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State Begins Probe of Broker's Lease Deals

WSJ; NY REAL ESTATE RESIDENTIAL; OCTOBER 28, 2010
By JOSH BARBANEL

A state investigation has begun into two below-market leases that a real-estate broker negotiated on his own behalf with the elderly owner of a 19th-century West Village townhouse.

Joel Barkin, a spokesman for the New York Department of State, said an investigator had been assigned to look into whether the leases violated state laws or regulations designed to protect the public from conflicts of interest by brokers.

The owner, William Cornwell, an 84-year-old retired advertising art director, has charged that a former broker at CitiHabitats had first showed the apartment to prospective tenants, and then come back and pressured him to sign handwritten leases that he didn't understand.

The leases signed by the broker, Amir Meiri, and his father, Herzel Meiri, a real-estate developer on Long Island in May, 2009, were for terms as long as 20 years at rents far below the going rate in the trendy West Village neighborhood.

Mr. Meiri was dismissed by CitiHabitats after the listing broker at CitiHabitats complained about the leases. He and his father have denied any wrongdoing and said that the leases were the result of fair and friendly negotiations. The dispute was the subject of a Wall Street Journal story this week.

CitiHabitats issued a statement saying that Mr. Meiri was acting on his own behalf when he signed the leases. A state court judge refused to nullify the leases last year, but Mr. Cornwell filed another suit against both Mr. Meiri and CitiHabitats, accusing them of violating their legal obligations to represent his interests. If a violation is found, the state could impose a fine, revoke a broker license or order restitution be paid to the victims, Mr. Barkin said. Real-estate brokerage firms and their agents have a fiduciary obligation to their clients.

Amir Meiri declined to comment on the state investigation.

Write to Josh Barbanel at josh.barbanel@wsj.com

Read the Wall Street Journal Article

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