Unit owners blame Ben Shaoul is solid their reinforcement with money from the reserve fund for the Tribeca condominium 87 Leonard. However, the law may not be on their side.
The board of directors sued Shaoul’s on Tuesday Magnum Real Estate, accusing the developer of investing additional proceeds from the sale of $ 1.89 million in the building’s reserve fund. The board is looking for this money plus fines and penalties totaling approximately $ 7.6 million. Seven residences of the boutique project sold for $ 6.6 million to $ 9.1 million between 2016 and 2018.
The reserve fund in the condominium is set aside for repairs and improvements to the buildings. The 87 Leonard case depends on whether the law required 3 percent of the sale to be invested in the reserve fund, which may depend on the building in question when it was converted into apartments.
AND state law refers to “conversion from rent to cooperative or flat”. Magnum’s lawyers at Starr Associates claim that the law does not apply to 87 Leonards because it was rebuilt from a commercial building.
The building was an office when the previous owner, developer Anthony Morano of Ozymandius Realty, bought it in 2004. Morano’s Verer, a division of Deutsche Bank, took over the property in 2011 when the developer tried to convert it into apartments.
Under the supervision of the bank were plans for conversion to housing approved at the end of 2011. Three years later, Magnum bought the property and completed the conversion into apartments.
AND charter Since the purchase of the Magnum building in 2014, it has been classified as an apartment building, but check records on Wednesday until The real solution did not find any rental activity until 2018.
The Leonard Housing Council filed a complaint with the New York Supreme Court, claiming that Magnum left only $ 65,000 in its reserve fund, not nearly $ 2 million – 3 percent of the projected sale of $ 65.4 million.
The Board also asks the court to award damages of at least the underfunded amount – $ 1.9 million – plus a fine of twice that amount ($ 3.8 million) and a civil penalty of $ 1,000 per day retroactively until July 2015 until its reserve fund is fully secured. financed. From November 17, the day the board filed the complaint, these fines would be around $ 1.95 million.
Magnum’s lawyers said they believed the lawsuit would be discredited in court as a “frivolous lawsuit” filed “with harassment and malicious injury to the developer and his executives.”
Morrison Cohen’s partner, Y. David Scharf, representing the housing council in the case, declined to comment.