The Real Deal New York

Baruch Singer sues Fortress Credit; move could stall Chetrit’s acquisition of West Side site

October 01, 2012 02:30PM
By Adam Pincus

From left: Joseph Chetrit, Baruch Singer and 540 West 38th Street at center (credit: PropertyShark)

Multi-family investor and landlord Baruch Singer is claiming that a former lender, Fortress Credit, reneged on a deal not to sue him for millions of dollars after they sold his foreclosed West Side property for a loss.

The lawsuit that Singer filed Thursday in New York State Supreme Court may throw a wrench into the Chetrit Group’s pending $26.5 million purchase of the development site that Singer lost last month in a foreclosure sale; the Chetrit Group is in contract to buy the parcel, situated at 541­–545 West 37th Street and 540-544 West 38th Street.

Singer claims in the suit that the Midtown-based Fortress had agreed not to pursue millions of dollars in a so-called deficiency judgment in exchange for Singer paying Fortress $1.5 million and not trying to buy back the note at the foreclosure auction, among other conditions.

Fortress first filed to foreclose on the property in 2008, court records show. The lender took control of the property following a Sept. 7 foreclosure auction. And then on Sept. 11 filed in court papers that it was seeking more than $22 million from Singer in a deficiency judgment.

The dispute may hinge on what the property is worth. It was widely marketed over the past year by Massey Knakal Realty Services, with a price of $26.5 million. Joseph Chetrit’s Chetrit Group signed a contract to buy the site last month, and the deal was slated to close Sept. 28, court papers say. It is not clear if the sale was finalized.

Singer was not available for comment, and his attorney declined to comment. The Chetrit Group and Fortress did not immediately respond to a request for comment.

The site is zoned for dense commercial and limited residential use, the Massey Knakal marketing material says, and has 172,813 square feet of “as-of-right” development potential, and up to 373,275 square feet of development potential through additional incentives.

Singer claims in court documents that a potential buyer was overlooked who would have offered $36 million.

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