Brooklyn developer Eli Karp just caught a break in East Flatbush, after a judge last week vacated a roughly $15 million personal guarantee tied to his rental building at 271 Lenox Road. The ruling restores Karp's ability to challenge a deficiency judgment that followed the property's 2024 foreclosure and gives him a chance to mount a late defense.
Judge’s ruling hinges on claimed lawyer misstep
Karp told the court that his former attorney, Leo Jacobs, did not file opposition papers despite being paid between $25,000 and $50,000 to fight enforcement of the guarantee. Jacobs PC has disputed that version of events, with a firm spokesperson saying it "had a different strategy which Eli was aware of and which successor counsel had implemented." The judge ultimately granted the motion to vacate, giving Karp new time to contest the deficiency, as reported by The Real Deal.
New legal team steps in
After the fallout with his former counsel, Karp hired KOR Law LLP to file the motion to vacate, tapping former Jacobs PC attorney Muriel Raggi to lead the effort. Public attorney directories list KOR Law at One World Trade Center and show the firm handling New York civil litigation matters. KOR Law's directory entry confirms the firm's New York address and practice focus, according to LawInfo.
Clashing appraisals and a parallel lawsuit
A 2025 ruling had found Karp personally liable for roughly $15 million, the difference between the loan and the property's later appraised value, but Karp has argued that the underlying valuations are unreliable. Central to his argument are two BBG appraisals that swing widely: a $46.2 million estimate in 2019 and a $29.6 million appraisal in 2024. Those figures underpin Karp's allegation of inflated underwriting.
Karp has also sued a Greystone affiliate and BBG, accusing them of engineering a "loan-to-own" scheme. Those claims and the appraisal figures are detailed in reporting and court documents reviewed by The Real Deal.
How Hello Lenox ended up in new hands
Public records show the 55-unit Hello Lenox building changed hands in late 2024 for about $10.36 million, with a deed recorded in November 2024 after an October transfer. That sale left Karp facing a deficiency tied to an earlier $34.5 million bridge loan used to underwrite the project. Title and sales data filed in public registries confirm the transfer and purchase price, per PropertyShark.
What the reprieve means now
With the deficiency judgment vacated, Karp can now submit belated opposition papers and bring in experts to attack the property's valuation. The lender has not issued a public response to the court's order, and the matter is expected to return to the court calendar as the sides continue to litigate the deficiency and related claims. For neighbors and local investors, the fight is a reminder that big appraisal swings and post-foreclosure courtroom battles can keep a building's fate unsettled long after the keys change hands.
