Co-op and condominium buyers have more leeway to pursue legal action against developers, according to Crain’s, following a New York Appellate Division ruling last week. The ruling, which related to a suit against JPMorgan Chase in which the plaintiff claimed the defendant committed gross negligence, superseded a law that typically allows only the attorney general to file class action suits in regard to securities. The law, known as the Martin Act, has forced tenants in the past to go through the attorney general’s office to instigate legal action against their developer, according to real estate attorney Steven Sladkus of Wolf Haldenstein Adler Freeman & Herz. [more]

One Madison Park, Ira Shapiro (top) and Jonathan Newman (bottom)

A state Supreme Court judge handed a victory to iStar Financial today by granting full authority to the interim receiver at the One Madison Park condominium, which is going through foreclosure proceedings. Judge James Yates ordered that attorney Jonathan Newman, who was appointed interim receiver earlier this month, be granted the authority to oversee the completion of One Madison Park. The move represents a significant setback to lead developer Ira Shapiro, who urged the judge to allow him to remain in control over the project, which descended into a bitter split with his development partner Marc Jacobs, and an investigation by the Rockland County District Attorney. “They’re no longer in control of the process,” said Matthew Parrott, attorney for iStar. “The custody and control of the building is in possession of Mr. Newman.” A written order is expected to be issued Monday, Parrott said. Burton Dorfman, the attorney for Shapiro, praised the judge’s ruling, and noted that the developer will still be involved with marketing and completing the 69-unit building in consultation with the receiver. Lawyers said that sales will not resume until Attorney General Andrew Cuomo’s office lifts the ban he imposed more than a month ago. On March 12, Cuomo ordered the developers to refund money to buyers after iStar filed to foreclose and dozens of lawsuits were filed claiming that the developers defaulted on tens of millions of dollars in personal loans used to fund overhead costs at the condo. [more]

Lender iStar Financial has told a state Supreme Court judge that it would fund the remaining construction at the One Madison Park condominium if the court-appointed receiver is granted expanded powers since it says the developer could not be trusted to complete the project. (Note: correction appended)

The remaining construction includes finishing the lobby, an indoor pool, fitness center, and other work to get temporary certificates of occupancy on the upper floors of the 50-story tower. The lender urged Judge James Yates to allow Jonathan Newman, the newly appointed interim receiver, additional powers to oversee the building amid concerns that the current developers, led by Slazer Enterprises president Ira Shapiro, have not fully accounted for millions in missing funds or resolved other problems. [more]

From the August issue: Much attention has been focused lately on the flurry of lawsuits filed
by unsatisfied apartment buyers hoping to get out of their purchase
contracts.
But attorneys say there is another, under-the-radar group of buyers
looking to break their contracts and get their money back. Instead of
suing, these regretful buyers have chosen to pursue the cheaper, more
streamlined option of having their disputes mediated by the state
attorney general’s office. The number of buyers selecting this route has exploded in the past
year, leading to a backlog of paperwork in the office’s real estate
finance bureau, with buyers and developers waiting long periods of time
to find out if they will get often-substantial deposits or down
payments back. [more]