Update on Stresses in 1717 S. Prairie in the South Loop
We last chattered about Unit #2301 at 1717 S. Prairie in May. At that time, the unit was listed for sale at about 40% off the 2006 sale price.
A lis pendens was recently filed against the property. It continues to be on the market for the same price as in May.
Here’s the listing:
SPECTACULAR NORTH EAST CORNER DEVELOPER’S PENTHOUSE W/ 5 DEEDED GARGE PARKING SPACES! AT 2600 SQ/FT ENJOY THE LARGEST HOME IN THIS BUILDING WITH 360 DEGREE FLOOR-CEILING VIEWS OF THE LAKE, CITY, AND NAVY PIER.
THIS EXCEPTIONAL HOME FEATURES EVERY UPGRADE INCLUDING MAHOGONY DIAGONAL HDWD FLRS, WALK IN WINE CELLAR, SEPERATE DEN, EAT-IN KITCHEN W/SS APPL., AND A GRAND TERRACE OVERLOOKING SOLDIER FIELD/MUSUEM PK/LOOP
Kimberly Chase Harding at Coldwell Banker has the listing. See more pictures here (sorry- no kitchen or bathroom pictures available).
Unit #2301: 3 bedrooms, 2.5 baths, 5 car parking
- Sold in December 2006 for $1.75 million
- Currently listed for $999,000
- Lis pendens filed in September 2008
- Mortgage was 100% financing
- Assessments of $1,240 a month
- Taxes of $4,500
I’m not even gonna look at the records – bought in 12/06 w/100% financing and probably made only a couple token payments.
Fraud?
Somethin is out of line, $4,000.00 taxes on a million dollar property are not correct.
bubbleboi, I posted this back in May about this unit:
“5/10/05 sold by developer w/2 pkg spaces for $1,275,000
5/11/05 mortgage with Wells Fargo for $892,500
7/28/05 second mortgage with Chicago Comm Bk for $253,294
12/30/05 purchased 3 more pkg spaces from dev for $105,000
7/26/06 lien filed by condo assn for $8,000
12/18/06 sold for $1,750,000 with 5 pkg spaces
12/18/06 two mortgages for 100% financing ($1.3125M + .4375M)
No lis pendens has been filed to date (5/2/08.) The asking price is obvioulsy intended to provoke overbids for approval as it is highly unlikely that the lender is going to approve a short sale of this magnitude. Not that they shouldn’t, but lenders have not been known for sound financial decisions in the mortgage field lately.”
Yes, it was fraud; believe a broker went to jail on this one.
Valasko, the taxes (w/o exemptions) on the unit alone would be $9,019/year. I didn’t look up the 5 pkg spaces, which would be additional. The first installment (2007 pay 2008) was $4,509.57 and remains unpaid according to the Treasurer. The tax amount is definitely an error.
The unit is only assessed at 62,826. Based on the ‘real’ assmt rate of approx 10% that is only a $630K market value. It is massively under-assessed.
There’s a lovely 8.37% rate on that $1.3MM loan.
Harris – my google search didn’t turn up anything for fraud/jail time in this buidling. Would love to know details if you remember any of them.
Seems to me so far that there has been very little prosecution of the fraudsters.
“The tax amount is definitely an error.”
Yeah, they forgot to mention that $4500 was the single installment amount.
“probably made only a couple token payments”
Probably made at least 6, not more than 12, based on the lis pendens date, but that may be overestimating the lender’s eagerness to file.
anyone else find it ironic that this seller would put a sail boat by the window !!
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Nightmare on Prairie Avenue; residents seek funds, repairs
By Jean Lachowicz
“It’s the perfect storm,” said Jane Justic, property owner at the TowerCondominiums at 1717 S. Prairie Ave., sitting in a well appointed kitchen with a stunning urban view. “This was supposed to be our dream home, and it has turned into a nightmare. Our building is beautiful, and we love the neighborhood. The people who live here are wonderful.”
Thomas Justic, Jane’s husband, explained that residents of 1717 S. Prairie have been trying since 2005 to recover money due them from the LLCs (limited liability corporations) controlled by developers Warren Barr and William E. Warman.
The LLCs turned the 1717 building over to unit owners in September 2004. In July 2005, an independent audit confirmed the LLCs owed the building’s condominium owners more than $175,000 in turnover audit funds; to date, they have not paid the owners.
Also, as part of various warranty claims, installing a dividing wall in the building’s heat exchange area will cost about $20,000. Another 11 claims remain outstanding.
“All 12 of these claims have been ignored by Barr and Warman,” Thomas Justic continued.
“As if that weren’t enough, due to faulty design, many units in the building have windows that leak heavily during rain storms.
Repairs of building water infiltration problems are projected to total a staggering $6,500,000. The cost of these repairs to each homeowner is expected to range from $25,000 to $50,000—an exorbitant amount which may force many into foreclosure through no fault of their own.”
Anyone unfamiliar with the building’s problems would consider the 23-story condominium structure a top-choice property, thanks to its location in the South Loop/Near South area’s Prairie Avenue Historic District. The condominiumsare attractive and well situated to make good use of their balconies and panoramic views of Lake Michigan and local architecture.
Spiraling assessments
Jane and Tom Justic are paying a $47,000 assessment on a two bedroom condo they purchased new three years ago for $520,000.
They already have paid a $12,000 assessment for garage repairs. “It’s just ridiculous,” Jane Justic said. “The value of the units has gone down, and if we wanted to sell, we couldn’t move unless we put $50,000 in escrow.” The building also contains rental units, but they are capped at 24% of total units. Jane Justic noted that many of the 177 rental units now are vacant, so if any of the condominium owners go through foreclosure, the other owners must absorb their share of the special assessment expenses.
Neighbor Julie Marsburger observed that “The ripple effect is so huge. The housing market is way down, people are facing job losses and pay cuts, and we are getting hit with extremely high special assessments. In normal circumstances, people might use their property as collateral for unexpected expenses, but we don’t have that luxury. My condo is now worth far less than I paid for it.
“They sold us a faulty product,” she continued. “If I go to Nordstrom’s and find that I bought a faulty product, I’d just take it back.
They are known for their customer service. But the LLCs are designed to protect the developers and not the customers. I can’t just take back my condo, and the faulty product they sold me just might ruin my life. I can very easily go from an 800 credit score to not being able to ever find another good job. How do these people get away with it?”
Financial repercussions from the 1717 building’s problems particularly shocked Marsburger because “I’ve been financially responsible,” she said.
“I pay all of my bills, and I’ve been working hard as a young person building up my financial position. I thought that putting my savings into buying this condo would be a good thing, and it turns out I might lose everything right now.
“Mayor Richard M. Daley is our neighbor. We are living in an area that’s one of the hottest real estate markets in the country. This isn’t right,” she said.
Board suing developer
The condominium board is suing the developer, called 18th & Prairie II LLC, and its principal, Warman, alleging the developer failed to manage the condo association’s finances properly and is responsible for severe leakage problems.
According to the residents, four lawsuits regarding this situation are making their way through the Circuit Court. “The board has worked its butt off to get the developerto fix the structural problems,” said resident Steve Rotfeld.
“They are doing the best they can, and they have been very diligent about listening to the residents so we can speak with one voice in dealing with the developers. I don’t hesitate to ask [the board] questions, and they don’t hesitate to answer them fully.”
Attempts to interview Warman proved unsuccessful, but court records indicate he has asked that the lawsuits’ allegations ofdeveloper fraud be dismissed. He denies the allegations and stated the condo board sued him before he had a chance to correct the problems.
The condo board contends they had no choice but to sue because Warman would not furnish the required specifications and
the contractors’ scope of work.
Barr, another member of the 18th & Prairie II LLC developer group, said he is trying to resolve the leakage problems before the lawsuit proceeds. According to resident Marsburger, “At least Barr has been willing to speak with us, and he appears to be genuinely interested in resolving the problems.
“We have been told that Barr is talking with the construction manager, Leopardo Construction Co., and subcontractors to try to fix the problem,” Marsburger continued.
“He says they are close to coming up with a solution and that he wants to maintain his reputation in Chicago since he is involved in other major South Loop development projects. Warman, on the other hand, is another story altogether.
“William Warman is the president of the board of directors of Glessner House, right here in the neighborhood,” she added. “Our experiences with him are not at all positive.”
A third member of the LLC, David Cuomo, had his law license suspended for three years last September for allegedly misappropriating clients’ money, according to Illinois Supreme Court records. Court documents indicate the LLC appeared to have at least three other members.
Desire to protect others
Justic, Marsburger, and many other residents of 1717 S. Prairienot only want to reach an equitable agreement with the developers but to ensure others are protected from similar condo problems.
“We have picketed the sales office of Chess Lofts, a 119-unit loft building at 320 E. 21st St., to warn potential buyers of Warman’s involvement in the project,”
Marsburger explained. “We want to get the word out that Warman is a also member of the Prairie Station LLC, [which is]planning to build condos and [townhouses], retail, and entertainment on 21st Street and Prairie Avenue.” She added that Warman has developed numerous other residential projects in the South Loop, and the 1717 group has contacted many owners in those buildings to discuss similar issues.
Residents also criticized how the LLCs handled finances at 1717S. Prairie. The condo board’s lawsuit alleges the developer failed to reveal documents and money required by state law, failed to establish proper budgets, failed to pay assessments for units the company owned, and borrowed money to cover routine operating expenses.
The lawsuit also alleges the developer owes the condo association charges for natural gas, electrical and scavenger service, and real estate taxes from 2003 and 2004. In addition, condo board records show the developer lowered the owners’ monthly assessments by 17% from May to December 2004; board members allege those reduced fees meant the condo board started out with a deficit when it was established in August 2004.
As soon as the board realized the extent of the problems, it started issuing special assessments. Monthly assessments have increased by more than 50% since July 2004 to cover the initial underfunding and filing the lawsuit. The smallest unit had an assessment of $242.55 in July 2004 and now pays $376.25 per month; the largest unit started at $497.12 in July 2004 and now pays $743.89 a month.
Google
Web nearwestgazette.com
a link would suffice
bubbleboi, I remember hearing a story about a Andrew Lewis???
The scam I heard, not soley to this building was people, who were not remotely qualified, working in tandom with appraiser, agent, mortgage broker, buying the unit, never moving in, then defaulting, with everyone else getting their pay, who cares. (which is what pisses me off about the govt bail out)
Actually though, the 1717 building has some great views, good unit layouts, nice common area, location, etc., and gets a bum wrap because of the window issue caused by the developers not following manufacturer specs.
any more updates on the lawsuit? the building?
Any new comments??? String went dead Oct 2008….have situations at 1717 improved or been resolved??