Real Estate, Screw-Ups, Stroock & Stroock & Lavan

A Very Expensive Typo?

Rushmore condominium Upper West Side condo.jpgWe realize that we make our fair share of typographical errors here at ATL. But this is just a blog, not a document being sent to a client or filed with a court, and we’re more focused on substance than style, due to the speed of the news cycle and our desire to be… FIRST! So please cut us some slack.

(But do continue to point out typos to us, either in the comments or by email. Readers are our unofficial copy editors, and we frequently fix typos after they’ve been brought to our attention.)

In any event, at least our typos don’t cost anyone millions. From the New York Times:

The Rushmore, a new 41-story glass and stone condominium tower on Riverside Boulevard at the Hudson River, seemed serene on a recent visit. The flowers in the interior courtyard were in full bloom; the ground-level pool had been filled. Sixteen buyers had already moved in.

And yet an error of a single digit in an arcane document — the densely worded 732-page offering plan — could upset that happy picture, and cost the sponsors, the Extell Development Company and the Carlyle Group, tens of millions of dollars in lost revenue, lawyers say.

Of course, this isn’t the first example of an expensive typo (assuming it’s a typo; this is open to debate). Remember the $900,000 comma, or the $40,000 missing “L”?

But, if given effect, the glitch in the Rushmore offering plan will certainly be one of the more expensive ones. Find out the nature of the mistake — and the law firm responsible — after the jump.

Due to the declining real estate market, several buyers at The Rushmore are trying to get out of their contracts (without sacrificing their 15 percent deposits). As it turns out, they may be in luck:

Both the buyers and the sponsors agree that there was an error in a date in the offering plan, a document painstakingly prepared by a major New York law firm. Now they are debating whether the mistake was a trivial clerical error that should simply be ignored, or a one-time opportunity for Rushmore buyers to back out and recover their deposits or negotiate a better deal….

Under state regulations, a sponsor is required to provide an operating budget for the first year of a new condominium, so buyers know what to expect when they move in. If the first closing does not occur by the end of the budget year, the sponsor is required to submit a new budget, and give the buyers a right to rescind their contracts.

At the Rushmore, somebody goofed. The offering plan promised to give buyers a right to back out of the plan if the first closing did not occur before the first day of the budget year, Sept. 1, 2008, rather than Sept. 1, 2009, after the last day. The first closing occurred in February 2009.

And who was responsible for this error?

The plan for the Rushmore was prepared by Stroock & Stroock & Lavan, a firm with 750 lawyers [FN1], and reviewed by the development team at Extell, but no one caught the mistake.

We wonder if the associates who worked on that deal still have their jobs. Whether it’s a typo or a substantive error, it’s a big boo-boo.

You may be asking yourself: What the Stroock happened here? Alas, we’ll probably never know (unless there’s a malpractice suit). Michel Evanusa, a somewhat Goth-looking real estate partner at Stroock, did not get back to the Times.

To find out the arguments for and against giving effect to the error — experts disagree on this — click on the link to the NYT article below.

[FN1] The NYT seems to be wrong on the number of attorneys at Stroock. According to the firm website, as well as the firm’s Career Center profile, the firm has around 350 lawyers.

Attack of the Fine Print [New York Times]

Earlier: What the Stroock Is Going On?
Comma Comma Comma Comma Comma Chameleon
Our Kingdom for an “L”

(hidden for your protection)

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