Court Battle Delays Affordable Redev Plan

A contract, a lien, and dueling lawsuits have thrown a wrench into the city’s plans to buy a derelict property in Newhallville and convert it into an affordable owner-occupied home.

That property is 558 Winchester Ave. — currently home to a long-blighted three-family house at the corner of Starr Street.

In February, the Board of Alders unanimously signed off on the city’s plans to purchase the property for $155,000 from a holding company controlled by Yisroel Rabinowitz of Brooklyn. The city plans to redevelop the site into another income-restricted, owner-occupied residence in the area of Winchester Avenue and Thompson Street.

Nearly five months after the alders approved the public purchase, the property deal has yet to go through. And the building remains boarded up and unused.

A trail of city land records and recent court filings explain what exactly is going on with the stalled project.

Levenhartz: What About Previous Deal?

Two days after the Independent ran a story on Feb. 17 about the planned 558 Winchester Ave. public purchase, local landlord Sim Levenhartz filed a so-called ​“Notice of Equitable Rights” in the city land records.

In that filing, Levenhartz claimed that he had already struck a deal with Rabinowitz’s company, 558 Winchester Avenue LLC, to purchase the derelict property for $122,500.

Levenhartz wrote that he had already tendered a deposit of $10,000, and that the initial closing was slated to occur on Oct. 13, 2020 — four months before the Board of Alders voted to approve the building’s public purchase for $32,500 more.

And he included in that land records filing a copy of a purchase and sale agreement signed by himself and Rabinowitz that dated back to September 2020.

“Buyer is ready, willing and able to purchase the subject property in accordance with the terms of the contract,” Levenhartz’s land record filing concludes.

Rabinowitz: That Deal Is Dead; Here’s Your $10K Back

On April 21, Rabinowitz responded by filing a lawsuit against Levenhartz in state Superior Court.

That suit, called a ​“petition for discharge of ineffective lien,” acknowledges that Levenhartz and Rabinwotiz entered into a purchase and sale agreement for 558 Winchester Ave. last Sept. 30.

While the closing date for the agreement was Oct. 20, ​“the Defendant failed to close on the purchase of the Property within a reasonable time after the Closing Date set forth in the Agreement,” wrote Rabinowitz’s attorney, Deborah Dorio.

“The Defendant’s failure to purchase the Property as aforesaid constituted a default under the Agreement.”

Not only has the previous property-deal agreement lapsed, Dorio wrote, but Levenhartz also violated a key term of that agreement when he filed a lien on the city land records in late February.

That part of the agreement — Section 12(f) — reads: ​“Buyer shall not cause or permit this Agreement, or any short form variation thereof or any notice of contract, to be filed of record in any office or place of public record.”

Dorio included in that court filing a copy of a March 5 letter she sent to Levenhartz’s then-attorney in the matter, Ben Trachten.

“I have heard nothing from you or your client concerning this matter for almost five (5) months and it is doubtful that I would have if not for the newspaper article,” she wrote. ​“Your client’s inaction speaks for itself and to his lack of good faith in moving this transaction forward.”

She lambasts Levenhatz’s ​“surreptitious” recording of the notice of equitable rights on the land records as a direct violation of the initial property-transaction agreement.

And she states that the Rabinowitz has returned the $10,000 deposit in full, ​“thereby relieving my client of his obligations” to sell the property to Levenhartz.

The petition calls for the court to order Levenhartz to remove the ​“ineffective lien” from the land records.

Separate Lawsuit For Breach Of Contract

On June 22, Levenhartz replied with a lawsuit of his own.

The complaint, filed in state Superior Court by local attorney Ken Rozich, accuses 558 Winchester Avenue LLC of breach of contract.

Levenhartz and Rabinowitz’s company entered into a deal on Sept. 30 for the former to buy the property from the latter for $122,500, Rozich wrote.

“The Plaintiff is prepared to fully perform in accordance with the terms of the Agreement. The sole action required to complete the transaction is for the parties to proceed with a closing to transfer title to the Property. The Defendant has failed and/or refused to do so without excuse, despite Plaintiff’s ability to perform.

“The only relief which will make the Plaintiff whole is to require the Defendant to perform under the Agreement by tendering title to the Property in exchange for the purchase price stated therein.”

On that same day, Levenhartz filed a lis pendens on the city land records, reiterating his intent to sue Rabinowitz’s company for allegedly violating the initial contract.

Judge: Don’t Waste Court’s Time

Rozich and Dorio then appeared in virtual court on Tuesday for a status conference in the initial case —that is, the petition filed by Rabinowitz against Levenhartz to remove the lien from the land records — before state Superior Court Judge Robin Wilson.

“It is the plaintiff’s contention that the defendant failed to close on the agreement within a reasonable time after the October 2020 closing date,” Dorio told the judge. ​“And there is a prohibition in the agreement against recording the agreement or any variation or notice of the agreement on the land records.”

Since Levenhartz did in fact record such a notice, she said, Rabinowitz has brought the state lawsuit against him, asking the court to order him to remove that notice.

Rozich stressed that his client, Levenhartz, is still ​“ready, willing and able” to close on the original $122,500 deal.

“We can proceed with litigation over this property,” he said, ​“or we can have a real estate transaction.”

Whether or not Levenhartz has a good case to make in the separate breach of contract lawsuit, Wilson said, his February filing of the notice of equitable rights on the city land records seems to have been in clear violation of the agreement’s Section 12(f).

“It would seem to me that this would be all moot and a waste of the court’s time” to keep a case going about the February lien, she said.

Rozich promised to talk with his client, and said they likely will release the lien of notice of equitable rights — as they continue to pursue the breach of contract lawsuit in that separate, ongoing case.

What About The City?

So, where does all this leave the city and its initial plans to buy 558 Winchester?

“We’re not going to comment on the lawsuits,” as the city is not party to either, city spokesperson Kyle Buda told the Independent.

However, he said, ​“the city does still expect to buy the property” and still intends to use it as part of Phase 2 of the Thompson-Winchester affordable homeownership redevelopment project.

If, that is, the city is able to buy the property at all.