T
ides Equities' co-founders are facing a new challenge after their lender on a Dallas multifamily complex is seeking repayment of the unpaid balance of a $33 million loan. Acres Capital, which foreclosed on the property in the summer and took it back with a $28 million credit bid, claims that the sale did not satisfy the debt. The Long Island-based company has filed a lawsuit against Sean Kia and Ryan Andrade in New York Supreme Court, alleging they defaulted three times on a recourse guaranty.

    Under this type of guaranty, the debtor is personally liable for the loan's outstanding balance after the collateral sells - in this case, $5 million. Kia stated that he and Andrade have been in constant communication with Acres and expect to reach an amicable agreement within a few months.

    Acres alleges that Tides Equities failed to maintain the property as agreed upon, allowing bed bugs, roaches, and termites to infest the complex, and failing to repair collapsed roofs, foundation leaks, and units made uninhabitable by mold. The company also claims that Kia and Andrade did not purchase a new interest rate cap in September, which led to additional damages.

    Acres is seeking $3 million in damages for these alleged breaches, as well as $427,000 in mechanic's liens that were allowed to fester. The company believes this allows it to hold the borrowers liable for the full amount owed under the loan documents, potentially totaling $8.2 million in damages.