Buyer sues Extell for deposit at Rushmore
October 09, 2009 03:30PM By David Jones
A rendering of the Rushmore at 80 Riverside Boulevard, Gary Barnett of Extell
Already battling at least 34 buyers trying to back out of their sales contracts, Extell Development is facing a lawsuit from a Wall Street executive claiming that the Rushmore condominium tried to defraud her of her $1 million-plus deposit refund, and failed to obtain key city approvals.
Kelly Coffey, a managing director at JPMorgan Chase, filed suit in New York State Supreme Court Sept. 29, alleging the Upper West Side building's sponsor missed the Sept. 1, 2008 closing deadline by five months, and then illegally amended the offering plan to deny buyers the right to get a refund.
"Instead of offering the plaintiff the right to rescind the agreement, as required by the offering plan, the defendant sponsor's 16th amendment to the offering plan states that purchasers have no right of rescission related to the first closing," attorneys Philip Hines and Marc Held wrote in the complaint.
In March 2007, Coffey agreed to buy two apartments and combine them into one $6.9 million deal, however, Extell was unable to start closing apartments until Feb. 1, 2009, which her lawyers say entitles her to a full refund of her deposit, plus damages.
In addition to missing the closing deadline, Coffey alleges that Extell failed to obtain proper approvals for her to combine her apartments into one as well as didn't get a permanent certificate of occupancy for the combination after failing to get the building's fire safety plan approved. She also claims there were design and construction defects in her apartments.
A spokesperson for Extell said the company would not comment on the case.
The Rushmore is a 289-unit luxury condo at 80 Riverside Blvd and 64th Street. Extell, a commercial and residential developer led by investor Gary Barnett, is developing the project along with the Carlyle Group.
Earlier this year, a group of 34 Rushmore buyers went to the New York State Attorney General demanding their deposits back, due to Extell missing the Sept. 1 deadline. Extell, according to published reports, claimed a typo by its law firm, Stroock & Stroock & Lavan, caused it to erroneously enter the wrong deadline, and that the real plan was to close by Sept. 1, 2009.
"Our basic point is we want the AG to enforce the offering plan as written," said Richard Cohen, attorney for the 34 buyers.
Cohen told The Real Deal that after his initial complaints to the AG, the Rushmore sponsor published a 17th amendment that includes language revoking part of the 16th amendment changes. Cohen said he believes that regulators forced the Rushmore to enter this into the new amendment, thus restoring certain rights to the buyers.
The new language includes the following: "Nothing contained in any prior amendment to the plan, including without limitation, paragraph six of the 16th amendment entitled 'Procedure to Purchase' shall serve to limit the rights previously granted to a purchaser who executed an agreement prior to the filing date of such amendment."
Michel Evanusa, a partner at Stroock, Stroock & Lavan, was not immediately available for comment.
The Real Deal reserves the right to delete any comment it finds to be rude, obscene, racist, sexist, bigoted, irrelevant or repetitive, as well as inappropriate comments about anyone's personal appearance. The Real Deal does not endorse any comments posted on its Web site nor does it verify the veracity of comments or the identity of posters.
Comments
Anonymous
JPMorgan Chase execs should know a thing or two about screwing people out of their hard earned money. Every single time you deal with that bank they nickel and dime you for everything under the sun. And if you complain, they say it's all in the very, very fine print. Ms Coffey is getting from Extell what her bank does to the public every day.
Comment #1 Posted By: Anonymous 10/09/09
Anonymous
Extell better pay, new kids in town learning hard hoe the game is played in NYC. Where was Barnett 5 years ago? Belguim selling dimonds.... what goes around comes around....
Comment #2 Posted By: Anonymous 10/10/09
Anonymous
Extell cannot move forward with selling their condos at the Rushmore unless they clean up this mess. The contract is the contract. Recind these deposits so everyone can MOVE ON. The building is worth it, but not with this cloud hanging over potential buyers.
Comment #3 Posted By: Anonymous 10/10/09
Anonymous
I wonder if NY condo developers are exempt from having to put deposits in an escrow account, as is the case in other states. If I were buying one, I'd want that clarified before leaving a deposit.
Comment #4 Posted By: Anonymous 10/10/09
Anonymous
Extell was riding very high. Everyone at this company is extremely conceited. Why are they surprised that people hit back as hard as they can when they get the upper hand. This would have never happened if Extell would have been willing to find a solution for everyone who is now filing complaints or suing them.
Comment #5 Posted By: Anonymous 10/10/09
Anonymous
I would just love to know the opinions of people as to the viability of this bldg in the short and long term. Will it turn into a rental? Will the services be cut. Will the stubborness and alledged deceit of the developer compromise the excellent services of the bldg and the potential resale. Help!!!!
Comment #6 Posted By: Anonymous 10/12/09
Anonymous
The sales office lies to everyone that walks in the door, they tried to deceive the AG's office, now they are trying to steal people's deposits. They think they don't have to live up to the contract they wrote and can take people's hard earned money when they can't even close because appraisals are low and they haven't sold enough apartments to meet lending requirements. If they had finished when they said they would and sold as many apartments as they said this wouldn't have happened. These guys are getting what they deserve.
Comment #7 Posted By: Anonymous 10/12/09
Anonymous
I got to think that resale prospects for this building are very poor. This building could have over 50% of apartment as rentals. This will put enormous pressure on resales as the sponsor will be the primary competitor for future sales with the poor souls who actually closed in this building.
Comment #8 Posted By: Anonymous 10/12/09
Anonymous
This building is heading right for $1,000 per square foot at best...mark my words.
Comment #9 Posted By: Anonymous 10/12/09
Anonymous
That's a shocker the sleavy, liars Extell..perhaps they should stay in "their" country and extort their own kind. Typicla, typical...
Comment #10 Posted By: Anonymous 10/12/09
Anonymous
beware of the sales people at the extell buildings they will lie to buyers and say anything to get a unit sold
Comment #11 Posted By: Anonymous 10/13/09
Anonymous
Potential buyers should be very wary of the arrogance of the sponsor Extell, particularly given their treatment of previous buyers. They'll smile and lie to you all day until you sign the contract, then feel free to violate the contract while holding you to every last letter.
Comment #12 Posted By: Anonymous 10/14/09
Anonymous
Why the AG let it go for ever, doesn't the AG office care how NYC families are been abused?
Comment #13 Posted By: Anonymous 10/15/09
Anonymous
This is a quality building in a quality neighborhood. Just move on with all of this and live. If you want the unit buy the unit, if not move on and leave your deposit. Yes $1,700 psf is too much for this building but its worth far more than others in the area that are asking $1,300 psf
Comment #14 Posted By: Anonymous 10/19/09
Anonymous
Why should anyone leave a deposit they are entitled to have returned? Why don't you go to the bank, withdraw your money, bring it home, drop it out the window and move on?
Comment #15 Posted By: Anonymous 10/20/09
Anonymous
Poster #14 is obviously a broker.
Comment #16 Posted By: Anonymous 10/20/09
Anonymous
Either Corcoran sales or Extell employee is my guess !!!
Comment #17 Posted By: Anonymous 10/20/09
Anonymous
why would anyone do that? in all seriousness? And why is it worth more? the amenities are exactly the same as neighboring buildings. If it was worth more than the building would have sold out. Either you are dumb or you think buyers are dumb. Which is it?
Comment #18 Posted By: Anonymous 10/20/09
Anonymous
It is such a myth that the Rushmore if this top line building. It might have some better finishes and slightly better amenities than some of the other RSB construction but it is going to be largely a rental building given their poor sales and the AG dispute with a large block of buyers. Condo/Rental buildings in which any positive market movements result in sponsor unit sales of rentals is a poor investment.
Comment #19 Posted By: Anonymous 10/20/09
Anonymous
Commenter #14 If Extell want to sell units in the building they should make buyers the required offer to rescind their contracts and get back their deposits and move on to selling this units to the market.
Comment #20 Posted By: Anonymous 10/21/09
Anonymous
Does anyone know if the Developer has offered any concessions yet to the potential buyers?
Comment #21 Posted By: Anonymous 10/23/09
Anonymous
What a great line -- "the attorneys committed a typo". As if the Offering Plan wasn't reviewed about 100 times by associates, partners, paralegals and their dogs in order to create more billable hours. I hope Stroock has put their malpractice insurer on notice.
Comment #22 Posted By: Anonymous 10/23/09