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New York Foreclosed Homes Auctions May Include Condos

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By : John Cutts    99 or more times read
Foreclosed homes auctions in the coming months in New York may include high-end condo units at the Carriage House in Chelsea after the condominium complex became the target of foreclosure and payment lawsuits by lenders and contractors for non-payment of loans and bills totaling more than $20 million.

The Carriage House luxury condo complex was the result of a condo conversion done by Flatiron District-based developer Broad Channel Builders on a former 1901 horse stable structure at Seventh Avenue. It developed 24 luxury apartments.

To acquire the property and carry out the conversion, Broad Channel borrowed $14.5 million from Oklahoma-based Midfirst Bank. But because of the downturn, Broad Channel struggled with its cash flow and failed to make its outstanding loans.

After two extensions provided by Midfirst, the last of which was May 1, Broad Channel still failed to pay. In June, Midfirst Bank filed a foreclosure lawsuit in New York State Supreme Court.

James Kuhn, head of commercial brokerage firm Newmark Knight Frank, was chosen as receiver, based on the court filings.

In addition to the foreclosure suit by Midfirst Bank, Midtown-based financing firm Terra Capital Partners also filed a lawsuit in August demanding payment of the $3.1 million mezzanine construction loan taken out by Broad Channel, including $877,542 in fees and interests. The loan was supposed to be paid after only a year.

The two lawsuits are seeking payments for loans totaling $19.47 million including interests and fees.

Making these lawsuits a bit different from most other commercial foreclosures are the claims by the lenders that the developers and investors who are part of Broad Channel, namely Eric Gray, Eamon Roche and Joshua Sacks, had personally guaranteed the loans.

Additionally, 25 mechanic's liens in contractor bills totaling $1.3 million were filed from February to July.

The pricier one-bedroom condo units were listed by Citi Habitats Marketing Group for $1,369 per square foot, although the condo building has not obtained a certificate of occupancy.

Brock Emmetsberger, a top executive at Massey Knakal Realty Services, said he toured the condo building a few months ago and had considered buying a unit for himself.

In response to a suggestion that the condo can improve its cash flow if it rents out the units, Emmetsberger said that revenues from rents would not be able to cover the high costs of construction and land acquisition since the condo project was designed and built as a luxury condominium.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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