Ground lease co-op rent cap failed to advance. Fourth year in a row.
Albany adjourned its 2026 session without passing S2433A. Roughly 25,000 NYC shareholders have no statutory protection against land rents courts can reset without limit. Companion to New York's condo-reform record.
In June 2025, the New York State Senate passed S2433A by 34 votes to 28. The bill would have established a set of co-op rights and displacement protections, including the right of first refusal to purchase the land and rent-stabilized tenancy rights upon deconversion. The Assembly did not bring it to a floor vote before the session closed. Albany adjourned its 2026 session without advancing the bill a second time. At Carnegie House, 100 West 57th Street, that gap has a documented price: a court-approved annual land rent of $24 million, up from $4.36 million, a 450 percent increase that an arbitration panel set and courts upheld with no statutory ceiling to apply.
What a ground lease co-op actually is.
A ground lease co-op is a building where the cooperative corporation owns the structure but not the land beneath it. Shareholders buy shares in the corporation and, through those shares, a proprietary lease on their apartment. The land itself belongs to a separate private owner. The co-op pays annual rent for that land under a long-term ground lease, typically running 60 to 99 years.
New York City has roughly 100 buildings in this situation, covering an estimated 25,000 shareholders. They are concentrated in Manhattan, largely in buildings where mid-century developers built on land held by institutions, universities, and private investment trusts that had no interest in selling. Most shareholders bought into these buildings as ordinary co-ops. The ground lease was a disclosure in the offering plan, not something most buyers modeled over the life of a decades-long reset cycle.
When the ground lease comes up for a reset, the landowner can seek a new annual rent based on current land values. There is no statutory ceiling on that reset. The Emergency Tenant Protection Act, which governs rent-stabilized apartments, does not apply to co-op ground rents. The shareholders occupy a category that sits between owner-occupant protections and tenant protections and is covered, in practice, by neither.
The Carnegie House case shows what the gap costs.
Carnegie House at 100 West 57th Street is the best-documented case. The co-op's ground lease came up for reset in 2024. The land is held by investors David Werner and Rubin Schron, who purchased it for approximately $270 million in 2014. They sought a new annual rent reflecting current Midtown Manhattan land values.
An arbitration panel set the new annual ground rent at approximately $24 million. The prior rent had been $4.36 million. State Supreme Court Judge Nicholas Moyne upheld the arbitration panel's determination. The co-op filed an appeal. The case established, on the record, that courts have no statutory tool to restrain a lease-reset outcome, however large, absent a legislature-enacted ceiling.
The building has 324 units. A $19.6 million annual increase spread across 324 units averages approximately $61,000 per unit per year in additional ground rent before any other operating costs. Long-term shareholders, including residents who bought decades ago at prices that assumed a stable carrying cost, face a bill bearing no relationship to what they paid when they purchased. The co-op's board testified before the Assembly Housing Committee. Shareholders organized and traveled to Albany. The Senate passed the bill 34 to 28. The Assembly did not take a floor vote.
What S2433A would have done.
S2433A, sponsored by Senator Liz Krueger and Assembly Member Linda Rosenthal, would amend the Real Property Law to create a specific protection regime for residential ground lease co-ops. The bill was amended in May 2025 in response to industry criticism. The amendment eliminated the original bill's 3%/CPI rent-increase cap and refocused the legislation on displacement protections: shareholders in primary-residence units would gain rent-stabilized tenancy rights upon deconversion, and the co-op would have a right of first refusal to purchase the land if the landowner elects to sell.
| Provision | Current law | S2433A would have established |
|---|---|---|
| Annual rent increase cap | None. Market rate at each reset, set by arbitration or negotiation. | None in the amended version. The original S2433 proposed 3% or CPI; that provision was eliminated in the May 2025 amendment. |
| Lease renewal right | No statutory right. Renewal depends on the existing ground lease terms. | 30-year renewal option for the co-op at each reset period. |
| Right to borrow | No statutory right. Landowner consent typically required in the lease. | Co-op right to borrow for required capital repairs without landowner consent. |
| Right of first refusal | Not established in statute for ground lease co-ops. | Right to purchase the land at fair market value if the landowner elects to sell. |
| Displacement protection | None upon deconversion. Shareholders become market-rate tenants. | Rental lease rights for existing primary-residence shareholders upon deconversion. |
Even as amended to narrow its scope, the bill did not receive a floor vote in the Assembly in either the 2025 or 2026 session. The Senate passed it in the 2025 session; the Assembly Housing Committee received it. Albany adjourned without acting.
Why the bill did not advance.
The real estate industry's argument against S2433A is on the record: a statutory rent cap retrospectively alters the economic terms of existing ground leases, transferring value from landowners who acquired property at prices reflecting future rent upside to shareholders who bought units at prices that reflected the lease-reset risk. Ground lease rent resets, in this framing, are an efficient market mechanism. The landowner accepted the risk of holding a long-term asset; a legislated cap would eliminate the upside that justified that risk.
There is also a constitutional dimension that Assembly members raised in committee. New York courts have treated ground lease rent resets as arms-length commercial contract terms, not landlord-tenant relationships subject to rent stabilization. A statutory cap imposed retroactively on existing leases raises a contract-impairment argument under Article I of the U.S. Constitution and its New York equivalent. The bill's sponsors countered that the Legislature has routinely regulated contract terms when housing stability and the protection of owner-occupants justify the intervention, and that ground lease co-ops meet that threshold.
The shareholders' position is also on the record. They have no exit mechanism when the rent resets: they cannot compel the landowner to sell the land, they have no statutory right of renewal, and the reset-risk projection was absent from most offering plans issued at the time of the original building conversion. That disclosure gap is documented in the Carnegie House record and in testimony from residents of Queens ground lease co-ops who appeared before the Assembly in March 2026. Both sides of this argument have been made in print, in committee, and in court. The Assembly has not brought the bill to a floor vote.
The structural gap that remains.
The Martin Act, administered by the Attorney General's Real Estate Finance Bureau, reaches sponsor fraud and offering-plan misstatements at the time of issuance. As this site has documented, the REFB's enforcement authority does not extend to cost-structure changes that arise years after the offering plan closes. Ground lease resets fall into that gap by definition: the reset is a future event, often decades out, that the statute does not require offering plans to project in dollar terms.
No other state agency has jurisdiction over ground lease resets for residential co-ops. The Division of Housing and Community Renewal administers rent stabilization; ground rents on co-op land are not within its scope. HPD has enforcement authority over housing conditions, not carrying-cost structures negotiated in long-term commercial leases. Short of retaining a real estate attorney before purchase to model ground-rent scenarios over the full lease cycle, there is no disclosure mechanism that puts buyers on notice of the specific reset exposure.
The legislative record now shows the Senate demonstrated majority support in at least one session and the Assembly did not bring the bill to a floor vote in two consecutive sessions. That pattern matches the record documented across other condo and co-op reform bills: Senate action, Assembly inaction, session closes. Ground lease co-op protection is the newest addition to that record.
Bottom line.
Roughly 100 NYC co-op buildings and 25,000 shareholders are in ground lease structures with no statutory cap on rent resets. Carnegie House is the documented case: $24 million in annual ground rent, up from $4.36 million, upheld by courts with no ceiling to apply. S2433A addressed each of the specific vulnerabilities with a detailed set of provisions. The Senate passed it. The Assembly did not take a floor vote. Albany adjourned the 2026 session without acting. If you own shares in a ground lease co-op, the immediate steps are to confirm when your building's lease resets and to contact your Assembly member about S2433A. The representative contact tool on this site routes a message to your district.
Primary sources: NY State Senate Bill S2433A: text and legislative history · Habitat Magazine, June 2026: "State Legislature rejects Ground Lease Co-op Bill again" · The City, May 2024: Manhattan co-op in crisis, Carnegie House ground lease fight · The Real Deal, January 2026: Carnegie House lease dispute · Crain's New York Business: judge upholds Carnegie House rent hike
Companion resources: New York's condo-reform record: what stalled and what passed · Why the AG cannot help with most condo governance disputes · Your home is not an investment · NY condo transparency bill: 58-1 Senate, Assembly sponsor withdrew it · All documented regulatory gaps · Contact your Assembly member