Courts roundup: Condo board sued World Wide Group for $20M; Rybak sues retail tenant; more

Midtown East condo board sues developer World Wide Group for $20M: The condominium board of the recently constructed high-end, Midtown East development at 252 East 57th Street sued the affiliates of the developer of the building, the World Wide Group as well as current and former principals of the company, alleging millions of dollars in construction defects. The board is seeking $20 million.
The court filings are the positions of one party and are not necessarily accurate or complete. The developer has not yet responded in court papers.

The complaint alleges the defendants were aware of the defects but minimized them and ultimately represented that it would not pay for them to be repaired. The building has 95 condo units, 173 rental units and four retail units.

According to the complaint, “The residential units were offered at initial sale prices ranging up to $37,500,000, with the aggregate initial offering price totaling $768,510,500. Despite Defendants’ responsibility for ensuring that the Condominium was constructed in accordance with the terms sets forth in the Offering Plan, the Condominium suffers from substantial defects and inadequate and negligent workmanship, all of which breach applicable law, including the NYCBC, the Offering Plan, the Plans and Specifications and/or industry and local standards…sudden water flooding and leaks… extreme heat and humidity issues…sky-high energy bills…the building’s core structural elements lack adequate fire proofing… In 2018, these ongoing problems required the Sponsor-controlled Condominium Board to designate $326,610 more in common charges for “major repairs and replacements,” an amount three times higher than the assessment in 2017. These common charge allocations—while eye-popping in their own right—were still a vast underestimation of the problems in the building. In reality, in 2017, 2018, and 2019, the building expended over $197,000, $526,000 and $1 million, for repairs. LINK

Court filings are the positions of one party and are not necessarily accurate or complete.

Rybak sues retailer at Midtown East building it bought for $24M: Rybak Development sued a retail tenant’s guarantor at 660 Lexington Avenue in Midtown East. Rybak is seeking $794,928 in alleged unpaid rent since March 2020 that it claims is due under a guaranty by the guarantor, who owns the camera store 888 Camera Express that occupies 1,270 square feet of space in the building pursuant to 15-year sublease that runs from 2012 to 2027. The developer Rybak bought the building for $24.39 million in December 2021, and in June 2022 sued the sellers for $2 million related to this lease in a case the is ongoing.

According to the new complaint, “From March 1, 2020, through and including April 30, 2022, Tenant failed to pay any Fixed Rent and Additional Rent (as defined and set forth in the Lease) due and owing under the Sublease (the “Default Arrears”)… tenant remains in possession… As of the date hereof, Tenant owes $794,928.00 in unpaid Rent to Plaintiff, which total amount reflects a credit in Tenant’s favor as a result of the application of Tenant’s $72,000 Security Deposit by Plaintiff’s predecessor against the then existing arrears. Nonparty 888 Camera Express, Inc. (“Tenant”), is in possession of the Premises (as defined below) pursuant to a written lease dated March 1, 2012 (the “Sublease”), by and between Tenant, as tenant, and Plaintiff’s predecessor, as landlord.” LINK

Tenant sues Scharfman over alleged 2010 deregulation: The plaintiff, a tenant with a non-rent-regulated lease, alleges the apartment lease is a rent overcharge, stating that subject apartment 5B was rent regulated when it was vacated in 2005 and never legally deregulated. According to the complaint, “In 2005, [the previous owner] registered the subject unit as rent stabilized but vacant at a legal rent of $1476.76. From 2006-2009, [the previous and current owners] did not register the subject unit with DHCR. In 2010, [the current] Owner registered the subject unit as exempt from rent regulation due to a high rent vacancy… Tenant entered possession of the subject unit pursuant to the terms of a written lease in 2021.” The current owner, an affiliate of the Scharfman Organization, purchased the building in 2008 for $5.6 million, according to city records. The complaint does not specify a dollar amount the plaintiff is seeking. LINK