How Adam Leitman Bailey’s 79-year-old Client Received Over Two Million Dollars for the Sale or Buyout of a Residential Lease
Contacted when the official documents converting a large residential building to a condominium, and retained after the landlord called the tenant to offer $25,000, Adam Leitman Bailey, P.C. had its mission.
The challenges presented to Adam Leitman Bailey, P.C. included:
- A client over the age of 80 years old and knowing many landlords would not pay more than a pittance in an expectation of a short life span.
- The tenant-client has been diagnosed with an aggressive cancer and was told he did not have long to live.
- The client loved his home and was only going to leave if the developer reached his number two million dollars.
- The client was a collector who lived alone in a three-bedroom apartment where he had his organized collection including presidential campaign items from the Civil War and every presidential campaign thereafter. This collection bordered on a nuisance as a result of the amount of papers mounted heavily in the rooms.
- The apartment has no views and was on a very low floor.
Negotiating points to get the landlord to two million dollars:
1. Making Money for the Sponsor
Adam Leitman Bailey, P.C. focused the negotiation away from its client and toward what the landlord can receive from a quick expensive buyout. In order to do this Adam Leitman Bailey, P.C. needed to be able to credibly predict what the vacant apartment would sell for. The firm did a homemade analysis of all sells for the year in comparable buildings and another chart for all condominium conversions. Adam Leitman Bailey, P.C. predicted the apartment could easily sell for six million therefore paying its million-dollar price, making the unit very profitable. Adam Leitman Bailey, P.C. argument was bolstered when sales prices came out for the units and our client’s unit had been heavily discounted due to the rent regulated tenant–Adam Leitman Bailey, P.C.’s client.
2. Using Inside Information
Adam Leitman Bailey, P.C. learned that the developer wanted to combine two units but needed the buyout to be completed before final plans had been executed for the to be combined unit. Adam Leitman Bailey, P.C. received additional inside information that every decision regarding the building needed approval by the lender.
3. Convincing the Developer
If he offered Adam Leitman Bailey, P.C.’s client such a high number no other tenant would ever hear about it. It never worked. Adam Leitman Bailey, P.C.’s client loved to speak and was called by the developer a “yenta.” The firm realized that there was no way of winning this point. But the firm also learned vital information. The developer was worried about unfavorable press.
4. Living with unbearable conditions
The developer’s ammunition was simple to make life for Adam Leitman Bailey, P.C.’s client a living hell. It removed the call lines so tenant could not communicate with doorman. In the name of repair work, it caused large holes in the walls and terminated use of stove and utilities in kitchen. Adam Leitman Bailey, P.C.’s client had a decision to make–could he live like hell for a few months to year in order to the possibility of providing economic stability for his children and grandchildren? He said he had lived in much worse. Every time the developer came to do repairs more damage was done.
5. Documenting the Damage
By documenting the damage room by room and bringing in lead paint and asbestos experts to examine the unit, Adam Leitman Bailey, P.C. now predicted that it would be worth it for the developer who was trying to sell apartments to want to keep all of the above information out of the press.
6. Suing the Developer
Once further negotiations kept the developer almost a million dollars off of the required number, Adam Leitman Bailey, P.C. unleashed the dogs. A lawsuit was filed exposing all of the horrible conditions in the apartment. This should have had the effect of influencing sales prices as the lawsuit would have to be mentioned in an offering plan amendment however an amendment to the offering plan with this information never occurred.
Adam Leitman Bailey, P.C. now had to win the lawsuit. After a long trial, the tenant received a resounding victory–ordering the repairs and the removal of the asbestos and lead paint and the restoration of all essential services immediately.
7. Press attention
An article about the case received press attention from a major publication and the real estate newspapers. For the first time, potential buyers read about problems with the building through Adam Leitman Bailey, P.C.’s civil war.
8. Getting to Yes
The developer agreed to the two million dollar number eight months after the initial negotiation. But once it said yes, it stated that it must complete the negotiation within 24 hours as the New York Times was doing a story on the building and wanted us to state that the case was settled. In addition, the lender for reasons unknown to us, put a date on the completion of the negotiation.
Once the deal was completed the tenant earned two million dollars and the developer paid all of the legal fees including the fees for the experts and the trial. Besides paying the firm’s legal fees, Adam Leitman Bailey, P.C.’s client awarded the firm with a prize from his history collection. The famous person involved in the collection was a warrior who signed an important peace agreement. Adam Leitman Bailey, P.C.’s client now lives in Florida and his children and grandchildren may never have to worry about money again. Since the settlement, his health has also improved greatly.