Word recently came that new Hell's Kitchen condo building The 505 (at 505 West 47th Street for those keeping track) had received its TCO, and closings at the 95% sold building could begin. Indeed, per StreetEasy, a one-bedroom unit closed for $855,000 two weeks ago. Hooray, all is well, let there be happiness and joy throughout the land! Er, not so fast. The situation at The 505 has become something of a shitshow, The Real Deal reports, with up to half of the buyers suing to break their contracts and get their deposits back. Why? Paying 2007 prices is, like, so totally retro!
The buyers are attempting to use the legal loophole du jour, the Interstate Land Sales Full Disclosure Act, only the developers behind The 505 have a message: It ain't gonna work. Check out the letter sent by the developers, forwarded to us by a 505 buyer not afraid of these "scare tactics."
Gotta love that trash-talking opener: Dear Future Unit Owner. The developer claims some buyers are already dropping out of the suit, but as TRD notes, this is just one legal front at The 505:
The case is not the only legal problem for the 505 developers, a partnership including Reisner's Parkview 47. Lev Development Group, representing several of the 505’s original investors, filed suit in February 2008 against Parkview 47 claiming he distributed 421-a certificates to certain investors that resulted in a loan default; and retained certain “sponsor units” that were to be used exclusively for the benefit of the sponsor. He also allegedly allowed certain subcontractors to continue working on the building against the wishes of the construction manager, resulting in an additional $1 million payment to hire a new construction manager, according to court filings. Martin Jackson, a buyer and attorney at Sidley & Austin, alleged in a separate lawsuit that Reisner engaged in a scheme to reduce the profits shared with other investors at the project through an elaborate series of buybacks and assignments. Jackson, in the suit, put down a 10 percent deposit for a $1.42 million penthouse in early 2008, and then was told that the apartment had been sold to Reisner and could be “assigned” to Jackson for a $145,000 “assignment fee” and he would then lower the purchase price.
Sounds pretty darn serious, doesn't it? This would never happen in Clinton!
· 505 developers warned buyers of suits, documents show, but still face revolt [Real Deal]
· The 505 coverage [Curbed]