Lotta headaches for Harlem condo-turned-hostel developers

Prudential Douglas Elliman is suing the developers of an erstwhile condo-turned-shuttered hostel in South Harlem for failing to pay $130,000 in broker termination fees after cancelling the sales effort there, according to a lawsuit filed May 17 in New York State Supreme Court.

Elliman’s Tamir Shemesh had been the exclusive sales agent for Lotta Condominiums, the H. Thomas O’Hara-designed prewar conversion at 159 West 118th Street, from April until July of 2008. At that point, according to StreetEasy.com, just one of the building’s 35 units had gone into contract. With the market starting to turn and a slew of other condos gearing up to hit the market nearby, developers Gal Sela and Eli Idi decided to turn the building into a youth hostel, instead.

Branded as L-Hostel, Sela operated the building successfully until last month, when it was shuttered and vacated by the Department of Buildings for operating as a transient hotel without the necessary permits and for improper means of egress. L-Hostel will not be reopening its Harlem location, which has an alternate address of 1961 Adam Clayton Powell Boulevard, but is looking to open elsewhere in the New York area, according to the company’s website.

Meanwhile, Elliman was never paid for its advertising, sales and consulting services despite written demands, the lawsuit alleges. The firm’s contract, according to the suit, had promised a $50,000 “break-up fee,” plus an additional $20,000 per month of sales office operations, in the event that the developer decided to abandon the project or decided not to sell the units.

Shemesh declined to comment on the ongoing litigation. The developers could not be immediately be reached for comment.