Instead of allocating $ 470,000 in security deposits in 11 buildings in East Harlem, Isaac Kassirer’s Emerald Equity Group claims it has withdrawn the money to its operating accounts.
This practice – which has been going on since Emerald Equity acquired apartment buildings at the end of 2017 – became apparent in a statement from the landlord’s lawyer in the ongoing bankruptcy proceedings.
Emerald capital default LoanCore loans of $ 203 million for buildings in Harlem in December 2020. The company acquired four properties on 107th Street in 2018 for $ 116 millionwhile the properties on 117th Street were part of its massif $ 358 million Acquisition of the Dawnay Day portfolio in 2016. In the registration of bankruptcy under Chapter 11, the landlord attributed its default to adverse changes in the 2019 Rent Act and the ongoing rent strike.
New York State law – prohibits lessors from mixing bail with other funds, and credentials The deposits are deposited in interest-bearing accounts at the State Bank of New York. In each of the Emerald Equity Group’s bankrupt buildings in East Harlem and Upper Manhattan, the landlord used security deposits for operating costs.
The landlord “generally collected security deposits from tenants, but deposited funds in debtors’ operating accounts instead of keeping separate security deposit accounts,” it said in early February.
For one property, the owner was unable to deposit $ 47,342.08 into proper accounts. In the following period, more than USD 60,000 also ended up in operating funds. Meanwhile, tenants in buildings are trying to get landlords to repair buildings immediately – for violating housing laws because of rats and bedbugs.
New York State’s rules on security deposits may be clear, but who is responsible for ensuring that landlords follow them is not.
Some multi-family lenders require borrowers to keep the deposit in custody next to their operating accounts, while others are satisfied with the borrower’s statement that they have money in another institution. In most cases, this ends proper care.
Whether a landlord like Emerald Equity would bail into the right account would be “very difficult to track,” said one multi-family lender.
Emerald Equity declined to comment on the filing or whether it maintains separate security deposits in its other New York holding companies.
However, Blaine Schwadel, a lawyer at Rosenberg & Estis, said that the experienced operators of several families he represents “know the rules and complain about them,” but toe line.
Compared to multi-generational multi-generational companies in New York, such as LeFrak and Cammeby’s International, Emerald Equity is a relative newcomer to the scene. The company has made a number of purchases for more families 2016 by 2019, especially in Manhattan and the Bronx, p financial support from institutional investors.
The company’s plan to increase rents was largely suppressed by amendments to the Rent Act of 2019, and part of its portfolio subsequently went into distress.
Several landlords with multiple families have stated that security deposits do not have to be kept in a separate account due to negligence, but such supervision of 11 buildings lasting several years would be unlikely.
Retention of security deposits in operational funds “is not a widespread practice,” Schwadel said, offering an alternative justification for the practice. “It seems to me.” [Emerald Equity] he is just lazy. “