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Following Years of Wrangling, Village, Chelsea Buildings Rise

Following Years of Wrangling, Village, Chelsea Buildings RiseBY JILL PRILUCK - Special to the SunAugust 16, 2007URL: http://www.nysun.com/article/60622

Developer Cary Tamarkin is moving forward on new residential condominiums in the Far West Village and West Chelsea following the resolution earlier this month of a lawsuit over two parcels of land that dragged on for four years.

The West Village parcel, at 397 W. 12th St., will be the site of a 10-story, five-unit building. Each apartment will be as large as 6,600 square feet and will be left as raw space. The asking prices are expected to range between $5.5 million and $14 million.

The West Chelsea property, at 456 W. 19th St., will include 22 duplexes ranging in size from 1,100 square feet to 2,800 square feet, with asking prices of $1,500 a square foot to $2,800 a square foot. The buildings are already under construction.

Mr. Tamarkin is a seasoned real estate insider who in 2000 battled Woody Allen and other Upper East Siders over a proposed 17-story Carnegie Hill tower he was developing at 47 E. 91st St. The building eventually was built to nine stories.

Mr. Tamarkin's new developments were hotly contested because of the value of the sites. During the time it took Mr. Tamarkin's lawsuit to wind through the courts, the average price for residential properties downtown skyrocketed. According to the appraisal firm Miller Samuel, three-bedroom Greenwich Village condos almost tripled to $1,647 a square foot in the second quarter of 2007 from $662 in 2003, while the price per square foot for two-bedroom condos in Chelsea rose to $1,247 from $770 during the same period.

"Both of those properties are to downtown what 15 Central Park West is to the Upper West Side," an executive vice president at Prudential Douglas Elliman, Darren Sukenik, said. The 12th Street location is "the only clean parcel left in the West Village that they can build the way they want," he said. As for the West Chelsea development, "these aren't two-bedroom, two-bathroom cookie cutters in parts of Chelsea where no one wants to live."

Mr. Tamarkin, a long-term commercial tenant at the West 12th Street property, sued his landlord, Victor Zupa, and a developer, Madison Capital Management, after Mr. Zupa tried to sell the West 12th Street property and the West 19th Street site to Madison Capital for $22 million. According to Mr. Tamarkin's lease, he was supposed to be given a first chance to buy the properties.

Mr. Tamarkin and his lawyer, Y. David Scharf, a partner at the law firm Morrison Cohen, alleged that Mr. Zupa and Madison Capital colluded to defraud Mr. Tamarkin. After years of litigation, including three lower court decisions, three appeals, and two applications to the court of appeals, Madison Capital exhausted its legal options against Mr. Tamarkin. During the course of the litigation, Mr. Tamarkin purchased the two parcels from Mr. Zupa for $24 million.

The suit is a reminder of the importance of the right of first refusal, experts say. "I've seen situations where people have tried to circumvent rights and they have to be careful how they do it because of contractual obligations of good faith and fair dealing," a partner at Greenberg Traurig, Robert Ivanhoe, said.

Mr. Scharf, who counts Donald Trump as a client, said the lawsuit illustrates a trend of using the legal system to renegotiate a deal when market forces fall short.

"In a hot market, as New York has been for the last few years, people are looking for leverage and they are resorting to the litigation process to try to give them an angle to get pieces of property that they weren't able to get in the ordinary bidding process," he said. "If we were in a flat market, my guess is that a lot of this litigation wouldn't be happening."

August 16, 2007 Edition > Section: Real Estate > Printer-Friendly Version



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