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Re: Manhattan Club Lawsuite (by Alex C.):

http://www.crainsnewyork.com/article/20110713/REAL_ESTATE/110719963

Ritzy NYC time-share developer sued for fraud

Buyers of shares in The Manhattan Club allege developer Ian Bruce Eichner is letting anybody but them into his West 56th Street hot spot; say they paid up to $53,000 for little.

A lawsuit has been filed against developer Ian Bruce Eichner and other owners and operators of The Manhattan Club, the city's first time-share condominium resort late last month. The suit accuses Mr. Eichner and other entities of fraud and “breach of implied covenant of good faith and fair dealing,” according to court documents. Five time-share owners in The Manhattan Club, located in The Park Central Hotel at 200 W. 56th St., are alleging that “through a coordinated and uniform marketing strategy, defendants fraudulently create and maintain the impression that access to and beneficial use of timeshare units in The Manhattan Club is completely or almost completely limited to timeshare ownership interests,” the court filing dated June 28 said. “The sponsors and other entities are being sued for committing fraud,” said Steven Blau of the law firm of Blau Brown & Leonard, which represents the plaintiffs. “Timeshare owners paid valuable money and they are not being permitted to use the apartment, even if they are requesting the unit nine months to a year early.” Mr. Eichner declined to comment. The suit suggests that there's an easy explanation for that. The defendants “intentionally and fraudulently engage in the continuous and unconscionable practice of overselling the occupancy capacity of the 286 time-share units by renting them throughout the year to the general public through Expedia, Hotel.com and other Internet-based travel websites,” according to the lawsuit. “As a result, a significant percentage of holders of flexible timeshare ownership interests are precluded from reserving the use and occupancy of their time-share units…and are routinely told by defendants that ‘availability is on a first-come first serve basis' and ‘there are no available [units].'” The Manhattan Club's management company, which is also run by the developer, earns 20% of gross revenues from the general public which rents the units, according to Mr. Blau. Meanwhile, he insists that “the owners get nothing and have to pay real estate taxes, time-share charges and for the mortgage on their time-share interest.” Purchasers of the time-shares spent roughly $10,000 to $53,000 depending on the type and size of unit. The sponsor also offered buyers up to 90% financing, with terms of up to 15 years with varying interest rates of up to an 18% fixed-rate, the filing said. Therefore, the defendants are also making money from the plaintiffs via mortgage payments. “It's in the best interest of the sponsor, who runs the management company, to rent it to strangers because when owners use of the apartment they make nothing,” Mr. Blau said. The Manhattan Club is located in a mixed-use property that is also home to The Park Central Hotel. Mr. Eichner converted some of the hotel into time-share condos in 1996. The plaintiffs are seeking to recoup unspecified monetary damages.