Brooklyn developer Eli Karp scored a short lived reprieve after a choose vacated a $15 million private assure tied to a troubled East Flatbush property.
The ruling stems from a foreclosures case involving 271 Lenox Highway, the East Flatbush rental property Karp misplaced in 2024 to the lender, an affiliate of Greystone. A choose final week granted Karp’s movement to vacate a judgment over the assure after Karp argued that his former lawyer, Leo Jacobs, did not contest it with out his information.
Karp mentioned that Jacobs allegedly did not file opposition papers regardless of being paid between $25,000 and $50,000 to battle enforcement of the assure.
The developer claims he thought Jacobs was getting ready a movement to vacate the judgment till February, when Karp realized the submitting deadline was about to run out and no movement had been submitted, in line with courtroom filings. Karp then employed KOR Regulation LLP, a agency launched by former Jacobs PC lawyer Murial Raggi, to file the movement.
In a 2025 textual content message to Jacobs and two different colleagues included within the submitting, Raggi wrote that Karp “was disenchanted to listen to that the movement was not beforehand filed” and “he checked in a couple of instances with Leo and was advised that each one was nicely.” Raggi left the agency the next month.
Jacobs, nevertheless, mentioned his agency had been pursuing a distinct authorized strategy.
“With out breaking privilege, Jacobs PC had a distinct technique which Eli was conscious of and which successor counsel had applied,” Jacobs mentioned in an announcement. “To be clear there is no such thing as a prejudice to the shopper. We’re completely happy for Eli nonetheless and want him success in his case.”
In 2025, a courtroom dominated that Karp was personally chargeable for roughly $15 million — the distinction between the property’s appraised worth and the unique $34.5 million mortgage. This newest resolution provides Karp an opportunity to submit a belated opposition to the lender’s deficiency judgment and current his personal consultants to dispute the appraised worth of the property.
On the middle of that battle is a $29.6 million appraisal ready in 2024 by BBG Actual Property Companies. Karp’s camp argues the appraisal sharply contradicts the methodology BBG utilized in 2019, when the agency gave the property a a lot larger valuation of $46.2 million that helped underwrite the unique mortgage.
Karp is pursuing a separate lawsuit in opposition to the Greystone affiliate and BBG, accusing them of orchestrating a “loan-to-own” scheme designed to grab management of the newly constructed condominium complicated.
In that case, Karp alleges Greystone conspired with BBG to dramatically inflate the worth of the East Flatbush property through the underwriting course of, solely to later depend on a sharply diminished valuation after the challenge fell into misery. As a part of his argument, he identified that BBG had been positioned on Freddie Mac’s checklist of companies below evaluation, although the appraisal firm was later removed from the list.
A lawyer for the lender didn’t instantly reply to a request for remark.
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