Remaining RTC condos on the market.
The now defunct Resolution Trust Corporation (RTC) acquired the units in 444 East 57th Street in the late 1980's after banks failed that had taken the units back from sponsors who had defaulted on their loan obligations.
The RTC had attempted to use its powers granted by Congress to repudiate leases and to evict non-purchasing tenants who had rent stabilized and rent controlled leases in the non-eviction plan condominium.
In 1990, the RTC sent termination notices to the mostly elderly tenants, who were warned to either move or buy their apartment. The tenants panicked, obtaining the help of Congressman Jerrold Nadler and Senator Daniel Patrick Moynihan, among others.
At the time, sources said the initial termination letters were sent by mistake, but once the tenants, press and politicians rallied, the RTC continued with its actions, simply to test its powers.
The tenants, along with former State Attorney General Robert Abrams and the Division of Housing and Community Renewal (DHCR), which governs rent regulated units, began other legal moves to uphold the state rent laws and keep the Feds from exercising control of the apartments.
Ironically, many co-op and condominium sponsors defaulted because the rents allowed to be charged to the non-purchasing tenants in non-eviction plan conversions under state and city rent regulations did not cover the actual maintenance and loans.
It was the low income generated by the units that led the RTC to consider repudiating the leases, since these officials were interested in maximizing the income on the units on behalf of all Federal taxpayers, who were effectively subsidizing the liquidation of the failed banks' assets.
"The RTC thought they weren't subject to rent control," real estate attorney Michael Utefsky recalled.
Over the years, the courts flip-flopped and the parties kept appealing. The U.S. Supreme Court justices remanded the case back to the 2nd Circuit Court. But after certain issues were explained to its satisfaction, in 1995, the U.S. Supreme Court declined to take up the matter further, leaving the RTC's powers intact.
RTC officials had privately told politicians that while they might be pursuing the legal principles, no evictions would take place.
When it began litigating RTC vs. Diamond, there were close to 2,000 units under RTC control. By the time the legal maneuvering was over years later, only 46 units in various buildings remained under its care.
At 444 East 57th Street, the litigation affected between nine and 19 units. Since then, many of the apartments have been purchased by the tenants, leaving the current nine that are now being sold by order of the FDIC, which has since taken over the assets of the RTC.
Six of the apartments now up for sale are vacant, while three are occupied, said Linda Salamon, the principal of Maxima Realty, who is handling the sale on behalf of the FDIC.
Packages with all the information and legal-ese are available from her office for $35 by calling (212) 505-5007.
Bulk condo sale king Mark Zborovsky said he was familiar with the offering. As of six months ago, he said, unit 6-B's rent regulated tenant was paying $777 for a two-bedroom one-bath unit of 1,100 square feet, with common charges of $859 and real estate taxes of $381. Salamon said that rent is now $1,055.
Six months ago, the tenant of 4-D, a 6.5-room, 2.5-bath, 1,600 square-footer, was paying $926 in rent, and the owner was responsible for $1,292 in common charges, with real estate taxes of $574.
The largest unit, 12-F, is in the back. That apartment has nine rooms with four bathrooms in a total of about 2,960 square feet. The tenant pays $4,444 in rent, while common charges are $2,564 and real estate taxes are $1139.
Two of the other units - 11-F and 14-F - are large three-bedrooms in the same line.
"Theoretically, eventually someone could make themselves a duplex," said Salamon, referring to the still occupied 12-F apartment.
Any investor will buy all of the units, he said. "Because they are condominiums in excellent locations, an investor will pay 75 cents on the dollar for the vacant apartments, and on the level of 30 to 35 cents on the dollar for the occupied units," Zborovsky added.
In April 1996, screen legend Marilyn Monroe's former three-bedroom in the building was sold at auction by Sheldon Good for $1.65 million to an actress/musician.
Zborovsky said that in June 1998, apartment 11-E, an eight-room unit, sold for $525,000, while in December 1996, unit 8E sold for $970,000.
Based on the sales in the building, which run around $450 a foot, Zborovsky says the three occupied units are worth $1.7 million, with the vacant market value of the entire block tagged at $5.76 million. Because there are so many units that are deregulated, he said, the block should sell for between $3 million and $3.7 million.
Potential bidders can view the units during three different open houses in May, with all sealed bids due by May 20th at 5 p.m.
Throughout the decade, Maxima has handled many real estate sales on behalf of the RTC and the FDIC. "I have people that have been following this for quite a few years and are waiting for this particular sale," said Salamon.
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|Title Annotation:||Resolution Trust Corporation|
|Publication:||Real Estate Weekly|
|Date:||Apr 14, 1999|
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