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Corporate and Real Estate Clinic Helps 16 Families Save Their Building from Foreclosure


Updated: 9/14/2021: In September 2021, Turnaround Management Association named the 2178 Atlantic Avenue transaction a winner of the 2021 Turnaround/Transaction of the Year Awards in the pro bono category. In November 2020, Professor Debra Bechtel was also awarded the Sondra Roach Community Partnership Award by Habitat for Humanity New York City for her work on this project.

After six years of dedicated representation by Brooklyn Law School’s Corporate and Real Estate Clinic and its director, Professor Debra Bechtel, along with an extensive pro bono effort from Kramer Levin Naftalis & Frankel’s bankruptcy department, 16 long-time residents of 2178 Atlantic Avenue in Brooklyn have emerged from a foreclosure and a Chapter 11 bankruptcy in control of their building with affordability preserved. The pay-off of the foreclosing lender was funded through an $893,000 loan from Habitat for Humanity NYC Community Fund.

Fall semester clinic students Celeste Russell ’21 and Mallika Bolla ’20 played a crucial role by pursuing a real estate tax exemption and refund from New York City, drafting resolutions, and assisting residents with the loan application. Spring semester students Sacha-Aviva Sellam ’20 and Michael Saulle ’21 negotiated a regulatory agreement with the City to implement the tax exemption. Summer clinic students Cindy Chan ’22 and Evan Teich ’21 reviewed and drafted closing documents, resolved title issues, and assisted with the remote closing.

The foreclosure case was handled by Stephen Lasser ’02 of Lasser Law Group along with his associate, Michael Kayam ’14. Jane Jeong ’15, and Allan Leznikova ’14 worked with the residents in the early years of the clinic’s involvement, investigating lender claims and beginning the real estate tax exemption effort. Bechtel also advised the residents for many semesters on transactional matters as the foreclosure case lingered.

The resident board members filed the bankruptcy case pro se in December 2019 after attempts to settle the matter in New York State Court failed. Kramer Levin partner Doug Mannal ’00, a former student of Bechtel’s, put together the pro bono team that successfully extended the residents’ ability to regain title to the building, prepared and negotiated the Chapter 11 plan, and responded to the mortgage holder’s own bankruptcy, as well as various appeals. Associate Rose Bagley ’18, special counsel Joe Shifer, and associate Hunter Blain represented the residents, grappling with a series of demanding deadlines through the pandemic, and brought the matter to fruition on August 5. Bechtel and the clinic students handled the complex remote closing, which involved transferring the deed back from the foreclosing lender and finalizing loan documents in order to disburse the Habitat funds. The wire transfers and document execution were coordinated by Stewart Title Company, which became involved through Vice President Tim Oberweger ’05, a member of the Brooklyn Law School Alumni Association Board, and Home Abstract Corp.

The effort to obtain a real estate tax exemption for the building began with technical assistance from the Urban Homesteading Assistance Board, which supports resident-controlled affordable housing. Deputy Commissioner Ann Marie Hendrickson of the NYC Department of Housing Preservation and Development, along with dedicated staff members and lawyers from the agency, pursued the real estate tax exemption over the years, with final approval shepherded by City Council member Alicka Ampry-Samuel and supported by State Senator Velmanette Montgomery and NY State Assembly member Latrice Walker. The roughly $530,000 real estate tax refund expected in the next few months will be used as part of the pay-off of the Habitat loan while the real estate tax exemption going forward will be crucial in stabilizing the building’s budget.

“I am extremely proud of the huge efforts by the wide array of players, including our students and alumni and the residents themselves, who tackled and overcame this complex series of challenges,” said Bechtel. “As New York City copes with the COVID-19 pandemic, the importance of affordable housing and its preservation is even more crucial. This result is extremely important for these families.”

Bechtel, one of New York City’s foremost legal experts in low-income cooperatives, is founder and director of the Corporate and Real Estate Clinic, which provides representation for low-income co-ops. Students have helped preserve dozens of low-income cooperatives throughout the city by assisting in loan closings, real estate tax arrears strategies, shareholder meetings, and other challenges.