Mother vs. Son: Lerner Family Legal Fight Intensifies

Some mothers can be just as tough on their children as fathers.

That may be the case for Michael Nathan Lerner, son of prominent Chicago-based multifamily developer Michael J. Lerner, the founder of MCZ Development, which has built apartment complexes throughout the Windy City along with Washington, D.C., Kansas City and elsewhere, according to the firm’s website.

The younger Lerner is now facing a lawsuit filed by his mother, Jamie Lerner, over Chicago real estate deals she claims he closed without getting her permission when he was legally required to and that she was entitled to receive half the proceeds from but never did, her complaint states.

The lawsuit was brought by a trust controlled by Jamie and refers to the son as Nathan, and marks the latest rift between him and his parents regarding real estate in prime Chicago neighborhoods. It also comes after Nathan has pulled off multiple pricey and profitable development site deals with two of the biggest names in Chicago real estate, Mike Golden and Thad Wong, the co-CEOs of the city’s largest residential brokerage @properties.

The new case was filed mere months after Nathan privately settled separate litigation brought by his father that sought to usurp the son’s equity in a $35 million Fulton Market development site sale to Crescent Heights. Miami-based Crescent Heights plans on building a 52-story, 587-unit apartment tower on the site.

The latest dispute with Jamie involves 59 different corporate entities managed by her son that own property jointly with a trust controlled by the mother, and specifically calls out transactions of seven properties she alleges were improperly executed without her agreement.

In addition, mom claims she’s been ghosted by son after her repeated attempts to obtain financial information from the dozens of companies under which the Lerner family owns real estate.

The lawsuit lays out how Nathan was given 50 percent interests and the duty to perform certain management tasks for the real estate companies, but that he has overstepped his authority on multiple occasions by selling some properties and using others as collateral to obtain personal loans.

A lawyer for the younger Lerner didn’t return a request for comment, while a receptionist for Adam Rome, the attorney representing Jamie Lerner’s trust, said he was unavailable for comment. MCZ Development, which has listed both the father and son as principals in the past, did not return a request for comment.

Overall, the lawsuit alleges Nathan sold a unit within the four-story condo property at 919 North Larrabee Street to someone else for $800,000, and sold the four-story multifamily complex at 1936-1956 North Bosworth Avenue to an LLC controlled by the son, without checking in with the mother’s trust as he was required to and without distributing any cash from the deals to the trust.

Nathan also received loans totaling nearly $4 million by mortgaging a portion of 919 North Larrabee, along with the multifamily at 2128 South May Street and 1338 West Cullerton Street, both in the Pilsen neighborhood, the lawsuit says. And he did so without permission from and without giving proceeds to his mother’s trust, it said.

Jamie Lerner also mentioned Nathan’s control of 5137 North Broadway, a property his LLC used to obtain a total of $17.5 million in loans in two different deals made in 2017 and 2018, Cook County records show. The mother also filed lis pendens on the low-slung commercial property at 2718 West Chicago Avenue, where Nathan took out an $800,000 mortgage last year, records show.

In its argument that Nathan should pay Jamie’s trust back proceeds from the deals plus attorneys fees and be ordered to stop making unilateral decisions with jointly owned real estate, the lawsuit cites the son’s statements to taxing authorities that income associated with the real estate companies was taxable to the trust rather than him individually. The IRS in March filed a federal lien with the Cook County Clerk’s Office claiming Jamie and Michael Lerner owe $1.2 million in unpaid taxes dating back to 2014. (The lien doesn’t specify which Michael Lerner owes the taxes.)

An August letter from the trust to Nathan used as an exhibit in the complaint urged the son to obtain legal counsel and sought the business records from the family’s dozens of real estate companies along with their income tax returns of the past four years.

Back in Fulton Market, after the father, Michael J. Lerner, bought the note for a debt owed by Nathan to Wong and Golden, the co-heads of @properties who also had stakes in 420 South May Street along with Nathan, the elder Lerner filed a lawsuit in an attempt to foreclose on his son’s equity. That case was dismissed after an out-of-court settlement.