Beach rental equipments

Loan Dispute Could Evict West Harlem Condo Tenants

308 West 133rd Street and Arena Investors CEO Dan Zwirn (Arena Co, Google Maps)

A dispute between the developer of a West Harlem condominium building and its former lender could cause its tenants to leave their homes.

The disagreement dates back to March 2019. Lender Arena Investors had approved a $26 million loan for Happy Living Development’s Levi Balkany to build a condo tower at 308 West 133rd Street, according to public records.

The conditions of the loan stipulated that the building was to be used “exclusively” as co-ownership and stipulated that Balkany “could not enter into any lease” without the written agreement of the lender, a complaint filed Wednesday in Manhattan salons.

Balkany violated this agreement on several occasions, according to court documents.

Six weeks after the developer secured the loan, it fell into default and failed to issue a temporary occupancy certificate for the property, according to an earlier lawsuit. Buyers were allowed to terminate their contracts, a legal requirement when a condo fails to meet its first year of expected operation.

Unable to meet the “effective” threshold for a new condo – 15% of units under contract – Balkany canceled the remaining signings and sought a new strategy.

The real deal reported that Balkany contacted Arena to see if the lender would agree to let him lease the units.

“Don’t you understand that an empty building is a disaster?” he wrote to Arena’s general manager of real estate, Don Moses.

The lawsuit filed this week alleges that without Arena’s consent, Balkany began renting units in May 2020. Arena quickly sent Balkany a letter asking him to stop, but he did not.

On June 5, Arena filed a lawsuit asking the court to stop Balkany from renting apartments and to have him tell potential tenants that any lease would be void. Less than two weeks later, the court approved an order ending the developer’s rental spree, noting that all leases had been signed without Arena’s permission.

Balkany filed for bankruptcy in July 2020, the complaint states. A year later, Arena bought the building at a public auction for $22 million.

In October 2021, a judge approved Balkany’s bankruptcy plan and, in doing so, rejected the building’s permanent leases.

Now, Arena is arguing that occupants of the building, whose leases should have been canceled last October, “continue to retain possession” of their units without Arena’s consent, the complaint reads.

The lender is now asking for possession of 26 of the building’s 46 units. He claims he never collected rent from the occupants and sought a judgment that would order a New York sheriff or marshal to “evict” each of the tenants from the building.

An eviction is legally different from an eviction.

If a judge approves Arena’s request, it would displace at least 35 tenants, many of whom may not have known their leases were at stake.

Neither Arena Investors nor Matthew Meisel, a Reed Smith attorney representing the plaintiff, immediately returned a request for comment. Neither Balkany nor the occupants of 308 West 133rd Street could be reached for comment.