The Real Deal New York

Warburg sues condo sponsor over sales deal at 225 E. 81st St.

Brokerage claims Michael Paul Enterprises violated arrangement

September 02, 2014 04:45PM
By Zachary Kussin

From left: Warburg's Frederick Peters and 22

From left: Warburg’s Frederick Peters and 225 East 81st Street

Warburg Realty filed a complaint in State Supreme Court last Thursday against Michael Paul Enterprises, the sponsor of 225 East 81st Street — a boutique five-unit condominium development — alleging that the Westchester-based investment and development firm reneged on an exclusive sales agreement.

In the suit, the brokerage claims that Michael Paul breached a clause of the September 2013 exclusive sales and marketing agreement for the property, which says that Michael Paul can dissolve the contract with Warburg if a third party acquires an equity interest that requires tapping a new brokerage or if Warburg fails to do its job. None of those triggering events occured, the brokerage claims.

“It was the defendant’s intention to deprive [Warburg] of the commissions, compensation and reimbursable expenses due … under the agreement by falsely claiming that a third party had acquired an equity interest … for the sole purpose of wrongfully avoiding [Michael Paul’s] obligations to [Warburg] under the agreement,” the complaint reads.

Though the final amount of damages are not yet available, Warburg seeks no less than $1.3 million in present and future damages, accounting for commissions and other unspecified expenses incurred.

Michael Paul did not return a call seeking comment on the suit.

Warburg, whose spokesperson and attorney also did not respond to requests for comment, mentions that it undertook various sales efforts at the property. The suit includes details of Warburg assisting with apartment design, preparing the offering plan, and advertising the homes on their website and in the New York Times.

This spring, several months after the sales and marketing agreement was reached, “through its words and conduct,” Michael Paul allegedly “communicated its intention to renounce, disavow and not perform any and all of its future contractual obligations yet to be performed,” according to the suit, though specific details were not cited.

Nest Seekers International’s Ryan Serhant, along with Jenna Amicucci and the rest of his team, were tapped last month to handle sales at the property, which is located between Second and Third avenues. Their listings have not yet hit the market. Though not mentioned in the complaint, Serhant did not respond to a message seeking comment on the dispute.

Serhant and Amicucci also took over sales from Warburg at another Michael Paul development located at 230 East 63rd Street, as previously reported, and sold the six-unit building’s remaining homes.

The 81st Street development is under construction and will be open by the end of the year. It includes three- and four-bedroom full-floor apartments, with prices ranging from $3.5 million to $6 million.

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