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Habitat Magazine Business of Management 2021

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LEGAL/FINANCIAL

HOW LEGAL/FINANCIAL PROBLEMS ARE SOLVED BY NYC CO-OPS AND CONDOS

Lawsuit Seeks to Oust Atelier Condo Board Over “Illegal Hotel”

Bill Morris in Legal/Financial on July 15, 2021

Hell's Kitchen, Manhattan

Condo board, lawsuit, illegal hotel, short-term rentals, Hell's Kitchen.

The Atelier is a white-glove condominium at 635 W. 42nd St.

July 15, 2021

Tourists are coming back to New York City, and the luxury Atelier condominium in Hell’s Kitchen is back in the news. An 81-page complaint filed recently in state Supreme Court on behalf of disgruntled unit-owners claims the condo board has turned the Atelier into an “illegal hotel enterprise.” The lawsuit seeks removal of the board, installation of a new board, appointment of a receiver and new management company – and punitive damages of $50 million.

The complaint states: “Defendants’ illegal hotel scheme involving foreign investors from the Middle East, China, and Russia, among others, was orchestrated at the Atelier, a white-glove residential building. This scheme run by Defendants totally compromised the unit-owners’ feeling of community living, severely damaged the quality of life of the unit-owners – many of whom are New York City residents – debased the unit-owners’ equity in their respective units, and created myriad life safety concerns.”

Named as defendants are all seven members of the condo board, including its president Daniel Neiditch, who is also president of River 2 River Realty, the Atelier’s exclusive broker for sales and leasing. “It is believed Neiditch utilizes these positions of power to keep his firm grip on the board and the building and to ultimately continue his profitable self-dealings,” the complaint states.

Neiditch did not respond to a request for a comment. The condo board’s attorney, Dani Schwartz, a partner at Wachtel Missry, said in a statement: “The complaint is legally deficient in too many ways to count. A similar (but less verbose) lawsuit was dismissed last year, and we are confident of the same result this go-round... Why owners want to spend their money suing a board that has guided the building to millions of dollars in reserve funds and among the lowest common charges in the city is beyond me.”

The Atelier, a 46-story glass tower with 478 residential units located at 635 W. 42nd St., is no stranger to controversy. On Oct. 12, 2018, a team from the mayor’s Office of Special Enforcement raided the building in response to complaints that numerous unit-owners were illegally renting their apartments for less than the 30 days allowed by law. The city issued 27 violations in what was, at the time, one of the sharpest crackdowns on illegal short-term rentals. The violations went to 20 different unit-owners who allegedly rented to guests from at least 15 countries, including Argentina and Spain. Some guests paid $400 a night, and one group of six from Switzerland paid a total bill of $3,823 for a short-term stay, according to city records. Two members of the Atelier condo board were among those cited for making illegal rentals – and for putting up illegal partitions in their units to create extra rooms.

The new complaint against Neiditch and his fellow board members adds: “To make matters worse, Neiditch, along with the assistance of the Atelier’s ostensible General Manager, defendant Sabrina Mehmedovic, and the Board, have run the Atelier like a dictatorship in an effort to shield the defendants’ illegal short-term rental scheme through threats, intimidation, bullying tactics, and intentional malicious actions. In fact, the Board levied substantial frivolous fines against the unit-owners who have verbally aired their discontent with the Atelier’s nefarious business practices.”

Massimo D'Angelo, a partner at the law firm Akerman, represents the condominium's disgruntled unit-owners.

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