A Midtown home of an orthodox sect of Judaism is at risk of losing its building.
Chabad Lubavitch of Midtown was hit with a foreclosure lawsuit Tuesday for a range of alleged offenses related to a $16.5 million mortgage for 509 Fifth Ave.
According to the suit from lender Unify Financial Federal Credit Union, which was filed in Manhattan state Supreme Court, the synagogue and cultural center near East 42nd Street apparently doesn’t have enough cash flow to cover its debts and has also failed to fix a list of building code violations, enough to trigger a default.
But when Texas-based Unify Financial tried to collect the balance of the mortgage in December, as the lender claims it is permitted to do when a borrower dishonors a loan’s terms, Chabad refused to pay, the suit says.
“As a result of borrower’s continuing default, lender is now entitled to foreclose its security interest in the property,” it adds.
Based at No. 509 for about three decades and owner of the 12-story, mixed-use, prewar structure since 2013, the Midtown Chabad has not yet filed a legal response to the suit. And a message left with its office was not returned by press time.
In the filing, Unify Financial also claims that the group, a Hasidic sect that rose to global prominence in the mid-20th century under the late Rabbi Menachem Mendel Schneerson, did not settle a $692,000 bill from an elevator contractor, which subsequently slapped a lien on the property.
The condition of that elevator also seems to be at the root of several of the 60 open city Department of Buildings violations against the property, a list that dates back to 2014 and also includes citations for missing sprinklers and a lack of facade inspections, public records show.
Inspectors do not appear to have hit No. 509 with any of the most-hazardous Class 1 violations, though the building does face two stop-work orders for construction without proper permits.
The lender also says the organization owes Con Edison and other utility providers a total of $267,000, another alleged breach of the rules for the mortgage, which was issued in 2022, according to the suit.
Once home to Japanese department store Takashimaya Co., No. 509 in 1996 welcomed the Midtown chabad, which was then, as it is today, led by Rabbi Joshua Metzger. In 2012 Metzger teamed up with retail real estate mogul Jeff Sutton of Wharton Properties to purchase the building for $42 million in a deal that also included members of the Adjmi and Cayre families, records show. A conversion of the building into 12 commercial condos followed.
Metzger then took possession of the upper 11 stories of 509 Fifth for his nonprofit group, according to deeds filed in the city register. Wharton, meanwhile, hung on to the storefront, which is occupied by a Skechers shoe store today.
Chabad, which has about 100,000 followers across the globe, owns about a half-dozen sites in Manhattan, which generally offer religious services, Torah classes and Shabbat meals, according to its website. But the address for which the group has probably been most known in recent months is 770 Eastern Parkway in Crown Heights, Chabad’s world headquarters.
In 2023 Fire Department officials discovered a tunnel stretching from No. 770 into neighboring buildings that was apparently dug by students to illegally expand a synagogue. But when a cement truck came to fill the underground space, a riot broke out as protesters tried to keep the tunnel open, prompting arrests. The tunnel has since been sealed, though some of the protesters still face legal charges.
Bradley Gardner, the attorney with Polsinelli who filed the lawsuit on behalf of Unify Financial, declined to comment when reached by phone.
