The developers of Clarion Uptown Lofts, a stalled boutique condominium in East Harlem, are facing a $4.87 million foreclosure suit after allegedly defaulting on its mortgage loans.
The Manhattan-based lender Community Preservation Corp. filed suit in New York State Supreme Court against the developers, Douglas Marshall Cooper, of Pound Ridge, N.Y., and Anthony Hyde Jr., of Mahopac, N.Y., charging that they defaulted on the loans in November 2011. According to the suit, the developers were granted loans of $800,000 and $2.94 million in 2007, and those were modified and extended in December 2010. A second building loan of $625,000 was made in November of 2010.
Contracts had been signed on eight of the 12 units, but no certificate of occupancy has been issued — therefore, the building remains vacant, a lawyer for the developer said.
Clarion Uptown, located at 225 East 111th Street, was developed by Douglas Marshall Cooper Associates, a Pound Ridge, N.Y.-based architectural firm and Hyde, owner of J.A. Contracting, a Mahopac-based firm that specializes in kitchen cabinets and countertops.
The newly constructed building included one- and-two bedroom apartments with upscale features such as Brazilian cherry wood floors, granite countertops, jacuzzi tubs and in-unit washer-dryers. According to the Clarion Uptown website, the property also included a rear garden, access to a gym and recreation space. The property was Federal Housing Administration-approved, thus allowing buyers to secure financing with low down payments; the development also had a 421-A tax abatement from the city.
Clarion Uptown was being marketed by Prudential Douglas Elliman. According to Streeteasy.com, would-be buyers agreed upon prices ranging from from $375,000 for a 650 square-foot, one-bedroom unit to $805,000 for a 1,250-square-foot penthouse.
The suit, filed June 27, alleges that Hyde and Cooper signed completion guarantees, however the loan was extended from its original due date of June 1, 2009 until November 30, 2011.
Richard Conley, senior vice president at CPC, is asking the court to appoint a receiver, who will take control of the vacant property and rent out the empty apartments, according to an affidavit filed in the case. He noted that the current value of the property is less than the loan balance and that the developers failed to make any payments on the overdue loans, which now have a balance of $4.87 million, including interest.
However, attorney Gary Rosen, who is representing the developers, says his clients sat down with the lender when the building was 50 percent complete two years ago and agreed to work out a deal. He said the bank decided to foreclose after construction was completed in 2011.
“The bank thinks they can get more money than the contracts we signed,” Rosen told The Real Deal.
Rosen said the developers will file an amendment with Attorney General Eric Schneiderman’s office offering buyers a right of rescission, which allows them to get refunds on the condo contracts they signed.
Lawyers for the lender were not immediately available for comment. A spokesperson for CPC was reviewing the case, but did not have any immediate comment. Beverly Draggon, a broker with PDE, said she was not aware of the case and declined comment.