The private investment firm SME Capital Ventures is transferring ownership of 441 West 37th Street to the homeowners' association after an investigation by the New York Attorney General’s Office concluded. SME had acquired the building in 2023 through foreclosure. The firm subsequently failed to pay bills for the Hudson Yards property and neglected safety defects, leading to a settlement requiring the payment of $700,000, according to Attorney General Letitia James.
The nine-unit building, constructed in 2020 by Levi Balkany, went into foreclosure in 2023. SME never notified the state that it was the successful bidder at the auction and never acknowledged ownership of the building. This meant residents had to bear costs such as a new certificate of occupancy, valued at $15,824, themselves, according to the Attorney General's Office.
Failures and legal consequences
Some of the units were rented out while awaiting buyers. This included 35 formerly homeless individuals who were evicted around the time SME took control of the building, The Real Deal reported. Attorney General James commented on this, stating that private equity firms cannot pick and choose which laws apply to them. She emphasised that by taking over a condominium building in Manhattan, the company incurred real legal obligations to the owners living there. For two years, SME Capital circumvented these duties while continuing to collect rental payments. Her office will continue to hold such firms accountable when they prioritise profits over the safety of New Yorkers.
Eran Silverberg of SME signed the settlement agreement; however, the company did not immediately respond to a request for comment. The New York Fire Department also issued notices for failing to file documents regarding fire safety systems, as well as other health and safety violations. These amounted to approximately $140,000 in unpaid fines, as noted by the Attorney General. In addition, there were unpaid monthly costs totalling $523,000.
Financial burdens and outstanding obligations
- —Settlement payment to the state: $700,000
- —Unpaid fire department fines: approx. $140,000
- —Unpaid monthly costs: $523,000
- —Cost for new certificate of occupancy: $15,824
