The developer of the Upper East Side’s Manhattan House condominium suffered a major blow in the long-awaited eviction trial of 17 market-rate tenants yesterday when a housing court judge disqualified their legal counsel for failing to disclose that one of their lawyers previously represented one of the defendants against the condo.

Housing Court Judge Brenda Spears ruled that Axelrod, Fingerhut & Dennis could no longer represent Manhattan House, because Peter Axelrod, one of the law partners defending the developer, failed to disclose that he had previously represented defendant Susan Tosk, in a 2007 case involving the replacement of her windows at the 200 East 66th Street tower, and had inside information that was relevant to the current case. [more]

O’Connor North America, the junior mezzanine lender at 510 Madison
Avenue, has filed suit to force developer Harry Macklowe to open up the
building to an investment group that will help investor Jeremiah
O’Connor buy out the loan [more]

New details about the financing behind the massive condominium conversion at the Manhattan House are raising questions among critics and some public officials about the long-term viability of the Upper East Side project. Documents filed with the state attorney general’s office show that in 2009, HSH Nordbank, which holds a $750 million loan on the building at 200 East 66th Street, established a special fund to help the developer, O’Connor Capital Partners, meet its monthly expenses at the property. “My concern about Manhattan House is that one day the sponsor says that they have no money and that basic repairs and maintenance cannot be maintained,” said City Council member Dan Garodnick, who, along with state Assembly member Jonathan Bing, has held discussions with the developer over the financial condition of the building. Developer O’Connor Capital Partners has insisted the conversion is in good shape, Garodnick said. [more]

A week after fending off a foreclosure action at 510 Madison Avenue, developers Harry and William Macklowe and real estate investment trust SL Green Realty are facing a lawsuit from another industry heavyweight that wants a piece of a $65 million insurance payment.

O’Connor North American Property Partnership, led by Jeremiah O’Connor, filed suit against Macklowe Properties, alleging breach of contract, and SL Green, alleging breach of contract and unjust enrichment for allegedly failing to share the insurance proceeds stemming from the massive 2009 fire at 510 Madison. The 510 Madison building has been embroiled in controversy for years. It was one of the last commercial buildings in the Macklowe Properties portfolio after the developer was  forced to sell off the trophy General Motors building in 2008 help pay off billions of dollars in debt. [more]

Brooklyn developer Isaac Hager is facing litigation after he allegedly took out a $17 million loan from N. Richard Kalikow’s Alpha Capital, and allowed his terminally ill business partner, Chaim Lax, to personally guarantee the loan, less than a year before his death.

Alpha, a firm controlled by Kalikow’s Manchester Real Estate and Construction, entered an agreement in October 2007, to lend the $17 second mortgage to Kent Wythe 9th Street, a firm led by Hager and Lax, who was at the time suffering from terminal cancer, according the lawsuit filed Nov. 20 in New York State Supreme Court.

In December 2007, the developer paid $42.6 million for a development site at 421-431 Kent Avenue and 464-474 Wythe Avenue in the Williamsburg section of Brooklyn, with plans to build several apartment buildings there, according to PropertyShark.com records and the complaint. [more]

A group of 24 market-rate tenants at the struggling Upper East Side condominium Manhattan House were granted the right to appeal their evictions to the New York State Appellate Division, a move that could renew the debate over the rights of non-stabilized tenants in a residential conversion. In December 2008, an appeals court overturned an earlier ruling to block the evictions of 29 tenants at Manhattan House, who were originally issued eviction notices during the conversion of the property from a rental building to a condo. The tenants refused to leave the building after developers Peter Kalikow and Jeremiah O’Connor acquired the building at 200 East 66th Street, for a record $623 million in 2005. The developers planned to convert the 583-unit rental building into a luxury condo, but faced significant legal opposition from tenants who challenged the legality of their evictions. [more]