A condo owner is suing Draper & Kramer, claiming the company’s property management arm and a condo board lured him to buy a Lincoln Park residence under false financial pretenses.
Robert Cohen in July 2017 bought a unit in the Park West building, 444 West Fullerton Parkway, for $330,000. A subsidiary of Chicago-based Draper & Kramer, DK Condo, manages the building.
The company, which handles sales in the building, is responsible under city ordinance to provide certain information about the building and its finances to prospective buyers. DK Condo did produce the materials — but the information included “false statements and/or material omissions,” the suit filed in Cook County alleges.
One issue is the company said there were no planned special assessments — a fact Cohen says wasn’t true.
Shortly after closing on his condo Cohen learned his assessments would rise “significantly” due to planned building improvements, facts he did not know and couldn’t take into account when deciding to buy, according to the suit.
The special assessment was needed because of a $1.7 million project to improve the building’s common areas — a project that caused the condo association to take out a $3.3 million line of credit, according to the suit.
DK Condo’s initial disclosure to Cohen mentioned board-approved capital expenditures, but Cohen says in the lawsuit the condo board did not approve of or disclose the project to unit owners. Plus, DK Condo and the board failed to mention the $3.3 million loan to Cohen before he bought in the building, Cohen alleges in the suit.
DK Condo’s initial disclosure to Cohen also mentioned a reserve account of $1 million, but it did not say the funds had been pledged as collateral to the lender of the $3.3 million line of credit, according to the suit. Cohen’s lawsuit says the condo association was effectively involved due to the line of credit.
The management company knew these “materially false statements” despite telling condo owners in late 2016 of the planned improvements and that building assessments would rise by as much as 7 percent each year, the suit says.
“Given the insolvency of the association, and due to DK Condo’s fraudulent concealment of this insolvency through its misleading and false [financial] disclosure, plaintiff has been damaged because plaintiff would not have purchased the unit had he known the true financial health and status of the association as of July 27, 2017,” the suit reads.
A spokesperson for Draper & Kramer said the company does not comment on pending litigation.
Cohen’s suit also says the association board failed to produce numerous documents, including records relating to a board election that Cohen lost.