Courts roundup: Madison Realty hit with $19.7M pre-foreclosure in Brooklyn; 11 Beach condo sues HFZ; more

Courts roundup for May 26 and 27, 2021: There were no commercial bankruptcies of interest, and one commercial foreclosure above $5 million.

Please note that court filings are the positions of one party and may not be complete or accurate.

Amherst Capital sues Madison Realty for $19.7M at One Hanson retail: The day after the One Hanson Place condominium board sued Madison Realty Capital and Siguler Guff & Company’s OHP Retail Owner LLC, which owns the retail at One Hanson Place in Fort Greene, seeking $394,190, lender Amherst Capital Management sued to recover $19.7 million remaining of a $22.5 million loan issued in 2018. The One Hanson condo board filed to foreclose on its outstanding condo liens totaling $394,190 one day earlier, on May 25, 2021, as PincusCo exclusively reported. According to the complaint,  “On July 9, 2020, Borrower failed to make its scheduled payment of debt service on the Loans and its monthly deposit to the Tax and Insurance Reserve. By letters dated July 17, 2020, Lender declared an Event of Default under Section 8.1(a) of the Loan Agreements. (The July 17, 2020 letters are annexed as Exhibits 20, 21, and 22.) Borrower failed to respond or cure.” The complaint continues, “By letters dated May 25, 2021, Lender advised Borrower and Guarantors that, due to their defaults in the performance of their obligations under the Loan Documents, Lender had elected to exercise its rights to accelerate the maturity date of the Notes, and that the entire principal amount of the Loans and other amounts due pursuant to the Loan Documents were immediately due and payable. In those letters, Lender demanded immediate payment of the full accelerated current balance.” LINK

11 Beach board sues HFZ, Feldman, others for $4.5M: The board of managers of the HFZ Capital Group-developed, 27-unit 11 Beach Street condominium is suing HFZ, Ziel Feldman, Nir Meir, their partners, law firm, architect and others for a wide range of alleged offenses, including poor construction, improper apartment transfers and safety issues. The board is seeking $4.5 million through various claims. The complaint says, “The unit owners instead were left with a building rife with defective conditions that in numerous respects violate applicable government regulations, compromise the quality of life of residents, and deviate from express promises and material representations in the Offering plan.” The complaint continues, “The myriad defects impacting the Building are the result of construction practices by defendants and their contractors that were amateurish at best and grossly negligent at worst. Perhaps the most egregious example is the active water leaks through unit windows that were defectively installed from the start. The recurring water intrusion into the residential units has caused damage to the ceilings, walls, floors, fixtures and personal property of their owners. Leaks also are present at the A-line elevator and common egress stairs… Finally, the sponsor and its business partners have pilfered the sponsor’s assets, walking away with millions of dollars in distributions while leaving the Board and the residents in the lurch. Recently, the sponsor conveyed its last remaining Condominium units to its business partners for no consideration, resulting in the sponsor’s insolvency. One of these units just was “flipped” for $6,750,000 and at least one other is in contract. While the Board’s attorneys have cautioned the sponsor’s business partners not to distribute the sales proceeds until the Board’s claims are adjudicated, they have refused to do so.” The condo is an 11-story condominium with a cellar level. It consists of 27 residential units, including three townhouses. LINK

HFZ’s XI showroom landlord sues HFZ for $2.58M: The landlord for HFZ Capital Group’s sales showroom for units at the XI condominium at 76 Eleventh Avenue filed its second lawsuit against the developer in a year. The first was filed in August 2020 and quickly settled when Feldman made a payment to landlord Greenway Mews Realty covering some back rent and extended the lease to March 31, 2021. The new suit is seeking $2.58 million in back rent, penalties, holdover charges and estimated costs to demolish the showroom. LINK

8-unit rental buyer seeks $1M from seller over rent-regulation status dispute: An unhappy owner of an 8-unit building, who is the plaintiff-landlord, is suing the property seller and plaintiff’s own attorney for $1 million each as a result of a 2018, $3.825 million transaction for an 8-unit rental building. The plaintiff alleges they were incorrectly told that the building had no rent-regulated tenants when in fact it does, according to the complaint. The plaintiff alleges false representation on the part of the seller and negligence on the part of the attorney. The individual owner who owns plaintiff LLC is not named in the suit, but HPD identifies a Chun Lee as the property’s head officer. LINK