The Real Deal New York

Massive headaches at the A Building

April 20, 2010 05:29PM
By Sarah Ryley

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The party’s over at the A Building, an East Village condominium built by mini-mogul Ben Shaoul and his partner, Rob Kaliner.

Beneath the two-year-old building’s reputation for hosting raucous rooftop pool parties lies a reality worse than the most killer hangover — flooding, crumbling balconies, alleged mismanagement of the condo board’s funds and two unresponsive developers who have left owners banging their heads against mold-ridden walls, claim several residents who forwarded dozens of documents detailing these issues to The Real Deal.

The A Building at 421 East 13th Street was among the first luxury condominiums finished in the formerly gritty East Village. Shaoul, principal of Magnum Real Estate Group, manages thousands of rental units, has built several luxury Manhattan condominiums in recent years including Chelsea’s Yves, and has a rental building under construction in the South Street Seaport historic district. Kaliner, president of the Ascend Group, also built the Georgica on the Upper East Side.

Shaoul declined to comment on most of the complaints lodged against him and his partner, but issued this statement: “The sponsor is actively engaged in evaluating and addressing concerns raised by the unit owners with regard to construction issues. In that regard, the sponsor is speaking with the general contractor who was responsible for the construction of the building, and has reached out to some of the individual contractors who performed the work that the unit owners are concerned about.”

Kaliner did not return calls from The Real Deal.

Indoor Pools

Faulty construction has afflicted roughly a quarter of the A Building’s 96 units with serious leakage and mold issues, according to one letter the residents sent to the developers — outlining 33 issues they are seeking explanation on — that was forwarded to The Real Deal.

The developers did not respond to the letter, and have been no-shows at condo board meetings, even though they serve as president and vice president, several residents complained to The Real Deal

“This is dangerous for my daughter to be in, and we now have no running water in the kitchen as the island has been disconnected … I feel like I am squatting in my own home,” resident Kim D’Amato wrote in an e-mail on March 25 to the building’s management company, owned by Shaoul. She complained in that e-mail that it took three months to repair her unit after experiencing the same problem last year.

Her $1.9 million garden-level apartment flooded after the heavy rainstorms in early March. She told the condo’s insurance claims examiner in an April e-mail that the living conditions got so bad that her daughter could no longer live there.

On April 13, the claims examiner wrote: “Our preliminary investigation has revealed that this is a construction issue. The garden/terrace is sloped toward the interior wall, which allowed the water to pool along the wall and create a seepage condition. As a result, the construction company … would be responsible for this loss.”

D’Amato declined to comment for this article, and did not provide the e-mails to The Real Deal.

Her neighbor, Thomas Gaissmaier, experienced similar problems with his unit. “There has been extensive damage to the wood flooring throughout the living room, dining room, home office and master bedroom,” Gaissmaier’s attorney wrote to the management company in a letter forwarded to The Real Deal. “It is probable that there is moisture under the [kitchen and bathroom] tile floor which, like the moisture in the rest of the unit, will sustain the growth of mold and cause even more serious damage.”

Gaissmaier declined to comment, and did not provide the letter to The Real Deal.

All of the residents who were contacted either declined to comment or were only willing to speak anonymously because they are contemplating a group lawsuit against the developers, who they claim have ignored or been slow to respond to their complaints. 

Also of concern are the building’s balconies, some of which have large, visible cracks and unfinished edges. “We had a structural engineer look at our balconies. He stated that they were not done properly and are dangerous at this point,” said one resident, who asked to remain anonymous. 

‘Suspicious Transactions’

In December, three residents, acting as representatives for all unit owners, wrote the state Department of Law requesting it investigate the developers, claiming that they “may have engaged in suspicious transactions” using the condo board’s funds. They have not received a response from the state.

Shaoul and Kaliner still control the condo board (and will do so until the building receives its permanent Certificate of Occupancy).

Last June, as heads of the condo board, the duo decided to replace an outside management company that handled the building’s affairs with Magnum Management, which Shaoul owns.

The arrangement — in which the two men act as the developers, condo board and management company — has made it impossible for the residents to have any meaningful oversight of the building’s affairs, since all three entities act in the developers’ interests and none act in the residents’ interest, charged one resident.

In the letter to the state, the residents complain that Magnum Management only provided them with a partial set of budgetary documents. But those documents — some of which were invoices that could have been the responsibility of the previous management company — still indicated a history of late payment penalties for critical utilities, that the developers did not pay all of their common charges, and that “questionable disbursements were paid out of A Building condominium operating accounts,” said the letter.

The residents said they received no answer to requests for further documentation that would bolster their investigation.

For example, an audit showed that the condo board was charged $109,360 for closing costs on the $1.3 million apartment for the manager to live in.

“The closing costs should not have been more than $45,000,” said Debra Guzov, a principal of the law firm Guzov Ofsink. Guzov, who does not represent the residents, added, “A fee in excess of $100K would be extremely high and perhaps unprecedented for a $1.3 million purchase.”

The residents requested detailed invoices illustrating those closing costs, but were not provided the documents, said the letter.

The residents were also concerned about a $2,340 bill paid by the condo board that included gym repairs related to leakage caused by “faulty construction” that they argue should be the responsibility of the developer. They’re concerned that the condo board is covering other bills that the developer should pay, but have been stonewalled on their efforts to conduct a proper audit, explained one resident.

Pool Problems 

Even the rooftop pool, marketed as an oasis of summer bliss, has been a problem. A spokeswoman for the city Department of Buildings confirmed that it wasn’t included in the original plans for the building, which caused it to be shut down several times over the last two summers. Nearly $17,000 in fines were charged to the building, of which only $200 was paid, according to department records.

The spokeswoman said the department has accepted plans for the pool, so it shouldn’t be closed down this summer.

But large blocks of concrete around its deck have already broken into pieces, which the management characterized as “general wear and tear” in a letter sent to the residents. It’s currently under repair.

Shaoul said he has fixed and is continuing to fix numerous construction defects, including the rooftop pool’s deck, paying tens of thousands of dollars out of his own pocket. 

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