By Sherman C. Toppin, Esq.
FoxNews.com recently published a web article accusing Jay-Z’s legal team of using scare tactics and harassment to forcibly remove tenants out of a luxury condo building that his real estate firm purchased in Philadelphia. The hype of this article, as well its outrageous allegations against Jay-Z’s lawyers, caught my attention. Thus, I am compelled to comment.
According to the article, SCC North American Realty, LLC (of which Jay-Z is part owner) purchased a 24-unit condo complex at 603 N. American Street in the trendy Northern Liberties section of Philadelphia, and immediately instituted a plan to vacate the property of tenants in order to sell the units. In my experience as a real estate lawyer, this approach is as common as sunrise and sunset. Let me share a bit of real estate information that most people may not know. When the units of a new condo building are slow in selling, the developer may begin to rent units in order to generate cash. This is generally not a good thing to do. In fact, this is a usually a last ditch effort on the part of the developer in desperation to pay the debt service (i.e. mortgage) on the property. If the cash flow from rent is still insufficient to pay the debt service on the property, the financing bank will begin foreclosure proceedings against the developer and the property. One of two things will happen next: 1) the developer will sell his/her interest in the property to a new owner who will take over the debt, or 2) the financing bank will foreclose on the property and then sell it to a new owner. Either way, the new owner will almost always terminate those tenant leases as soon as possible in order to sell the units. This is exactly what Jay-Z’s real estate firm did after they purchased the property. This is legal to do and very often done by new owners of a condo building. The caveat is that the new owner is subject to the lease terms of the existing tenants.
Unfortunately for Jay-Z, the Fox News report contains allegations from tenants of “relentless” harassment by his legal team in an effort to force them out. I will concede that any such harassment, if it actually occurred, is improper for an attorney. But the actual allegations in the Fox News piece did not appear to be harassing or scary. You can read the article for yourself, but what I read simply described the typical approach of a new owner to take possession of the rented condo units. Jay-Z himself did not have any direct contact with the disgruntled tenants. Jay-Z’s legal team was only instructed to notify the tenants of the termination of their leases and to file eviction matters against tenants that they believed were behind on rent. Point blank, this is not harassment.
In my opinion, these high-end tenants appear to be more embarrassed by the situation rather than actually being harassed by the conduct of Jay Z’s lawyers. But then again, as Jay-Z’s predecessor Biggie Smalls once said, “the mo’ money you make, the mo’ problems.”
Link to article: Click here.
