Lawyers are negotiating to resolve a lawsuit filed by the Washington Square Group over a $32 million deal involving the sale of two West Chelsea area properties, The Real Deal has learned.
Washington Square Group, based in Chatham, N.J., filed the $2.25 million breach of contract suit in Manhattan Supreme Court on Sept. 19. The firm is seeking to delay the scheduled closing today of a deal to buy 116 Tenth Avenue and 453-455 West 17th Street. The seller is a firm called N.E.W. Corp., which is led by Neil Wainland. Wainland runs an Astoria-based metal fabricator, Wainlands Inc.
In court filings, lawyers for Washington Square Group alleged that the firm discovered several inaccuracies in rent roll information for a number of commercial tenants. Those alleged inaccuracies include the duration of the lease to Mediacraft, the duration and value of the lease to 17th Street Entertainment and the value of the lease to Avenue/Earth Chelsea Hospitality Partners and Murray Guy.
The area has experienced extensive development in recent years. A new residential property from the Related Companies, the Caledonia, is located at 450 West 17th Street.
Lawyers for Washington Square allege that the sellers refused to provide updated data to resolve the dispute and wanted to keep the Sept. 22 closing date so it could declare a default. According to the complaint, that would allow N.E.W. to keep a $1.5 million deposit provided by the buyers and direct the escrow agent to keep another $750,000 and then sell the properties at a higher price.
Attorneys for Washington Square Group said if the issue was not resolved, the firm runs the risk of losing air rights to an adjacent property, which would cost them about $600,000.
Jeffrey Platte, representing N.E.W., said, “It’s a little sensitive right now. I’d rather not say anything. We’re trying to get this thing resolved.”
Wainland declined to comment, but acknowledged that the firm was trying to resolve the case. Lawyers for Washington Square did not return calls, nor did officials from the firm.