The developers of the Artisan Lofts condominium in Tribeca are facing a $6 million lawsuit from Fillmore Real Estate after they missed a deadline to complete construction and failed to make payments to their construction workers.
In a suit filed in New York state Supreme Court, Fillmore alleges that Tribeca Associates partners Elliott Ingerman and William Brodsky breached a contract by failing to obtain a permanent certificate of occupancy at the building, located at 157 Chambers Street, and failing to make payments to Pavarini McGovern, the general contractor at the property.
According to the Feb. 21 complaint, in 2006, Morgan Stanley Mortgage Capital made a $13 million loan to 157 Chambers Condo, a firm controlled by Brodsky and Ingerman, to help finance the condo conversion, and later sold the loan to Fillmore. Artisan Lofts is a former 100,000-square-foot office building, midway between Greenwich and Hudson streets, which was converted to residential condos.
The original loan deadline was June 2009, and the borrowers guaranteed that the project would be completed in a timely manner and it would be “free and clear” of all liens, which are often placed on a property when a contractor or other vendor is not paid on time.
Under a related loan, the property was originally scheduled to be completed in December 2008, but that was extended several times at the request of the developers, according to the complaint. The developers were given a November 2009 deadline to get a temporary certificate of occupancy and received six loan amendments, the final with a deadline of May 31, 2011, to obtain a permanent certificate of occupancy.
The lawsuit alleges that the borrowers missed the November 2009 deadline for a temporary certificate and never obtained the permanent certificate. The suit also alleges the developers exceeded the construction budget and failed to pay an undisclosed amount of funds to Pavarini McGovern, which slapped a mechanic’s lien on the building.
Due to the delay, the proceeds from several apartment closings were placed in an escrow account controlled by the title company, according to the complaint. This escrow agreement delayed payment to the lender, which would have helped pay down the loan balance, which is now more than $16 million.
According to the complaint, another contractor named DAL Electrical has a lien on the building for unpaid fees.
As The Real Deal previously reported, a number of buyers at Artisan Lofts filed escrow disputes in 2009 to try and get out of their sales contracts.
The developers and Pavarini McGovern did not return calls seeking comment. Dechert attorney Joseph Donley, representing Fillmore, said his client has asked him not to comment on the case in the press. DAL officials were not immediately available for comment.