Tower Design Defects
At 432 Park Avenue, condo owners sued developers CIM Group and Macklowe Properties over alleged building-wide defects, ranging from excessive vibration to structural flaws and problematic trash chutes. The litigation, initiated in late 2021, ballooned to include millions of pages of documents by early 2024. In 2025, new suits emerged over alleged façade cracks concealed from buyers. These disputes highlight the litigation risks associated with ultra-luxury towers that feature high architectural complexity.
Zoning Permit Reversal and “Build‑At‑Risk” Litigation
In the Amsterdam Avenue Redevelopment Associates case, developers built a 55‑story condominium atop a zoning violation interpretation—even before securing final approval. A court initially revoked the DOB permit and ordered the removal of 20 excess floors. But on appeal, the First Department reversed, allowing the project to proceed. This reflects the perils and unpredictability of “build‑at‑risk” strategies in zoning disputes.
Litigation Trends Emerging in Manhattan Real Estate
Tenant and Affordable Housing Litigation on the Rise
From class actions on illegal rent hikes in Harlem to building owners accused of over‑charging via fraudulent repair claims, litigation from tenant advocates is increasingly common. Enforcement mechanisms and class‑action paths are being used to challenge both rent‑stabilized properties and deceptive landlord practices.
Brokerage and Commission Liability Under Antitrust Laws
The REBNY‑backed lawsuit is emblematic of a new wave of antitrust litigation aimed at longstanding brokerage practices that may unfairly burden sellers or buyers.
Design and Construction Litigation in Luxury Developments
Developments like 15 Hudson Yards (poor‑door/amenity segregation lawsuits) and 1 Seaport (foundation and construction defects causing structural lean) demonstrate an increasing trend in litigation over high-end development flaws and tenant segregation policies.
Evidence Preservation and E‑Discovery Challenges
Older precedents, such as Einstein v. 357 LLC (2009), remain influential. That decision held realtors liable for failing to issue litigation holds and preserve emails, leading to sanctions and adverse inferences. As complex Manhattan cases generate massive digital records, e‑discovery missteps are costly.
Judicial Overload Slowing Litigation Resolution
Litigators report severe delays in case processing, particularly in real estate cases. A current bottleneck in Manhattan courts is attributed to constitutional caps on the number of state Supreme Court justices, resulting in wait times of over a year for motions and three years or more for appeals, especially in cases like Elizabeth Street Garden.
What Manhattan Stakeholders Should Do
- Proactively audit compliance and documentation: from ADA design standards to contract disclosures.
- Maintain thorough records and implement litigation holds when disputes are imminent to ensure compliance with relevant regulations.
- Monitor evolving antitrust and tenant rights litigation, particularly involving co-op and brokerage practices.
- Consult experienced local litigators to anticipate procedural bottlenecks and develop efficient strategies.
- Evaluate risk in speculative zoning or build‑at‑risk projects, as shown by the Amsterdam Avenue litigation.
Levy Goldenberg is Here to Help
Real estate litigation in Manhattan is entering a new era: tenants are increasingly litigating against landlords; brokers face antitrust exposure; defect claims beset ultra‑luxury developments; and courts struggle with a mounting docket. Understanding recent trends and reviewing internal practices accordingly can help protect your interests in this evolving legal landscape. At Levy Goldenberg LLP, we have extensive experience in Manhattan real estate litigation and provide tailored guidance at every stage—from compliance audits to trial representation. Call us today for a confidential consultation.