New York AG orders developer stop fraudulent conversion of condos
New York’s Attorney General orders a developer to stop conversion of apartments into condos amid allegations of fraud.
Attorney General Eric T. Schneiderman announced a court order that bars completion of a project to convert an occupied residential rental building into condominiums, pending a fraud investigation. Essentially, the developer is accused of claiming to convert a building with minimal work while quietly laying plans to alter the structure from 43 condos to 24 larger units, according to a recent report by DNA info, a neighborhood news source covering New York.
More on the allegations of real estate fraud in New York
The allegations were officially announced in a Press Release from the Attorney General’s Office on January 13, 2015. Allegations under investigation include:
- The Attorney General is investigating whether the developer submitted a fraudulent offering plan to the Attorney General’s Office.
- Distribution of these false plans to the tenants.
- False filings with the City’s Department of Buildings.
- Wrongfully entered buyout agreements with tenants to force them to vacate apartments during conversion process. The developers are accused of violating the law and stripping the tenants of their basic rights by forcing them into agreements without enough time to review the agreement and without an option to purchase the apartment.
The developers are temporarily restrained by a court order from moving forward with any of their plans until the investigation is complete.
Impact on real estate fraud and forgery throughout Queens
The above court order will likely have a larger impact than just this single development. State Senators and Assembly members spoke out in support of the Attorney General’s move, noting that rental properties are being converted into condos and co-ops in high numbers throughout the city. As a result, developers may find increased scrutiny when attempting to move forward with similar projects.
The law that applies is referred to as the Martin Act, which protects both apartment purchasers and tenants in buildings that are converted into condominiums or co-ops. The law, also referred to as New York’s blue sky law, ensures tenants get an exclusive right to purchase their unit.
This is just one form of fraud that can arise during a real estate transaction in New York. As a result, those who are moving forward with a real estate transaction as a developer, investor or other role are wise to seek the counsel of Rosado, Apat & Dudley, LLP experienced Queens real estate fraud attorneys. This legal professional can review your unique situation and help to mitigate any potential risk, better ensuring a more favorable investment.
Keywords: real estate law