Buyers try to get out of contracts at W Downtown over developer violating order to halt sales

TRD New York /
Oct.October 21, 2010 06:45 PM

From left: W New York Downtown Hotel & Residences, Adam Leitman Bailey and John Desiderio

Moinian Group is facing allegations that it continued to sell units at the W New York Downtown Hotel & Residences despite an order to suspend sales from the federal Department of Housing and Urban Development, according to court documents.

Three condominium buyers at W New York Downtown, at 123 Washington Street in the Financial District, filed suit in U.S. District Court against the developer, alleging that it failed to file required property reports under the federal Interstate Land Sales Disclosure Act, or ILSA. Two of those buyers, who are all represented by the law firm of Adam Leitman Bailey P.C., allege they sold the unit after the building’s ILSA registration was suspended.

Moinian officials said they have a policy not to comment on ongoing litigation and HUD officials declined to comment.

Giovanni Indomenico and Jihyun Indomenico, a New Jersey couple, allege that the developer agreed to sell them a $1.3 million apartment at the 217-room property despite a standing order from HUD not to sell any units until deficiencies in its ILSA registration were resolved.

“Indeed the sponsor signed the contract at issue herein in direct violation of a suspension notice issued by HUD barring the sponsor from selling units until it complied with ILSA,” plaintiff’s attorney John Desiderio of the firm Adam Leitman Bailey alleged in the complaint.

In a November 2007 letter, Ivy Jackson, director of the Office of Real Estate Settlement Procedures Act and Interstate Land Sales, tells the developer’s lawyers that they cannot sell units until certain “deficiencies” in the ILSA registration are fixed (see letter below).

“Until these deficiencies are corrected and HUD grants you an effective date for your registration, you are suspended from any lot sales or offers to sell lots in this subdivision,” Jackson wrote.

The ILSA registration was eventually corrected and accepted by December 2007, according to the lawsuit. The buyers allege that the developer also failed to provide the required disclosure forms under ILSA, and demanded their money back in July 2009.

Dongil Yoo, also of New Jersey, alleges in his Oct. 15 lawsuit, that he signed a contract for a $1.5 million unit during the suspension period, and was not provided the proper disclosure forms.

Song Young Joon, of South Korea, says in his Oct. 15 suit that he signed an Oct. 15, 2007 contract for a $1.56 million unit, before the ILSA registration had been accepted. He also claims he was not provided proper forms and claims the ILSA registration was not accepted until December 2007.

In July, a Manhattan-based buyer named Youssef Janfar filed suit under ILSA claiming he signed a $1.6 million contract for two units in November 2007.

Streeteasy.com shows that two units closed at the building in late June, and the hotel officially opened for business in August. Lawyers for several buyers said that closing dates have been repeatedly postponed.

HUD Suspension Notice(2)

 

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