Chelsea condo developers may be liable for board’s claims

Developer LLC's individual principals can be held accountable in Modern 23 lawsuit, judge rules

New York /
Apr.April 22, 2016 02:00 PM

UPDATED, 6:00 p.m., April 25: The condominium board for the Modern 23 residential building in Chelsea received a boost in its legal battle against the property’s developers. A judge ruled last week that the board may hold the developer LLC’s individual principals liable for breach of contract and breach of warranty claims.

The decision could set a precedent regarding how “[condo] boards with claims against their sponsors may have recourse against the individual principals,” attorney Leni Cummins of Cozen O’Connor, which is representing the Modern 23 board, told the Commercial Observer.

“This is important because very often the sponsor entities are devoid of assets so this allows recourse for the boards and unit owners,” Cummins said. The New York State Supreme Court judge did dismiss plaintiff claims alleging fraud, however.

Despite noting that the decision could set precedent, the Modern 23 board’s lawsuit cites similar instances of “case law” in asserting “claims for breach of contract against the individual defendants” — including a lawsuit filed in 2013 by the condo board of the Palomar building at 266 West 115th Street in Harlem, which found that “a principal of a sponsor may be held separately liable” when “knowingly and intentionally advanc[ing] the alleged misrepresentations of the [condo] offering plan.”

The board of the 14-unit building at 350 West 23rd Street filed suit against the property’s developers – including individual principals Martin Hollander, Arthur Israel and Itzhaki Acquisitions founder Erez Itzhaki – in May 2015, claiming a “willful and fraudulent failure to construct the Modern 23” including construction defects and poor workmanship.

The lawsuit claimed the eight-story property had “a laundry list of defects… that have required, currently require and continue to require remediation or replacement,” and that the developers had allegedly failed to fix the issues despite unit owners’ requests.

The Modern 23’s developers acquired the property for $7.2 million in March 2005 and completed the glassy condo building in 2009. The average sale price of an apartment at the Chelsea property is $2.1 million, according to the lawsuit. [CO]Rey Mashayekhi


Related Articles

arrow_forward_ios
Churchill Real Estate's Justin Ehrlich and 381 Broadway (Google Maps)

Two-year Tribeca foreclosure saga continues with lawsuit over $20M

Two-year Tribeca foreclosure saga continues with lawsuit over $20M
Vanke US managing director Kai-yan Lee, RFR’s Aby Rosen and 100 East 53rd Street (Photos via Foster + Partners and Getty)

Vanke seeks to remove RFR from Midtown condo project

Vanke seeks to remove RFR from Midtown condo project
Magnum Real Estate's Ben Shaoul and 87 Leonard Street (Getty; StreetEasy)

Tribeca condo owners sue Magnum Real Estate, seeking $7.6M

Tribeca condo owners sue Magnum Real Estate, seeking $7.6M
From left: Ben Ashkenazy, 1991 Broadway, 2067 Broadway and Samuel Gindi (Getty; Google Maps)

Billionaire developer Ben Ashkenazy in feud with investor over reputation, cash

Billionaire developer Ben Ashkenazy in feud with investor over reputation, cash
New York Wheel (S9 Architecture|Perkins Eastman; Pixabay)

Going in circles: Dueling New York Wheel lawsuits emerge

Going in circles: Dueling New York Wheel lawsuits emerge
HFZ's Ziel Feldman and CIM's Shaul Kuba (Getty, iStock)

HFZ sues CIM to halt condo foreclosure sale

HFZ sues CIM to halt condo foreclosure sale
(iStock)

Petition to overturn indoor dining restrictions squashed by judge

Petition to overturn indoor dining restrictions squashed by judge
Gotham Organization COO Phil Lavoie and 432 Park Avenue South (Google Maps)

Gotham Organization sued for unpaid rent at Park Ave South office

Gotham Organization sued for unpaid rent at Park Ave South office
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...