The sellers of two properties in Ridgewood and Bushwick took advantage of the coronavirus pandemic and Passover to claim a buyer defaulted on their deal, a lawsuit claims.
In the suit, Brooklyn investor Shulem Herman says he went into contract in early January to buy 818 Woodward Avenue in Queens and 417 Suydam Street in Brooklyn for a total of $6.1 million. The sellers are a pair of LLCs based at 155 Noble Street in Greenpoint.
There was nothing in the contract about needing to close the deal by a certain date, but the owners’ attorney sent a “time of the essence” notice to Herman’s attorney on March 13 that scheduled the closing for April 13, the suit says.
This was problematic for several reasons, according to Herman’s legal action.
First, the closing date was in the middle of Passover, even though the sellers know Herman “is an observant Orthdox Jew.”
Second, the notice was sent “on the cusp of the coronavirus pandemic at a time when people were falling ill and both the state and federal governments were establishing guidelines for managing the public health crisis.”
Third, Herman’s financing would not be ready by April 13 — it was due a week later, his suit says.
Herman’s horrible spring got worse when he came down with Covid-19, something the sellers knew as of March 30, according to his lawsuit.
The owners pushed the closing date back a week, to April 20, which Herman’s suit says was “objectively unreasonable given the stay-at-home and social distancing directives that New York residents are required to observe, and the effect that the pandemic has had on businesses, including lenders.”
When the deal did not close April 20, the owners declared the contract in default and planned to keep Herman’s $457,500 deposit and find another buyer, according to court papers.
Despite this, Herman is still “ready, willing and able” to close on the deal, according to the suit.
“It is unfortunate that defendants are shamefully using the present public health crisis for their own cynical and selfish ends,” it reads.
Herman is suing for breach of contract and seeking more than $5 million in damages. He has also asked the court to order the sellers to close on the deal with him as soon as reasonably possible.
His attorney, Jeffrey Fleischmann, declined to comment.
The deal was $2.9 million for 417 Suydam Street, which Suydam 1 LLC bought in 2013 for $585,000, and $3.2 million for 818 Woodward Avenue, which 818 Woodward LLC purchased for $1.25 million in 2013, according to property records. Representatives for the LLCs could not be reached for comment.
The Queens property is three stories and has five residential units and commercial space. The Brooklyn property is three stories and has six apartments.
Herman is hardly new to the industry. Two years ago he bought a homeless shelter at 52-34 Van Dam Street in Long Island City for $36.5 million and in 2017 he paid $53 million for a commercial building with a charter school and retail tenants at 1501 Pitkin Avenue in Brownsville.