People v. Grubel

George Tilzer, J.

The movant receiver was appointed by the court in this blue sky proceeding brought by the Attorney-General to protect the public with respect to the sale of participation interests in real estate (General Business Law, art. 23-A). The present application requests that the court vest title in the receiver to two buildings owned by one of the defendant limited partnerships so that the receiver may execute a deed to the premises. The installments of principal and interest due on the mortgages on the properties in question have not been paid; there are serious violations against the buildings which must be remedied; and, as a result of a fire, the buildings are virtually uninhabitable and it appears that many thousands of dollars must be spent over and above the proceeds of the fire loss to rehabilitate the buildings. Finally, all of the insurance affecting the buildings has been cancelled.

The second mortgagee has commenced foreclosure proceedings. However, in lieu of foreclosure, the mortgagee has made an offer of $3,000 for a deed to the premises. On the return date of the motion, November 17, 1961, the court was asked and acceded to the request of one of the investors to withhold disposition of the application to give the limited partners an opportunity of securing a better offer. In the two-and-a-half months that have elapsed, although the limited partners have been shown every consideration, and, in fact, were tendered a deed to the premises by the receiver, they have failed to interest anyone in making a better offer and themselves refused to take a deed from the receiver. In these circumstances, the last of many conferences held before the court but yesterday having proved unfruitful, considering the hazardous condition of the premises, the many health and building violations filed against the buildings and with due regard to the foreclosure action, the best interests of all concerned, tenants, investors, mortgagees and receiver, dictate that the application be granted.