Broadstreet: 225 Rector
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Broadstreet: Marc Held, Partner, Held & Hines, LLP, quoted on lawsuit re: 225 Rector
Unit owners at 225 Rector Place sue developer and others
Related Companies may repurchase building that it originally erected
225 Rector Place, where unit owners in the failed condominium conversion have filed a $100 million lawsuit against the developer, Yair Levy, and other parties. (Photo: Terese Loeb Kreuzer)
On Jan. 20, State Supreme Court Judge Joan Madden handed down a stinging decision that severed the last connection between real estate developer Yair Levy and 225 Rector Place, the one-time rental building he bought in 2005 with plans to convert it to condominiums. Judge Madden’s decision upheld each claim made in the foreclosure action by Anglo-Irish Bank, which held Mr. Levy’s mortgage, and dismissed each claim made by Mr. Levy’s attorneys.
Separately, attorneys representing several dozen people who bought apartments before Mr. Levy stopped remodeling work and defaulted on the mortgage have filed suit seeking $100 million in damages from Mr. Levy and several other parties, including Cooper Square, the management company he hired. “Mr. Levy failed to complete the project as promised,” explained Marc Held, a lawyer for the unit owners. “He also failed to comply with the terms of the offering plan.” Mr. Held alleges that Cooper Square, “paid themselves money that was supposed to be set aside for PILOT fees” – a reference to the payments in lieu of taxes that Battery Park City residents are assessed each year, as part of the unusual financial structure of the community.
In the suit, which was filed in mid-November, the unit owners also seek damages from Shvo, the real estate sales and marketing firm that Mr. Levy retained to help sell apartments in the building. “They negligently failed to disclose the true financial condition of the condo,” Mr. Held said. “My clients were harmed as a result.” (Calls to attorneys for Mr. Levy and Anglo-Irish requesting comment, as well as to representatives of Cooper Square and Shvo, were not returned.)
As Anglo-Irish takes full legal possession of the building, several questions remain unresolved. Mr. Held points out that the offering plan that governs the sale of condo apartments at 225 Rector, “allows the sponsor to rent units, rather than sell them, but my clients didn’t buy their apartments to move into a rental building.” Also a concern, he says, “is that we don’t want the remaining apartments dumped at below-market prices, which would harm the value of the units my clients own.”
Asked to characterize the prospects for his case, Mr. Held said, “my clients and I are confident that justice will be served.” He went on to explain that, although Mr. Levy appears to be in the midst of severe financial distress (several other large condo conversion projects of his are also in foreclosure), “he had insurance against this kind of problem, and we can still recover against his insurance companies.”
In a third development, two sources – one associated with 225 Rector, the other a real estate professional who watches Battery Park City closely – said they understand that the Related Companies (the developer that built 225 Rector and sold it to Mr. Levy for more than $100 million, and has since been brought back to manage it during foreclosure) is considering a possible re-purchase of the building from Anglo-Irish. “That’s how the smart money works in Manhattan properties,” the real estate professional said. “They sell when everybody thinks the good times will never end, and buy back in when it looks like the bad times will never end.”
