Washington Heights’ First Hotel Opening With Legal Baggage

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Washington Heights is readying for the opening of Hotel Cliff this month, but an LLC that was in contract to buy the property for $19 million is suing the building owner for breach of contract, according to a recent lawsuit.

The property, which according to DNAinfo will be the first hotel to open in Washington Heights, is at the center of a recent lawsuit between the owner, Peter K. Skeadas505 West 181 Associates, LLC, and Stanley Gestetner‘s Oitcroyce Hotel Holdings LLC.

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Mr. Gestetner claims in the suit that Mr. Skeadas failed to sell 505 West 181st Street at Amsterdam Avenue to his company, following the signing of a “valid and binding contract.”

Since that time, Mr. Skeadas has been marketing the 52-room property and now it will be opening as Hotel Cliff under Manny Kumar‘s direction. On July 8, Mr. Skeadas signed a 10-year lease with Mr. Kumar’s 505 Wash LLC and the roughly $1-million-per-year lease includes an option to buy the premises for $20 million, according to the lease.

“[Mr. Kumar] just leased the finished product,” Mr. Kumar’s attorney in the deal, Alan Merovitch, told Commercial Observer. “It’s essentially a turn-key operation.”

The attorney said he has no concern about the suit. “From what I’ve been told there’s no merit to the suit,” Mr. Merovitch said.

The entities 505 West 181 Associates, LLC, and Oitcroyce Hotel Holdings LLC signed a sales contract this March 10 and the buyer gave a $1 million downpayment via an escrow agent, the plaintiff claims. The seller, the suit charges, was unable to close the deal “due to a number of title defects, undisclosed liens and a deviation from the agreed upon balance of sale agreement.” In fear of losing the $1 million down payment, the would-be buyers allegedly agreed to cancel the contract and in June executed a new oral contract of sale. The escrow agent released the down payment back to the plaintiff.

The defendant sees it a different way.

Mr. Skeadas says in court papers: “We never received any proof that the million dollars was actually paid to escrow despite numerous requests that we receive such proof.” The defendant also claims that the plaintiff cancelled the contract in writing “when plaintiff was unable to close,” and that“no new contract was ever executed. Plaintiff neither provided a contract signed by plaintiff nor the $1 million escrow monies.”

A notice of pendency was filed on July 9, which the defendant argues was filed “despite there being no executed contract and no escrow down payment.”

The plaintiff’s attorney, David Fleischmann, didn’t immediately respond to a request for comment, and nor did Leonard E. Lombardi, attorney for the defendant, nor Mr. Skeadas.