Soloviev Group is suing A&E Real Estate Management over the firm’s nonpayment for a Yorkville apartment building.
The firm’s plan was to sell a majority stake of its rental building at 501 East 87th Street to A&E Real Estate Management, which would have picked up a 56.3 percent stake, and would have assumed the same percentage of the $60.5 million Soloviev owes in loans at the property.
The suit over $14.5 million says A&E wrongfully backed out of its agreement to buy the 23-story rental building valued at $121 million and known as Rivers Bend.
The complaint claims that A&E agreed to the deal in February. A&E Real Estate tried to back out in part due to the alleged presence of asbestos in the building, which Soloviev Group chairman Stefan Soloviev said is a fabrication made in an attempt to get out of the deal.
“The asbestos is just a joke as far as them trying to get out of it because they couldn’t find financing,” said Soloviev. “They’re going to end up paying us $14.5 million and we’re going to end up keeping the building.”
The sale was scheduled to close in April, but A&E allegedly asked for several extensions, pushing the closing back to October, putting down a total of $13 million in deposits. Of that, Soloviev has collected $7.5 million while another $7 million remains in escrow.
A&E agreed to pay the $33.5 million as a down payment, according to Soloviev Group executives, before it was expected to pay the rest of the $121 million over time.
“We wouldn’t sell that building for a dime less,” said Soloviev.
A&E declined to comment.
On Sept. 29, a day before the scheduled closing, A&E allegedly surprised Soloviev with a termination notice, asserting that it didn’t get approval to assume the loan and that the asbestos discovered in the building was grounds for exiting the deal. It also wants its deposits back.
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Soloviev Group’s lawsuit says A&E’s “last-minute false allegations were unsupported and meritless and are manufactured excuses for its failure to meet its obligations … despite its repeated requests for additional time to meet those obligations and close.”
Soloviev then informed A&E it was in default of the sale agreement and that Soloviev would retain the $7.5 million in deposits and fees, and demanded the outstanding $7 million in escrow plus interest.
Soloviev’s lawsuit seeks that $7 million plus 9 percent interest, as well as punitive damages and legal costs.
There was talk of including Rivers Bend in Soloviev’s huge portfolio sale to Josh Gotlib and Meyer Orbach, but the building was ultimately left out of that $425 million deal.
PincusCo first reported the lawsuit.
Correction: An earlier version of this story incorrectly said $27 million was at stake for the Soloviev Group while the case was being litigated, based on the $33.5 million cited as the purchase price in the complaint.