Tuesday, October 27, 2009
Swindler no longer allowed to sell homes
From the NY Times:
A Brooklyn developer who took advantage of a faculty-housing exemption to build oversized condominium buildings, then sold the units on the open market, will be barred from selling apartments in New York State, according to an agreement between the developer and the attorney general’s office.
Along with barring him from selling real estate securities, the settlement requires that the developer, Mendel Brach, pay $10.9 million to the residents of the 72-unit development to repair structural defects.
In 2002, Mr. Brach obtained a zoning variance from the city allowing him to build nine-story condominiums on Spencer Street in Bedford-Stuyvesant, Brooklyn, where the normal limit was five stories. Mr. Brach took advantage of a “faculty housing bonus” allowing the extra stories by claiming that the buildings would house faculty members of a local yeshiva.
But the offering plan Mr. Brach sent to the attorney general’s office, which is responsible for approving all new condominium sales, made no mention of selling the units to teachers. The attorney general’s office, unaware of the variance, approved the offering and soon all 72 units were sold on the open market.
When the city learned of the sales, it declined to issue a permanent certificate of occupancy for the apartments, making it all but impossible for the owners to sell, rent or even refinance them.
Advised by the attorney general’s office that suing Mr. Brach would be fruitless because he did not have the money to make the buildings legal, the residents agreed to a mediated resolution. They say they have spent $1 million on legal fees and architects, but continue to live in the buildings, which are too tall for the neighborhood and racked with building code violations.