Brompton buyer sues Related for deposits

Jun.June 30, 2009 02:57 PM

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.” (Note: correction appended.)

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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