AG James Gets SME Capital to Pay Hudson Yards Condo Fees

Lender SME Capital Ventures, which took control of a luxury Hudson Yards condo building at 441 West 37th Street in a foreclosure auction, will pay more than $700,000 to settle a case brought by Attorney General Letitia James alleging neglect and unpaid fees.

The deal requires SME to pay a more than $523,000 balance of monthly fees, reimburse condo owners upwards of $15,000 for renewing the building’s certificate of occupancy themselves and pay a $54,000 penalty.

The AG also alleged that SME was actively working with brokers to sell the building’s remaining condos while neglecting to pay the monthly costs, ultimately opting to rent unsold units, including the penthouse, which went for $12,000 a month.

An SME spokesperson didn’t immediately respond to a request for comment.

SME won a foreclosure auction for the building, also known as The Westerley, as the sole bidder in 2023 when developers and initial condo sponsor Levi Bakalny defaulted on a $3 million loan from the firm.

The attorney general’s office launched its investigation in 2024 after residents complained about nonpayment and mismanagement by SME, which allegedly failed to notify the state it had taken over the condo building’s sponsor company and never gave homeowners control of the board.

As part of this settlement, SME will also repair and certify the building’s fire suppression system, pay associated fines and taxes on the nine-unit condo building to the tune of more than $139,000. The building’s fire safety issues posed a risk to the residents, who also faced challenges selling or refinancing their homes without a permanent occupancy permit, the AG’s office said in a press release.

Hudson Yards luxury condos aren’t a typical part of SME’s portfolio. The firm founded by Eran Silverberg recently took over a Chelsea office conversion after serving as a mezzanine lender at 541 West 21st Street after developer ERBO filed for bankruptcy in 2023. It also entered into contract to buy a rental building at 691 Marcy Avenue in Bedford-Stuyvesant in 2019, though it’s unclear if that deal closed.

Pera Soho, a restaurant located at 54 Thompson Street, sued SME last year alleging harassment aimed at forcing the operators to vacate the building, Crain’s reported. That suit claims SME overcharged for rent and attempted to shorten the lease term, also included allegations of fire alarm system malfunctions, along with broken air conditioning and loose trash bags dumped in front of the restaurant.

AG James has been pursuing a spate of real estate enforcement actions this summer, securing a conviction in a deed theft case against Joseph Makhani and new lawsuits against rent-stabilized landlords alleging failure to register regulated units and tenant harassment.

“When this company took control of a Manhattan condo building, it took on real legal responsibilities to the homeowners who lived there,” AG James said in a statement. “For two years, SME Capital dodged those duties while still collecting rent checks.”