Brompton buyer sues Related for deposits
June 30, 2009 03:15PM By David Jones
Brompton
The Brompton, the luxury Upper East Side condominium from Related Companies, is facing litigation from the buyer of four penthouse apartments, alleging that the developer misrepresented certain building amenities and also failed to allow independent inspections of the property.
The lawsuit, filed June 4 in New York State Supreme Court, demands that Related return more than $5 million in deposits for the four apartments, which have a combined value of $25.7 million.
The suit names two defendants, Related and 86th LLC, which controls the Brompton, and the law firm of Michael, Levitt & Rubenstein, which holds the deposits in escrow.
The Robert A.M. Stern Architects-designed Brompton, at 205 East 85th Street, is a 22-story luxury condo with 193 residential units.
The plaintiff used four limited liability companies to buy the penthouse units, including Aligory Business Ltd., Caray Business Inc., Toomish Asset Ltd., and Anglesey Business Ltd. The buyer signed contracts to buy the penthouse apartments in October 2007 and placed a 20 percent deposit on each unit, according to the suit.
The plaintiff agreed to buy penthouse 1A for $7.9 million; penthouse 1B for $5.6 million; penthouse 1C for $5.7 million and 1D for $6.5 million.
Michael, Levitt & Rubenstein referred all inquiries to Related, and
Adam Leitman Bailey, attorney for the plaintiffs' declined to comment.
Joanna Rose, a spokesperson for Related, said: "This lawsuit is simply another in his
string of lawsuits, asserting the very same frivolous claims that have
been asserted by Mr. Bailey before for other clients, all in an attempt
to extract the price concessions
that he has apparently promised his clients which he has been
unsuccessful at obtaining. We will not be a party to such actions. Two
judges have already denied a temporary restraining order for similar
claims and we have no reason to believe that this instance
will be any different."
In February 2009, Related sent out closing notices to the buyers in the building, and scheduled closings on the penthouse apartments for April 3 and April 6, 2009, according to the lawsuit.
Closings were later rescheduled for April 23, however the buyer alleges in the lawsuit that Related refused to allow the buyer to inspect their apartments with an outside engineering consultant. The lawsuit claims that an earlier inspection revealed a problem with "negative air pressure" in the building, which could lead to mold and other problems.
The suit also alleges that the sponsor misrepresented the views available from the penthouse apartments and that the buyer did not have direct access to Equinox fitness centers as promised, which is located next door at 203 East 85th Street.
The suit marks the latest chapter in a long-running battle by buyers at the Brompton to renegotiate prices since the 2008 collapse of the global financial markets.
At least two dozen buyers at the Brompton began to organize earlier this year amid fears that the collapse of the financial markets would hurt the value of their condo agreements, which were nearly all signed in 2007 and 2008. Buyers told The Real Deal that they would have to make higher down payments, or pay higher interest rates to qualify for bank loans, while others have been turned down.
As The Real Deal previously reported, Related refused to renegotiate those contracts, telling buyers that there was a list of 200 people waiting to buy at the Brompton. Buyers at other high profile condos, like Extell's Rushmore, have also revolted against their sponsors in an attempt to renegotiate deals.
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Comments
Anonymous
You bought in a building called "Brompton." What did you expect?
Comment #1 Posted By: Anonymous 06/30/09
Anonymous
200 people waiting? IF that were the case, they'd happily return the deposits and keep the bad press away from their company. Why make such a ridiculous statement?
Comment #2 Posted By: Anonymous 06/30/09
Anonymous
Related has always been a solid and stand-up company. These allegations are from desperate buyers who feel like they've paid too much and now they are blaming the company for selling it to them and they want to breach their contract. They shouldn't get a penny back. You don't close on your agreement, you forfeit your profit. Thems the rules pappy.
Comment #3 Posted By: Anonymous 06/30/09
Anonymous
20% deposits are enought to compensate for bad press. Especially when the deposits were for prices 30% higher than they would sell for today.
Comment #4 Posted By: Anonymous 06/30/09
Anonymous
What if they could take their deposits and buy in another Related Development? That would be good. Its win-win for everyone.
Comment #5 Posted By: Anonymous 06/30/09
Anonymous
So if the market were to have gone up 20%, should the sponsor be able to sue to cancel the contracts so they could sell for more? If you cant stand the heat, stay out of the market. Oh, and dont by four units in one building.
Comment #6 Posted By: Anonymous 06/30/09
Anonymous
i read about this in the NYT many months ago. what is new here? A+reporting guys
Comment #7 Posted By: Anonymous 06/30/09
Anonymous
bailey would only be good if he had a real claim, which he just may at 20 pine and the other buildings he represents.....
Comment #8 Posted By: Anonymous 06/30/09
Anonymous
Buyer was being a tough guy by putting down 20%- contracts of that size are customarily 5%-10% deposits. Also I am sure if he drops the suit Related would gladly pay for his expected Equinox membership- measley $1,800 per year. This suit is a joke
Comment #9 Posted By: Anonymous 06/30/09
Anonymous
The article fails to note whether the buyers mentioned here have already defaulted on their contracts and lost their deposits. And the article fails to note, if the buyers are still in contract while in litigation, how they're dealing with the provision in their contract that stipulates a financial penalty for each day a person fails to close, when directed by the developer to do so. Related has much at stake here as they have two other condos nearing completion. Any loss during litigation will reverberate among many other buyers who will soon be asked to close on their own units.
Comment #10 Posted By: Anonymous 07/01/09
Anonymous
In essence the attorney's case centers on Related's responsibility to "prove" that the air flow is sufficient and according to proper industry standards. One would think that the buyers' attorney would also require Related to "prove" that the roof doesn't leak; "prove" that water pressure reliable; "prove" that the windows are well sealed; "prove" that the elevators have the proper mechanisms; "prove" that the appliances are of sufficient quality; "prove, prove, prove, prove, prove" everything and anything before my clients will close. And then we'll sue again, and again, and again.
Comment #11 Posted By: Anonymous 07/01/09
Anonymous
Most places don't require an amount CLOSE to 20% down. NYC consumers, with their lawyers and real estate agents, are the dumbest consumers on the planet. Go after the lawyers and the agents for providing horrific deposit advice.
Comment #12 Posted By: Anonymous 07/01/09
Anonymous
Lots of brokers on this thread it seems -- wondering if they are RELATED to the building?
Comment #13 Posted By: Anonymous 07/01/09
Anonymous
I think if the guy sued with more people in the building, they'd probably have a better chance. A dozen units in this building isn't enough! Guaranteed if a majority of the units walked, Related's PR rep wouldn't be so smug.
Comment #14 Posted By: Anonymous 07/01/09
Anonymous
To #6 the moron, putting a deposit down on a condo IS an option since the worse you can do is walk away from the building (call premium) -- if you were to exercise the option, then you would be exercising your RIGHT TO BUY the unit.
Comment #15 Posted By: Anonymous 07/01/09
Anonymous
To the two dozen Brompton people looking to get out: Related's going to have a very tough time finding 24 people to pay your prices (200 waiting list maybe back in 2007)
Comment #16 Posted By: Anonymous 07/01/09
Anonymous
This building is a joke.
Comment #17 Posted By: Anonymous 07/01/09
Anonymous
4 separate LLC entities as buyers. Is that a device to avoid paying the higher rate/commercial rate of transfer taxes when the buyer is purchasing more than 1 unit from the same seller?? insight on this? Anyone have any
Comment #18 Posted By: Anonymous 07/01/09
Anonymous
good point #22, that is probably part of the rationale, will reduce the transfer tax by about 300K...someone may want to alert the City's dept of Finance on this. I think that would be cause for 'piercing the corporate veil" so to speak
Comment #19 Posted By: Anonymous 07/01/09
Anonymous
Sounds like a classic Hail Mary pass type of lawsuit: desperate buyer who probably lost their deposit has nothing to lose by going after the developer with real b.s. allegations. Wonder if the attorney took the case on a contingency basis? Now THAT would be something, and it would show his faith in the merits of the lawsuit.
Comment #20 Posted By: Anonymous 07/01/09
Anonymous
How many times are Related employees going to commone on this article. At least try to disguise what company you are from. Real Deal--please post the domain names.
Comment #21 Posted By: Anonymous 07/02/09
Anonymous
The views are just like all the views from Bloomberg's newly overly developed dark airless upper East Side. Everyone looks directly into their neighbors bathrooms.
Comment #22 Posted By: Anonymous 07/05/09
Anonymous
I heard Related hired a PR guy to go after Adam Leitman Bailey. They cannot beat him in court so why not try to ruin his life. Related is a bunch of thugs who deserve to be heading to bankruptcy.
Comment #23 Posted By: Anonymous 07/30/09
Anonymous
It's a very nifty building. People are just trying to get a better deal. This is New York!
Comment #24 Posted By: Anonymous 07/31/09