The buyer of an $80 million penthouse at Zeckendorf Development’s 520 Park Ave. claims they were duped about a tall next-door project that will “cast a permanent cloud over the property—literally” and wants their money back.
A lawsuit from the unnamed purchaser of the duplex condo unit is accusing firm principals and brothers William Lie Zeckendorf and Arthur Zeckendorf of “brazen fraud” in allegedly hiding the fact that Extell Development Co. plans to construct a tower near No. 520 that could block the unit’s views of Central Park and potentially make the home unsellable.
“Needless to say, had buyer known the development was in the works, buyer never would have purchased the penthouse—let alone for close to $80 million,” says the complaint, which was filed Monday in Manhattan state Supreme Court.
The buyer, who in the fall purchased the penthouse at East 60th Street using the shell company Park Ave. Condo LLC, is seeking not only to recoup their $80 million but also is asking a judge to award an unspecified amount for damages and to have the Zeckendorfs cover their legal fees.
One of the city’s oldest, best-capitalized and most successful residential developers, the Zeckendorfs, whose previous projects include price-record-setting 15 Central Park West, nicknamed “limestone Jesus,” have not yet filed a legal response.
But their attorneys, Terrence Oved and Darren Oved of the firm Oved & Oved, are calling the action a misguided attempt to undo a legitimate real estate transaction.
“Our clients reject these baseless allegations as a shameless attempt to renegotiate a binding agreement,” they said. “They fully expect the court will see this action for what it is—a transparent case of buyer’s remorse masquerading as a complaint—and readily dismiss it.”
The 16-page complaint makes claims that the Zeckendorf brothers were desperate to unload the last sponsor unit at the $1.3 billion, 35-unit project, and the priciest of the bunch to boot, as Extell’s plans became increasingly clear.
The first move by Extell to acquire office building 655 Madison Ave. for $159 million in a deal that closed Oct. 10 didn’t ruffle any feathers, according to the complaint. “This news,” the suit says, “did not concern buyer, nor should it have.”
Indeed, at 34 stories, No. 655, which has been approved for demolition, did not seem to come with enough air rights to allow a skyscraper tall enough to overshadow 64-story 520 Park, the suit says.
So the buyer went ahead and inked a deal to purchase the five-bedroom penthouse as well as a pair of fourth-floor staff apartments, the filing says. The buyer signed a contract for the units Oct. 29 before closing Nov. 20 in an all-cash transaction, according to the city register.
But the suit alleges that the Zeckendorfs purposefully neglected to mention that Extell President Gary Barnett was at the time negotiating to buy four additional sites that could allow him to make his tower much larger. The sites, 33, 35, 37 and 39 E. 60th St., which Barnett bought from the Goldman family for $103.3 million, went into contract Dec. 18, a couple of weeks after the penthouse sale. The Goldman sale closed Feb. 26; Barnett applied to demolish the 5-story mixed-use buildings a few days later.
Because deals of that scale usually require months of negotiation before they come to fruition, and because the city’s real estate world is so clubby, the suit alleges that the Zeckendorfs had to have gotten wind of the fact that the East 60th Street sale was imminent.
“Unlike buyer, defendants were in a unique position to learn, and on information and belief did learn,” about the transaction, according to the suit, “given their status as part of a small circle of New York City real estate insiders.” But the filing does not offer specifics about how the Zeckendorfs might have come across that information.
Kevin Reed, one of three attorneys with the firm Quinn Emanuel Urquhart & Sullivan who is representing the penthouse owner, had no comment by press time.
