The Real Deal New York

Developer broke $625K deal to buy out UES rent-stabilized tenants: lawsuit

Leo Pustilnikov said market conditions changed and $400K was the new price, tenant suit says
By Eddie Small | May 25, 2018 09:26AM

12 East 88th Street

UPDATED, 11:13 a.m., Oct. 2: A pair of rent-stabilized tenants on the Upper East Side are suing a developer for reneging on an agreement to pay them $625,000 for moving out of the building.

Tenants Avi and Fern Abramoff, who are married, have lived at 12 East 88th Street since 1979, according to the lawsuit. BH Karka LLC, an entity managed by Los Angeles developer Leo Pustilnikov, bought 12 of 24 apartments in the building last year from Simon Baron Development for $10 million, and offered the Abramoffs a $625,000 payout to vacate the building by June 1, a deal that both sides agreed to in January, court documents say.

The payment was due on April 18, but Pustlinikov backed out of the deal on May 7, describing the payment as “too generous given the existing market conditions” and declaring the agreement “null and void,” the suit says. His attorney also tried to negotiate by lowering the price Pustlinikov would pay the Abramoffs to $400,000, but they rejected this offer and said they were still ready to move out by June 1 under the original terms of the agreement.

Representatives for Pustlinikov could not immediately be reached for comment.

Slava Hazin of Warshaw Burstein, LLP, attorney for the Abramoffs, described the case as a clear instance of a developer breaching a contract.

“He thinks that he overpaid,” he said, “but that’s not a reason to renege on an agreement.”

Apartments at the 12 East 88th Street are listed for between $1.5 million and $9.5 million, according to StreetEasy.

UPDATE: The parties have reached a settlement in this case, and it was discontinued on Oct. 2, according to lawyers for both sides. The terms of the settlement are confidential.