The Real Deal New York

Tenants sue Milstein at 30 Lincoln Plaza

May 23, 2011 03:40PM
By David Jones

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30 Lincoln Plaza and Milstein CEO Howard Milstein

Five tenants at 30 Lincoln Plaza have filed suit against Milstein Properties alleging the firm previously sold condominium units to outside buyers at
huge discounts, but refused to offer the same deals to existing
residents, and now refuses to allow them to close on their purchase
agreements.

The suit, filed May 5 in New York State Supreme Court, alleges
fraud, breach of contract and other claims against the developer,
which owns the 33-story tower at 30 West 63rd Street, near Central
Park.

The suit alleges that prior to the downturn Milstein had promised
to sell apartments to existing tenants at 25 percent off the price
offered to outside buyers, but the developer cut prices to outside
buyers following the downturn and refused to offer additional cuts
to the original tenants.

“When the real estate market collapsed in the fall of 2008, the
defendants, in violation of covenants contained in the plan, sold
numerous units to outside purchasers at a fraction of the price
offered to the bona fide tenants, without offering the aforesaid
reductions in price as promised in the plan,” wrote attorney Marc
Held, in the complaint.

According to the complaint, 46 bona-fide tenants at the building
signed agreements to buy their apartments at an average price of
$1,404 a square foot, while during the same period, 70 outside
buyers signed agreements to buy apartments at $956 a square foot.

After offering the discounts in 2007, the purchase period for
tenants to buy their apartments at a 25 percent discount was
extended four times until July 2008.

The suit alleges that after the exclusive period for tenants to
buy expired in 2008, the developer gave certain tenants special
discounts of up to 50 percent, and tried to conceal the arrangement
by identifying the buyers as outside buyers. The suit also alleges
these tenants were given apartment upgrades and closing costs
were waived.

The suit claims apartment 8C was listed for $1.88 million, and
would have been purchased for $1.4 million under a legal discount
of 25 percent, but the buyer, who previously lived in apartment
30E, was allowed to buy the apartment for $825,000, a 56 percent
discount.

“The aforesaid purchase agreement constituted ‘discriminatory
inducements’ in favor of certain favored ‘tenants in occupancy’ in
violation of the plan,” Held wrote in the complaint.

The suit claims that the tenants in the current lawsuit have
purchase agreements they want to close, but that Milstein is
refusing to renovate some of the units and is preventing them from
closing because he can sell the units at higher prices on the open
market.

In October 2009, former Attorney General Andrew Cuomo’s office
reached a $100,000 settlement with Milstein over allegations
that the company failed to disclose the price reductions in an
amendment to the condominium offering plan, according to the
lawsuit. As part of the settlement, the developer neither admitted
nor denied guilt.

As The Real Deal previously reported, tenants at 30 Lincoln Plaza
filed suit in December 2009 against Milstein and Cuomo in state
Supreme Court asking that the regulator reverse the 2007 approval
of the condo offering plan.

In October 2010, Judge Saliann Scarpula ruled against tenants in
that lawsuit
, saying that the lead complainant, Vera Salnikova, was
a non-purchasing tenant and therefore not entitled to an extension
of the purchase period.

Milstein officials declined to comment as did officials at the AG’s
office.

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