Legal woes could scuttle Marc Realty Capital’s River City deconversion
One lawsuit seeks to block the oft-delayed deal, while another wants to clear up a technicality that could stop it
Marc Realty Capital’s deal to buy the River City condo complex in the South Loop and turn it into apartments hit another snag this week, after two new lawsuits are at once seeking to block the deal and to clear up a technicality that could block it.
A lawsuit filed Monday by the condo association is asking a judge to clear up a title snafu that threatens to scuttle the deal, while one filed Wednesday by a group of unit owners seeks to block the deal amid allegations the developer offered side deals to entice owners to sell.
After a number of attempts to sell the property failed, River City’s owners agreed in September to sell the building to Marc Realty for $90.5 million. But as the River City condo association did its due diligence to close the deal, it learned that at least 39 units owned by the former “condo king” of Chicago were improperly conveyed, according to a lawsuit filed Monday.
The association filed suit against Nicholas Gouletas, a former prolific condo developer in the city and the one-time owner of at least 39 units in River City, 800 South Wells Street. According to the suit, Gouletas sold the units to various new buyers through an LLC, but the LLC had already been dissolved.
Now, the lawsuit alleges, Gouletas’ refusal to clear up the title issues puts the sale of the property in jeopardy.
Meanwhile, the owners of 20 units in the building filed a separate suit against the condo board, saying it helped Marc Realty win over unit owners by offering them better deals for their votes to approve the sale, according to Crain’s.
The condo owners allege the association board miscounted the vote total that determined the sale, calling the deal a “fraudulent forced sale,” according to Crain’s.
In the case of Gouletas, the association’s suit said he was made aware of the issue several weeks ago and has “refused to cooperate in resolving this issue in any manner whatsoever.”
With a closing date of Nov. 28, the condo association is saying the deal could fall through if Gouletas doesn’t clear up the title issue, or if the courts don’t give “judicial assurance” that the current owners are the proper title holders, according to the lawsuit.
Gouletas was dubbed the “condo king” by local media for his prolific development of condos here and throughout the country. His firm, American Invsco, had its hand in 45,000 condo units throughout the country, but Gouletas declared bankruptcy in 2016 after a planned $950 million residential portfolio acquisition went south.
After he couldn’t secure funding for the deal, Gouletas paid off a creditor by putting land next to River City into Chapter 11. Gouletas later was sued by a legal firm and a bank over unpaid fees and loans, and he filed for Chapter 7 bankruptcy in 2016, according to Crain’s.
He is now being sued by his fellow condo owners in River City, who say his inaction to clear up the title issue to his units could scuttle the deal that both condo owners and Marc Realty worked hard to reach.
Marc Realty sought to buy the complex since early 2016. The firm and River City condo owners initially agreed to a $100 million sale, but Marc Realty and partner Wolcott Group in May 2017 dropped their offer to $89 million, saying they discovered costly needed repairs.
Owners rejected that price, and Marc Realty came back with a revised offer of $90.5 million that was accepted in late August. The sale was approved with 78 percent of ownership, just above the 75 percent threshold required by law.
Marc Realty and Wolcott Group will add another $1 million to the sales price if the sale wraps up by Nov. 28.
In order to meet that date, condo owners are asking a judge to declare that the current owners are the legal title holders of the units in question, and “declare that any claim or lien on the part of [Gouletas] to be inferior to the interests of the current owners in the units.
Gouletas could not immediately be reached for comment.