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City forecloses on 341 in Manhattan.

The City of New York took over 341 Manhattan properties in February in its largest Manhattan foreclosure action since 1986.

In the past, about 60 percent of foreclosed properties are later redeemed by owners before the statute of limitations runs out. There is a four month period within which owners can just pay up and then a further 20-month period which is discretionary on the part of the city.

The current properties include 30 vacant parcels, 30 condominium apartments, 168 walk-up small apartment buildings, 16 elevator apartment buildings, two hotels, four garages and five office buildings, at least two of were mistakes.

Owners groups, city agencies and industry watch-dogs have been troubled by the large numbers of small residential buildings that are being taken for non-payment of taxes. These buildings are often later purchased for small sums by non-profit organizations to run as shelters or to turn into cooperatives. Even so, buildings of up to 20 units are at high risk of reentering the system because rents often do not cover expenses.

"The realiaty is that people are having difficult time," said Steven Spinola, president of the Real Estate Board of New York. "It's not surprising to see large numbers of these properties, especially in the walk-up area where people are being hit with higher taxes on the Class II properties; the water meters and other taxes. They are smaller owners who have less options in tems of owners coming up with cash to pay those taxes."

Two of the notable properties on the city's list were mistakes. One is a condominium garrage unit at 150 West 56 Street -- the Cityspire -- that is leased by Garage Management and was part of the Bruce Eichner bankruptcy proceeding. The Bank of Nova Scotia owns both the garage and office unit and account officer Nicholas Voulgaris said all taxes have been paid in full and they are in the process of correcting the records. At one point the unit owed the city over $10 million.

Another property on the list in error was The Paramount Hotel at 240 West 46 Street. Owners had owed the city $2.6 million last year. Phil Pilevsky, a partner with Ian Schrager in the hotel, was incredulous when told of the vesting. "It sounds impossible," he said. "Let me check it out."

When he called back moments later, Pilevsky said the city coincidentally had just sent him a letter which he faxed to REW. "They forgot to take our name off the foreclosure list," he said quite relieved.

Property owners have long complained that in some cases mistakes are made by the city when placing them into the in rem process. Owner are unaware the parcels have been transferred until a tenant is notified to pay rent to the city. Real estate payments are often credited to other accounts, and notices sent to the wrong addresses or to secondary addresses who assume the owner is receiving the notice, too. Or, as in the above situation, the city plain "forgets" to remove a proeprty from its system.

Pilevsky noted for the record that Arthur Cohen is not a partner in any of the Schrager/Pilvesky hotels nor was John Zaccaro ever one of his partners. Pilevsky complained about the high city taxes and observed that if lenders do not restructure debt evem more buildings will be foreclosed on.

The 30 condominium apartment unit vestings reflect the fact that it is a relatively new form of ownership and pumped up the number of properties. Most condomiums are treated as Class I's and would not be taken unless three years of property taxes were owed, an official said on condition of anonymity.

Garages are having problems in many cases because their use is discretionary and as one attorney put it, it depends on their locations as well as their price.

This Manhattan vesting is the largest since 1986 when 718 properties were taken. Figures for later years are 174 in 1988, 238 in 1990; 138 in 1990 and 241 in 1991. Gary F. Marton, the assistant Corporation Counsel in charge of in rem said this was actually the 1992 vesting which was never made.

Last October, 288 pacels were vested in Brooklyn, down from 473 the year before and down again from 625 in 1990. There were 225 vested in 1988 and 378 in 1988, Marton said.

In November of 1992, the city vested 227 in the Bronx. That was slightly up from 196 in 1991, and 140 in 1990. In 1989, 163 were taken and 235 properties were vested by the city in 1988.

Queens properties are expected to vest at the end of April while Staten Island will be completed later in the year.
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Title Annotation:City of New York takes over ownership of Manhattan, New York, New York properties in February 1993
Author:Weiss, Lois
Publication:Real Estate Weekly
Date:Mar 17, 1993
Words:786
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