Courts roundup: $3.9M Brownsville bankruptcy; $5.8M Greenwich Village pre-foreclosure, Arthur Spitzer sues Mendel Deutsch for $2.5M

$3.9M Brownsville bankruptcy: Bankruptcy petitioner Ray Jones seeks to sell the property at 405 Rockaway Parkway in Brownsville, Brooklyn, impacted by the maturity of a 10-year loan and 12 landlord-tenant court cases in the 31-unit building. Jones values the property in the petition at $3.9 million.
Ridgewood Savings Bank provided a loan in 2013 with an original principal of $1.98 million. The building has been involved in 12 landlord-tenant actions and one slip-and-fall tort case over the past 12 months. The walkup building with 31 residential units in Brownsville has 24,820 square feet of built space according to a PincusCo analysis of city data. The parcel has frontage of 70 feet and is 100 feet deep with a total lot size of 7,000 square feet. The zoning is R6 which allows for up to 2.43 times floor area ratio (FAR) for residential. The city-designated market value for the property in 2022 is $1.6 million.
According to the petition: The Loan matured on its own terms and became due and payable in full on February 1, 2023. (And the parties could not agree on an extension or refinance.) “Prior to the instant bankruptcy filing, the Debtor had issues collecting portions of its rents from certain tenants. The issue of rent collection was further exacerbated by the advent of the coronavirus pandemic where many tenants stopped paying their rent altogether. In addition, the Governor’s moratorium on residential evictions further prevented the Debtor from being able to commence or resume litigation to evict non-paying tenants. As such, the Debtor fell behind on its Mortgage obligations to Ridgewood. Due to the Loan coming due, the Debtor and Ridgewood attempted to extend the Loan’s maturity date. A Modification and Extension Agreement was proposed; however, the terms of that agreement were not acceptable to the Debtor and that agreement was not signed.”
Bankruptcy LINK

$5.8M Greenwich Village pre-foreclosure notice of pendency: In this action, the CMBS plaintiff in a January 2022 federal foreclosure case filed a notice of pendency in state court. The lender filed the foreclosure in the Southern District of New York in January 2022 alleging the Klein Group affiliate defaulted on the leasehold mortgage for a 4,876-square-foot retail space at the cooperative building at 659 Broadway in Greenwich Village, Manhattan.

In the federal case, the Klein Group states several time in its answer to the complaint, “Denies the allegations contained in paragraph 47 of the Complaint based on the defenses raised below including commercial impracticability, impossibility and force majeure arising from the natural disaster caused by the COVID-19 pandemic and the concomitant Executive Orders issued by the Governor of New York.”

The interest only payment is $24,520 per month, with a 4.99% interest rate, and it matures January 6, 2029, in the 10-year loan. 

The latest action in the federal foreclosure case was a motion for a delay, agreed to by both parties. “The sole reason for this request is that since our last correspondence to Your Honor on April 13, 2023, the servicing of the subject loan has transferred from Midland Loan Services, a division of PNC Bank, National Association, to K-Star Asset Management LLC, a KKR company. Although the intent of the parties remains to resolve this matter through stipulations to be submitted to the Court, we have encountered an unanticipated and unavoidable delay in connection with the servicing transfer and transition.”

Federal Case 1:22-cv-00435  LINK

State Case LINK

Arthur Spitzer sues Mendel Deutsch for $2.5 million in Crown Heights: Investor Arthur Spitzer alleges he and Mendel Deutsch formed a 50-50 joint in 2014 to buy the 12-unit building 1097 Prospect Place in Crown Heights for $3.05 million and developed plans to renovate it resulting in a building with eight units. The business plan stalled and Spitzer alleges Deutsch improperly transferred the asset to another entity. According to the complaint: “Spitzer and Deutsch purchased the Premises for the purpose of renovating the interior – converting the Premises from a 13-family dwelling to an 8-unit dwelling. At the time that JMPP purchased the Premises, Mr. Spitzer insisted that he and Defendant Deutsch agree that neither of them could convey the Premises without the agreement of the other – JMPP could not convey the Premises unless Mr. Spitzer and Defendant Deutsch agreed to the conveyance.”

Court filings represent the position of one party and are not necessarily accurate or complete. Deutsch has not yet responded in court.

The walkup building with 12 residential units in Crown Heights has 5,680 square feet of built space and 8,885 square feet of additional air rights for a total buildable of 14,589 square feet according to a PincusCo analysis of city data. The parcel has frontage of 47 feet and is 127 feet deep with a total lot size of 6,004 square feet. The zoning is R6 which allows for up to 2.43 times floor area ratio (FAR) for residential. The property is in the Crown Heights North III Historic District. The city-designated market value for the property in 2022 is $981,000. The most recent loan totaled 0.0 and was provided by Relmo 1097 Prospect Place LLC on July 18, 2022.

Case LINK

Direct link to the property’s ACRIS page and link to DOB NOW portal.