Court reverses course in case of flunked co-op board interview

Fifth Avenue seller, alleging buyer acted in bad faith, wants to keep the deposit

Jun.June 11, 2012 04:30 PM

An appeals court has reversed a ruling that required the seller of An Exclusive Fifth Avenue residence to return a $300,000 deposit to the woman who had planned to buy the unit. The seller had alleged that the would-be buyer intentionally flunked her co-op board interview.

Last year, Harvey Schuyler, a former resident of 812 Fifth Avenue, was instructed to return the deposit, after he failed to provide sufficient evidence that the woman acted in bad faith. But a Manhattan State Supreme Court Appellate Division judge said that there is indeed enough evidence to warrant further discussion of the case.

Schuyler alleged that Turkish businesswoman Demet Sabanci Cetindogan had purposely given the co-op board the impression that she wouldn’t follow the rules of the white-glove, all-cash building, situated between East 62nd and East 63rd streets. Prior to the 2009 board interview at issue, Cetindogan had put down a $300,000 deposit on Schuyler’s $3 million unit. The apartment featured a Versailles-inspired wall of glass.

Schuyler’s attorney, Evan Schieber of Starr Associates, maintained that Cetindogan had changed her mind about the apartment after putting down the deposit. She was concerned the building wouldn’t let her college-age daughter live in the building alone, the attorney said. But the judge ruled against Shulyer, and ordered him to return the deposit with interest.

However, in a decision issued last month, an appeals court judge said that the contract of sale, in which Cetindogan stated that she and her husband would be the only inhabitants of the apartment, as well as an email from Cetindogan to her broker saying that her children must be able to stay in the apartment regardless of the co-op rules, were enough to satisfy the requirement for proof. Schuyler had also submitted an affidavit stating that a member of the board who was present at the interview, told Schuyler of her intent not to abide by the rules of the building.

“The purchaser may have sabotaged the transaction and board interview by boldly proclaiming to the board that the rules of the co-operative did not apply to her and she, in fact, intended not to follow them,” Schieber told The Real Deal.

Schieber also surmised that the case could have “tremendous legal ramifications” for future litigation between sellers and purchasers of cooperative apartments.

“Given the economic downturn, buyer sabotage was not just a random event,” he said, “but it was a hard-to-prevent phenomenon.” Given the possible outcome of this case, he added, buyers may be advised to “take pause” before considering purposely flunking the interview.

Both parties will now engage in discovery as the case continues, he said.

The attorney for Cetindogan, Jeffrey Metz of Adam Leitman Bailey, was not immediately available for comment.

Schuyler has since sold the apartment to another couple for $3 million.

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