The Largest Buyout Ever Overpaid in New York City
Adam Leitman Bailey, P.C. was contacted by rent-stabilized tenants of a residential apartment in New York in connection with a potential buyout case. We were given a mission: identify the landlord’s goals for the tenants’ building and secure a fair settlement amount that would allow the tenants to live comfortably for the rest of their lives after leaving their home. We started our due diligence, expecting that the building our clients lived in was one of many the landlord owned, and that the landlord was putting together a number of buildings to demolish and build a larger few hundred unit condominium building.
The tenants, longtime residents of the building, sought Adam Leitman Bailey, P.C.’s aid after they were approached by their landlord with a buyout offer. The tenants were among the last remaining rent-stabilized tenants in an otherwise empty building.
After speaking with our clients and conducting public records research, Adam Leitman Bailey, P.C. learned that the current landlord of the clients’ building had only recently purchased the building. At this point, it was clear that this new landlord had unknown plans for the building. Based on preliminary due diligence analyses, Adam Leitman Bailey, P.C. was suspicious that the landlord was not being completely transparent with our initial offer to the clients. In fact, Adam Leitman Bailey, P.C. developed the theory that the landlord was trying to remove all of the building’s tenants so that it could either completely renovate the building or otherwise perform some type of new construction or expansion. With this base knowledge on hand, Adam Leitman Bailey P.C. was sure that the landlord grossly lowballed the clients’ original offer.
While simultaneously continuing with the due diligence and market research on the building and surrounding neighbourhood, Adam Leitman Bailey P.C. learned that the client’s apartment had other housing code issues. Working on parallel tracks, Adam Leitman Bailey, P.C. began to document all of the housing code violations that were present in the clients’ apartment, including leaking pipes, cracked tiles, and other plumbing hazards, among other things. Adam Leitman Bailey, P.C. immediately sprang into action and created a record of these perilous violations, placing the landlord on notice and demanding immediate repairs.
Over the course of the next several months, and after the landlord repaired the hazards in the clients’ apartment, Adam Leitman Bailey, P.C. continued to zealously advocate for its client by ensuring that they had a safe and habitable home to live in while simultaneously negotiating for a favorable settlement. In order to pinpoint and narrow down the landlord’s prospective plans with the building, Adam Leitman Bailey, P.C. continued to utilize its research and due diligence prowess to uncover more details related to the landlord’s goals. After several settlement discussions, the landlord was no longer able to furtively hide its goals and baselessly justify its low buyout offers.
The parties agreed on a favorable settlement amount, which was considerably higher than the landlord’s initial offer, and the buyout agreement was officially consummated. The clients were finally able to rest easy knowing that they were being duly compensated for leaving their home behind, all thanks to Adam Leitman Bailey, P.C.’s expertise and savvy negotiating techniques. Adam Leitman Bailey, P.C.’s clients are now able to live comfortably in their home with full financial security. The final number agreed to after much negotiation was 2 million dollars. That was the good news. The bad news was that the landlord did not have that much money and that no bank would lend the landlord 2 million dollars to deliver what was promised and signed in the buyout agreement.
We continued hunting and we accounted for every building that this landlord could have possibly owned. It turned out that the only building the landlord owned was the one where the tenants lived. Under the current laws paying 2 million dollars for a building that had no air rights and where the rents could not be raised once they moved out did not make any reasonable sense.
“You negotiated too well, Adam. You convinced us to give you a number that does not make financial sense and my client’s partners nor his bank will agree to pay the buyout number.” This became a problem since we did not want to lose the ability to get the number and the agreement had a confidentiality provision. The client had already packed their bags but I reminded them that if they moved out we may never see the money. Months went by. I called every week for updates. The landlord’s attorney would apologize.
It was extremely difficult not using our judicial tools as we knew that may endanger one day being paid the money. And our client had little patience and literally called almost every day and the Adam Leitman Bailey team showed remarkable patience and fortitude in dealing with the adversary and the clients. The adversary became nervous after seeing one of the firm’s high-profile cases and somehow came up with the money and to this day we do not know how. We followed the terms of the agreement perfectly and our clients are finally living happily ever after never having to worry about money again.
Adam Leitman Bailey, Carolyn Rualo and William Perkarsky represented the tenants in the buyout negotiations and in the aftermath getting our client paid.