In a somewhat ironic ruling, a New York state Supreme Court judge ruled that Maverick Real Estate Partners can’t foreclose on a Chelsea apartment building because the lender didn’t abide by the terms of their loan agreement.
Maverick had sued the owner of 416 West 25th Street, an entity controlled by Andreas Steiner, accusing the borrower of violating the terms of a consolidated loan agreement valued at $3.6 million. However, last week Judge Arlene Bluth decided to toss the complaint, finding that Maverick didn’t properly abide by certain aspects of the loan agreement.
“The lesson to lenders foreclosing based on a borrower’s technical default is to insure that they themselves have completely complied with the technical requirements to do so,” Darren Oved, an attorney who represented the landlord along with Aaron Solomon, said in a statement.
Maverick’s principal David Aviram declined to comment.
In its lawsuit, Maverick alleged that Steiner violated the terms of its contract by securing a $4 million loan from L&L Capital Partners on March 17, 2017. As part of its initial loan contract, Steiner should’ve received written consent from Peapack-Gladstone — a New Jersey-based bank that issued the debt and then subsequently assigned the loans to Maverick — before moving forward with the L&L financing, according to the complaint. Maverick sought to accelerate the loan, claiming it was immediately owed the loan’s remaining balance of $3.4 million plus 24 percent default interest for the past two years.
The judge granted Steiner’s motion to dismiss the case, ruling that Maverick, for its part, didn’t properly notify the landlord of its technical default on the loan. The default notice sent to Steiner didn’t make clear that the landlord had a cure period of 30 days to fix its violation of the mortgage agreement, which was also required by the contract with Peapack.
“There is no allegation that [the landlord] failed to make payments,” the judge wrote in her May 13 order. “The court declines to permit foreclosure based on a technical default of a [Consolidated, extension and modification agreement] where the plaintiff failed to comply with the technical requirements of the CEMA.”
Maverick has aggressively pursued distressed properties in the city. In December, the private equity firm launched a $200 million distressed debt fund. In May 2017, the firm bought $40 million worth of loans from Signature Bank backed by 31 properties controlled by embattled Brooklyn investor Cheskel Strulowitz.