NY City Condominium Project Facing Bank Owned Foreclosure

by Peter Vernon on Foreclosures

German lending company, Bayerische Landesbank has filed a bank owned foreclosure lawsuit against developer Manhattan Capital and its business partner, RREEF Global Opportunities Fund, a Deutsche Bank subsidiary.

The lender sued the Midtown-based developer in connection with the defaulted loans amounting to $51.7 million for a condominium conversion project located in New York City. Both Manhattan Capital and RREEF Global are converting a 14-story building into an 84-unit luxury condominium.

Bayerische Landesbank filed the bank owned foreclosure lawsuit before the New York State Supreme Court in an effort to repossess the note. According to court records, the bank claimed that Manhattan Capital had missed payments on the loan starting in February.

According to the bank, the borrower defaulted on its loan and has failed to make its account current despite repeated demands made in writing on March 19 and June 15 of this year.

The developer is supposed to make a closing on its first sale but the filing of the foreclosure case put everything on hold. Meanwhile, it plans to file an amendment with the office of the Attorney General to allow buyers to revoke their contracts and refund their money.

Units in the luxury condominium have a price range of $585,000 to $1.825 million. Meanwhile, bank owned foreclosure lawsuits and amendments for rescission are becoming common in the commercial real estate market due to the economic downturn.

Last March, a foreclosure lawsuit was also filed against the Jasper commercial building which was converted into a condominium. In
April, buyers at the Linden78 building were given rights to rescind.

According to data, about 48 percent of the Manhattan Capital-developed condominium units were sold. Aside from the delinquent loan payments on the condominium project, Manhattan Capital also owes contractors over $2.1 million. According to the office of the New York County Clerk, contractors involved in the project have not been paid and they filed mechanic’s lien.

The contractor with the highest lien value is My Jamie Joseph Only, an air-conditioning, heating and plumbing sub-contractor that claims $1 million on the project.

According to attorney Sandor Krauss, once a loan is in default, the borrower is required to notify the buyers. However, several buyers said that they did not receive any bank owned foreclosure notification from the developer.