Investment sales deals often appear neat and ordered, certainly when announced in congratulatory messages and memorial tombstones. But a dispute over a small loan needed to buy a residential building in Lower Manhattan — a deal sealed by a handshake — reveals a different story.
A Brooklyn investment team including Chaim Miller and Samuel Sprei were closing a deal on March 7 to buy 45 John Street, a former loft building that was converted to apartments, for $60 million from Josh Zegen’s Madison Realty Capital.
The building is located between Nassau and Dutch streets in Lower Manhattan.
But Miller and Sprei needed another $1.97 million in cash to close the deal, information from a lawsuit filed this month in Manhattan State Supreme Court states.
On the day of the closing, Miller phoned Jacob Deckelbaum, a real estate investor and managing member of the Brooklyn title company Reliable Abstract, to ask for short term loan of $1.97 million, a source familiar with the conversation, said.
Deckelbaum agreed to the loan, with the understanding he would be repaid within a few days, the papers state. The deal was secured over the phone on a “handshake,” however, and not set out formally in writing.
Miller has been involved in real estate for years, but has taken a much higher profile this year. He was one of several serious bidders involved in the drawn out sale of the Long Island College Hospital in Cobble Hill; a player in the complex sale of the large Greenpoint development site 49 Dupont Street and an owner in the residential conversion of the St. John’s Hospital in Queens, among other deals.
Now, Deckelbaum is suing, claiming he’s only been repaid $500,000 of the money. The lawsuit, filed Dec. 16, seeks $2.5 million in monetary damages and at least $6 million in punitive damages. Deckelbaum is also seeking a 14 percent stake in the property, the court papers show. A spokesperson for Miller and Sprei said it is unclear how much money Deckelbaum is still owed.
Deckelbaum declined to comment, but his attorney, Mitchell C. Shapiro, did not believe there was any nefarious intent.
“I think at time real estate moguls like Sprei and Miller, involved in a half-dozen transactions at a time, at times sometimes forget facts and sometimes they conflate facts in different transactions, and they make mistakes,” Shapiro said.
Shapiro said the case was not yet settled. A press representative for Miller and Sprei, said the dispute has been settled.
“At all times Mr. Miller continues to honor his handshake agreement, and has made consistent periodic payments to Deckelbaum,” the representative said in a statement to The Real Deal.
While not unheard of, such unsecured, short-terms loans are not common, said Aaron Jungreis, president of the Manhattan-based brokerage Rosewood Realty Group.
“It happens, but it is rare. I think it is something that used to happen [more frequently] years ago, but not now,” Jungreis said. Jungreis says when he lends money, the transactions are memorialized in writing.
State Supreme Court Justice Shirley Kornreich granted Deckelbaum’s request for a temporary restraining order earlier this month that protects some of his rights, Shapiro said. The next court date is set for Feb. 2, he said.