The Real Deal New York

Livorno Properties faces new foreclosure suit at East 81st Street condo

November 16, 2010 05:05PM
By David Jones

A Livorno Properties Upper East Side condominium is facing a new foreclosure suit from a private investment firm, just months after unit owners forced the troubled building into receivership.

The firm, Petermark II, filed suit in New York State Supreme Court Nov. 8 against developers Ben Zion Suky and Yossi Zaga, alleging they defaulted on a $2.5 million mortgage that they personally guaranteed at the Duplex, a 37-unit building at 215 East 81st Street on the Upper East Side.

Petermark acquired the $2.5 million mortgage from investors Peter Stern and Mark Pnini, who originally made the loan to the developers in September 2009, but Suky and Zaga allegedly failed to repay the loan and the default was declared this past September.

“Petermark, the mortgagee, is foreclosing on its collateral, which is made up of six residential units and two commercial units in that building,” said attorney Jonathan Freiberger, who represents the lender and is a partner at Gleich, Siegel and Farkas, in Great Neck, N.Y.

The condo has been in serious trouble in the courts and with regulators for several years now, according to court documents and interviews with several legal sources.

In 2006, Marathon Asset Management originally loaned the developers $14 million to acquire the former rental building and convert it into condo units. The developers later defaulted on the loan by failing to make monthly mortgage payments or cover the reserve fund, according to a 2009 foreclosure suit filed by Bank of America, the trustee of the loan. Lawyers for Bank of America and Marathon said the note was later sold to new investors, but it remains unclear what the new note holders plan to do with the property.

Attorney Charles Epstein, who represented Suky and Zaga in the Marathon foreclosure case, declined to comment, saying he did not have authorization to discuss the case.

Meanwhile, the developers were sued in 2008 by a firm called Global Hotels, which alleged it entered a lease agreement with the developers to use some of the unsold units as extended-stay hotel rooms, but the sponsor later kicked them out of the building after unit owners complained to the New York state attorney general’s office.

By March 2009, unit owners at the building filed suit against the developers, charging that they failed to pay common charges on the unsold units and also complained of serious defects in the construction of the building. Records filed with the city show the building was the subject of numerous citations by the fire and buildings departments.

A partial stop work order was issued in January 2010 and a receiver was later appointed to oversee the property.

Victor Metsch, attorney for the unit owners, declined to comment. Lenore Kramer, the court-appointed receiver, was not immediately available for comment, nor were Suky and Zaga.

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