A dispute between the developer of a West Harlem condo building and his former lender could push its tenants out of their homes.
The disagreement dates back to March 2019. Lender Arena Investors had approved a $26 million loan for Levi Balkany of Happy Living Development to build a condo tower at 308 West 133rd Street, public records show.
The loan’s terms called for the building to be used “exclusively” as a condominium and dictated that Balkany “may not enter into any lease” without the lender’s written consent, a complaint filed Wednesday in Manhattan shows.
Balkany breached that agreement several times over, court documents allege.
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Six weeks after the developer secured the loan, he fell into default and failed to deliver a temporary certificate of occupancy for the property, according to a prior lawsuit. Buyers were allowed to get out of their contracts, a legal requirement when a condo doesn’t meet its projected first year of operation.
Unable to meet the “effective” threshold for a new condo — 15 percent of units in contract — Balkany canceled the remaining signatures and sought a new strategy.
The Real Deal reported that Balkany contacted Arena to see if the lender would agree to let him rent the units.
“Don’t you understand an empty building is a disaster?” he wrote to Arena’s managing director of real estate, Don Moses.
The complaint filed this week alleges that without Arena’s consent, Balkany started leasing out units in May 2020. Arena promptly sent Balkany a letter demanding that he stop, but he did not.
On June 5, Arena filed a suit asking the court to prevent Balkany from leasing apartments and make him tell potential renters that any lease would be void. Less than two weeks later, the court approved an order that put an end to the developer’s renting spree, noting that all of the leases had been signed without Arena’s permission.
Balkany filed for bankruptcy in July 2020, the complaint reads. A year later, Arena bought the building in a public auction for $22 million.
In October 2021, a judge approved Balkany’s bankruptcy plan and in doing so rejected the building’s standing leases.
Now Arena argues that the building’s occupants, whose tenancies should have been void last October, “continue to remain in possession” of their units without Arena’s consent, the complaint reads.
The lender is now seeking possession of 26 of the building’s 46 units. It claims it has never collected rent from the occupants and has asked for a judgment that would direct a sheriff or New York City marshal to “eject” each of the tenants from the building.
An ejection is legally different from an eviction.
If a judge approves Arena’s request, it would lead to the displacement of at least 35 tenants, many of whom may have been unaware that their leases hung in the balance.
Neither Arena Investors nor Matthew Meisel, an attorney at Reed Smith representing the plaintiff, immediately returned a request for comment. Neither Balkany nor occupants of 308 West 133rd Street could be reached for comment.