New Jersey Real Estate Lawyer Blog

On August 20, 2010, NY Supreme Court Judge Joan Madden rejected a request by a group of Willets Point business and property owners to stop the NYC Willets Point redevelopment project for environmental reasons. Approximately twelve individuals, including the area's only resident, sought an injunction to halt the project. The group's objections stated that the city's environmental review is inadequate and fails to address the project's impact on the area's water supply, local highway system and emergency response services.

The 62-acre site was originally defined as a high potential redevelopment area under the Bloomberg Administration in 2002. In 2004, the newly created Willets Point Advisory Committee outlined the specifics of the redevelopment project. Plans for the mixed-use real estate development include 5,500 units of housing, 500,000 square feet of office space, a public school, a hotel, a convention center and 1.7 million square feet of retail and entertainment amenities. An open space covering 8 acres, including parks and playgrounds, is also planned for the area and the entire development will be built using LEED-certified green construction and infrastructure.

Even without opposition in court, the New York City Economic Development Corp. faces several challenges that will need to be addressed before the Willets Point project can begin. These issues have to be resolved to ensure that future residents of the redevelopment face no environmental risks. The site was a dumping ground for ash in the early 20th century, with approximately 100 railcars of ash deposited on the site daily. More recently, the land housed industrial businesses such as auto repair shops, scrap yards and waste processing plants. All of these businesses created waste that is still present in the ground. The area's high water table, combined with the accumulated industrial waste on the site, threatens contamination of surrounding water supplies. Additionally, most of the site is located within a 100-year flood plain and will require re-grading before infrastructure construction can begin on the project.

Continue reading "NYC Willets Point Redevelopment Project Inches Closer to Reality with Ruling of NY State Supreme Court Judge" »

Last month in "New Construction Contract Termination: New Yorkers Use a Federal Law to Escape," I wrote about how creative practitioners are seeking ways to help their clients break new construction contracts by using the (the "Act") as a weapon. Mark Fass explains in his New York Law Journal article "Buyers' Bid to Rescind Condo Purchases Under Land Sales Law Fails" that this argument failed in the case of Romero v. Border East River Realty LLC ("Romero").

This is one of the first cases to address the issue of whether buyers can use the requirements of the Act against developers to rescind contracts. The Act requires developers to register subdivisions of 100 or more lots with the Secretary of Housing and Urban Development ("HUD") and to deliver a disclosure document, called a property report, to each purchaser prior to executing the purchase agreement. In Romero the developers did not satisfy either obligation. However, the court found that two of the Act's exceptions combined exempted the developers from the registration and disclosure requirement.

Continue reading "New York Condo Purchaser Denied Rescission under Federal Law" »

Creative practitioners are seeking ways in this upside down economy to help their clients break contracts without incurring substantial costs and more importantly, to avoid claims for breach of contract. Allison Lissner and Tara Duggan Ryan explain in their New York Law Journal article "Buyers Rely on 1968 Federal Law to Terminate Contracts" that lawyers are making use of the Interstate Land Sales Full Disclosure Act of 1968 (15 U.S.C. §1701, et seq.) (the "Act") to get out of new construction contracts.

The Act was created to protect buyers purchasing land in another state that was advertised as an incredible development opportunity. Unfortunately, back then purchasers would not visit the property until after closing and would find that they purchased swamp land or something else as equally worthless. The Act requires developers to register subdivisions of 100 or more lots with the Secretary of Housing and Urban Development ("HUD") and to deliver a disclosure document, called a property report, to each purchaser prior to executing the purchase agreement. There are certain exemptions contained in Section 1702 of the Act such as, if under a contract of sale a developer obligates itself to complete construction within two years, then the contract is exempt from the requirements of the Act. However, most developers do not make these kinds of promises.

Continue reading "New Construction Contract Termination: New Yorkers Use a Federal Law to Escape " »

A.D. Pruitt and Lingling Wei write in their Wall Street Journal article "Dreams of Retail 'Xanadu' Meet Harsh Reality" that New Jersey Governor Christopher Christie is trying to figure out how to handle the unfinished retail center dubbed Xanadu Meadowlands ("Xanadu") by its developer, Colony Capital ("Colony"). Xanadu is a 2.3 million square foot retail complex that was slated to open in November 2008, but remains unfinished due to its inability to replace the $500 million in financing that it lost when Lehman Brothers Inc. and Capmark Financial Group Inc. declared bankruptcy. The Governor is upset that the project has not been completed; wanting the developer to either complete the project or surrender the land which it leased from the New Jersey Sports and Exposition Authority. Recently, Colony has been speaking with Related Cos. in an effort to bring them on as a financing partner.

Colony paid $160 million in advance for the first 15 years of the ground lease and is obligated to pay an additional $95 million through 2026 - a financial obligation that the Governor certainly has an interest in seeing carried out. It seems that the Governor has convened a commission to evaluate whether the New Jersey Sports and Exposition Authority, a New Jersey state agency, can make a land grab due to Colony's failure to complete construction. Escape clauses are standard in commercial ground leases which, in this case, would allow the public party to terminate the contract if the private party is not performing.

Continue reading "Xanadu: A Governor's Quest to Reclaim Northern New Jersey's Unfinished Retail Mecca" »