The Real Deal New York

It’s official — Rector Square is in foreclosure

March 06, 2009 04:39PM
By David Jones

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A State Supreme Court judge yesterday officially ordered the foreclosure of Rector Square condominium in Battery Park City, granting the receiver the power to rent out the building’s unsold units and providing a budget to complete construction of its common areas.

The order from Judge Joan Madden comes a month after Anglo Irish Bank filed to foreclose on Rector Square, a 304-unit converted condo at 225 Rector Place. The Dublin-based lender filed suit after developer Yair Levy defaulted on a $165 million mortgage loan.

Under the order, Anglo Irish will provide $2 million to complete the construction of the building’s common areas. In a tour of the complex in late February, The Real Deal found unfinished construction in several areas of the building, including hallways littered with exposed wiring, exit doors with no locks and an indoor swimming pool filled with stagnant water left untreated for months.

“The highest priority is to make the building habitable and safe,” Michael Miller, a veteran trust attorney and the court-appointed receiver, told The Real Deal in a February interview.

Miller has been granted the power to oversee the hiring of a new management team, to exercise the legal authority necessary to protect the building and to collect all rents, common charges and related fees.

Marc Held, attorney for the 46 unit owners in the building, has been granted more authority than almost any residential receiver in recent memory: “As far as I know, these expanded rights have never been done in the state of New York. This is a good day for the residents of 225 Rector Place.”

Anglo Irish filed to foreclose after Levy defaulted on more than $117 million owed on the $165 million mortgage loan. Court documents show he also owed $631,000 in payments on a ground lease to the Battery Park City Authority and was sued for back payments to several contractors, including his advertising agency.

According to Miller and Held, Levy’s attorneys informed the court that he is “broke” and has no funds to cover the costs. As The Real Deal first reported, Levy has problems at his Park Columbus property at 101 West 87th Street, facing $3.15 million in mechanic’s liens, and a lawsuit by a subcontractor alleging he misappropriated funds.

Held said that Levy’s attorneys admitted in court that Rector Square’s reserve fund has been depleted, and that Cooper Square Realty, the building’s management company, had been ordered by Levy to pay operating costs, like heat and hot water with funds collected for pilot payments for Battery Park.

Miller said he is currently interviewing several companies to take over management of the building. Lawyers said that Anglo Irish Bank had requested that Miller be given the authority to continue selling units in the building, but the judge has not yet ruled on that issue. Miller said future sales would not even be considered until construction is completed.

Madden ordered that any payments collected by Miller be deposited into a Capital One Bank account and that he post $680,000 in collateral to make sure he fulfills his duties as receiver.

Lawyers for Anglo Irish Bank declined to comment. Levy was not immediately available for comment.

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