Willowbrook residents sue to block condo sales
Delaware County Daily Times
By Alex Rose
30 March 2016

MEDIA COURTHOUSE—Individual unit owners at Willowbrook Apartments in Upper Chichester could soon see their homes sold out from under them due to a quirk of the Pennsylvania Uniform Condominium Act, according to a complaint filed in the Delaware County Court of Common Pleas earlier this month.

Their rights have been taken

“Their rights have been taken,” said attorney Leslie A. Margolies, who filed the complaint on behalf of a dozen Willowbrook residents. “It’s legal because there is a section of the Condominium Act that says if you’re an 80 percent owner of the condominium then you can vote to dissolve it. … Their property interests have been divested of them almost similar to eminent domain.”

Margolies, founder and director of the Real Estate Law Group, which provides legal representation on a sliding scale for people with real estate problems, said each of her clients still lives at Willowbrook and many are on fixed incomes. Two plaintiffs are so elderly that they don’t know how they will move if their home is sold, she said.

a hostile takeover

The complaint alleges 16 counts including fraud, unjust enrichment, deceptive business practices and criminal conspiracy against real estate broker Daniel Berger and others who allegedly orchestrated a hostile takeover of the property in order to auction it to a developer.

An emailed statement on behalf of Berger’s company, Boothwyn Partners, said the allegations were without merit.

Boothwyn Partners allegedly acquired 121 of the 374 Willowbrook units in 2013. Boothwyn Partners is owned by BGP Realty and Berger holds a financial interest in both entities, according to the complaint.

Berger allegedly became the Condominium Association Board treasurer at the time of the 2013 purchase, then established control of the association by installing non-resident family members, business associates and employees in four of the seven board seats. The association also allegedly hired Berger Real Estate Client Services as property manager.

Berger, with the help of fellow named defendant and employee Zack Moore, then allegedly began systematically buying up additional units through an allegedly fraudulent scheme that imposed financial hardships on unit owners, according to the complaint.

needed to impose “special assessments”

Plaintiffs claim they were told the prior property management company mismanaged funds and the board needed to impose “special assessments” to make up a shortfall for years of unpaid debts.

But shortly after the assessments were imposed, the Condominium Association allegedly started ignoring requests for service, marking tickets “completed” or “canceled” when no work had been performed.

Moore meanwhile allegedly hounded unit owners to sell their properties through his position as a board member, which granted him access to email addresses and unlisted phone numbers, according to the complaint. He never disclosed his or Berger’s financial interest in Boothwyn Partners or that he was a real estate agent employed by Berger Real Estate Sales, the complaint says.

The assessments were tripled within one year,

The assessments were tripled within one year, according to the complaint, but there was no grievance system in place to file a dispute. The complaint claims the association also imposed unjustified late fees on special assessments, despite owners saying they never received notice the assessment was being imposed.

The plaintiffs say the mounting financial burdens caused some homeowners to sell their condos to Berger and Moore at a loss, and that some sales included “under the table” payments designed to minimize transfer taxes.

Boothwyn Partners was eventually able to secure the required 80-percent ownership needed to dissolve Willowbrook and put the property up for sale, according to the complaint.

the board voted to dissolve the corporation

The board allegedly voted at a special meeting in February to dissolve the condominium. An attorney at that meeting told minority condominium owners that their properties would be repackaged into a single block and sold at auction, currently scheduled for April 13, according to the complaint.

The complaint indicates the appraised value of the property is $18.5 million, but Margolies said she believes that figure is artificially depressed by an incomplete and inaccurate appraisal.

While condominium owners have the right to the fair value of their homes in condominium terminations, that value is determined by an appraiser selected by the condominium association, according to the complaint – in this case, Berger. Owners are also still responsible to pay off their remaining mortgages, regardless of the sale price of their units.

“People are going to get a very small amount and most of them will not be able to find another place to live because of the amount they’re going to get,” said Margolies. “Right now, they’re panicked because if I am not successful (with the complaint), April 13 their property is going to be sold and they’re going to be out on the street.”

Margolies noted the auction is expected to take place at a law firm in Berks County and said she believes the aim is for another Berger entity to purchase the entire property at a reduced price.

The appraisal is rigged, the auction is rigged

“The appraisal is rigged, the auction is rigged, the way they got the 80 percent is fraudulent,” she said. “The long and the short of it is they could have told my clients from the very beginning, ‘This is what we plan to do, so you’re going to lose your property anyway, so let me give you a fair price.’ … They could have done this the right way and they chose to do it the wrong way.”

The plaintiffs are seeking a preliminary injunction halting the auction, as well as an order nullifying the Feb. 8 vote to dissolve the condominium. No trial schedule had been set as of Wednesday.

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Willowbrook residents can’t halt sale of condos; lawsuit continues
Delaware County Daily Times
By Alex Rose
17 June 2016

An Upper Chichester apartment complex at the heart of a class-action lawsuit sold last month for $18.5 million and former individual unit owners now say they are being asked to rent what used to be their homes.

“Basically, they wanted the complex and now they have it,” said Christine Scott, lead plaintiff in the lawsuit encompassing claims from a dozen former owners at Willowbrook Apartments. “No matter how nice that may be for them, it cannot make what is happening to people around here right.”

a hostile takeover of the property

The complaint, filed earlier this year in Delaware County Common Pleas Court by attorney Leslie A. Margolies on behalf of the former owners, alleges 16 counts including fraud, unjust enrichment, deceptive business practices and criminal conspiracy against real estate broker Daniel Berger and others who allegedly orchestrated a hostile takeover of the property in order to auction it to themselves.

Berger’s company, Boothwyn Partners, has denied the allegations.

Boothwyn Partners allegedly acquired 121 of the 374 Willowbrook units in 2013. The company is owned by BGP Realty and Berger holds a financial interest in both entities, according to the complaint.

Berger allegedly became the Condominium Association Board treasurer at the time of the 2013 purchase, then established control of the association by installing non-resident family members, business associates and employees in four of the seven board seats. The association also allegedly hired Berger Real Estate Client Services as property manager.

Berger, with the help of fellow named defendant and employee Zack Moore, then allegedly began systematically buying up additional units through a fraudulent scheme that imposed financial hardships on unit owners.

Plaintiffs claim the board imposed “special assessments” to make up a shortfall for years of unpaid debts by a former management company. The Condominium Association allegedly then began ignoring requests for service, marking tickets “completed” or “canceled” when no work had been performed. The assessments were tripled within one year, according to the complaint.

hounded unit owners to sell their properties

Moore also allegedly hounded unit owners to sell their properties, but never disclosed his or Berger’s financial interest in Boothwyn Partners, or that he was a real estate agent employed by Berger Real Estate Sales.

The plaintiffs say the mounting financial burdens caused some homeowners to sell their condos to Berger and Moore at a loss. Boothwyn Partners was eventually able to secure the required 80-percent ownership needed to dissolve Willowbrook under a provision of the Pennsylvania Uniform Condominium Act. The board allegedly voted to dissolve the condominium at a special meeting in February.

Attorneys for the defendants filed preliminary objections in April and moved to dismiss the complaint, arguing the condo association is an indispensable party to the suit and should have been named as a defendant. Margolies said in a response that it makes no sense to name the association because it is in a “winding up” period and will soon cease to exist.

The defendants argue the plaintiffs can’t bring suit under the Real Estate Licensing and Registration Act or Pennsylvania Rules of Professional Conduct for attorneys because neither allows for private causes of action. The objections also claim the plaintiffs cannot bring any action on behalf of non-party former condo owners who already sold their units and that Berger and Moore only owed a fiduciary duty to the Condominium Association, not the individual unit holders.

Margolies countered that members or shareholders of a corporation are entitled to bring a derivative action on behalf of that corporation. The defendants owed a minimum duty of “good faith” to the individual unit owners and had a fiduciary duty to the association, which exists solely for the benefit of its unit owners, she said.

The preliminary objections also argued that the complaint was full of open-ended language and lacked specificity for certain claims. Margolies responded that she is not expected at this point to recount every detail of the claims, which she said could be fleshed out with testimony and other discovery during the course of litigation.

The defendants additionally moved to sanction Margolies for allegedly admitting to the press that the process for dissolving the condominium was “legal” and that she went forward with a frivolous lawsuit anyway. Common Pleas Judge Spiros Angelos dismissed that claim before Margolies could respond.

Margolies was able to push back the sale through a preliminary injunction, but an auction took place May 31 at a Berks County law firm and the property sold for the appraised value of $18.5 million to Chichester Apartments LLC.

Chichester Apartments was created March 2 and lists no officers on the Pennsylvania database of corporations, but Berger was acknowledged as an officer in an email from the public relations firm representing the new corporation.

Although several companies showed interest in the auction, Chichester Apartments was the only company to submit a bid, according to the firm.

sign a lease or face eviction

“Only ten days since the auction, the unit owners are now receiving letters which advise them to either sign a lease or face eviction, even though they have not yet received their pro-rata share of the auction proceeds,” said Margolies in an email. “Some units were owned by investors and their tenants who may have become month-to-month lessees are also being threatened with similar letters. We have yet to see whether Chichester Apartments will honor the other annual leases but we are monitoring the situation.”

Chichester Apartments has indicated a willingness to work with residents to ensure they remain at Willowbrook and is offering a $1,200 annual reduction in rent for former owners, according to the PR firm.

One-bedroom units start at $855 per month and two-bedroom units start at $970 per month, according to the firm. Rent includes heat, water and sewer fees. Security deposits for former owners are being waived and those tenants were given the option of signing month-to-month leases, the firm said.

“The annual discount in rent will bridge the gap between rent and the amount the former owners paid in condo dues, real estate taxes and their mortgages,” according to a “fact sheet” provided by the firm. “This will ensure that everyone can afford to stay in their homes. In addition, former owners will have all funds from the sale of their unit.”

But Scott points out it is no longer “her home” and claims the market rent amounts receiving the discounts are higher than the fair market figures used in the dissolution appraisal.

She added that the $100 off per month is nice, but said it is still not cheaper than owner-occupancy for her. Scott noted several of the individual owners at the complex also rent their units out, sometimes at little or no cost to aged or disabled family members.

“Willowbrook Condos was the only place that I could afford to buy and pay ongoing expenses in this area,” she said. “I am moving in with a friend as I cannot afford to rent my own unit here, as I live on a fixed income. Some of the people who ‘decided’ to sign the yearly lease cannot move as they have not received any proceeds from the auction yet or the proceeds will only pay a portion of or all of the mortgage off, leaving them with little or no money to move anywhere else. Others have renovated their units to new condition and do not want to leave their investments.”

Scott added that the approximately $52,700 she would receive is less than the approximately $57,000 tax value of her unit, but she and other owners could not challenge the appraisal value, which the complaint contends was artificially depressed.

Chichester Apartments said in an email that a respected third-party company conducted appraisals on each unit and the overall property. Depressed properties typically receive several competitive bids, while properties at market price have less interest at auction, the firm said.

Chichester Apartments also plans to make significant improvements to Willowbrook, including new roofs, boilers, windows, and enhancements to common areas and landscaping, according to the email.

“Willowbrook is a special place,” said Berger in an email. “I look forward to working with the Willowbrook community to make this neighborhood an ever better place to live.”

There was no indication in court records Wednesday as to when Angelos might issue a decision on the defendants’ preliminary objections.

“In the meantime, we are packing and hoping for the best in this horrible situation,” said Scott.


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