Brooklyn developer Eli Karp scored a temporary reprieve after a judge vacated a $15 million personal guarantee tied to a troubled East Flatbush property.
The ruling stems from a foreclosure case involving 271 Lenox Road, the East Flatbush rental property Karp lost in 2024 to the lender, an affiliate of Greystone. A judge last week granted Karp’s motion to vacate a judgment over the guarantee after Karp argued that his former attorney, Leo Jacobs, failed to contest it without his knowledge.
Karp said that Jacobs allegedly failed to file opposition papers despite being paid between $25,000 and $50,000 to fight enforcement of the guarantee.
The developer claims he thought Jacobs was preparing a motion to vacate the judgment until February, when Karp learned the filing deadline was about to expire and no motion had been submitted, according to court filings. Karp then hired KOR Law LLP, a firm launched by former Jacobs PC attorney Murial Raggi, to file the motion.
In a 2025 text message to Jacobs and two other colleagues included in the filing, Raggi wrote that Karp “was disappointed to hear that the motion was not previously filed” and “he checked in a few times with Leo and was told that all was well.” Raggi left the firm the following month.
Jacobs, however, said his firm had been pursuing a different legal approach.
“Without breaking privilege, Jacobs PC had a different strategy which Eli was aware of and which successor counsel had implemented,” Jacobs said in a statement. “To be clear there is no prejudice to the client. We are happy for Eli nevertheless and wish him success in his case.”
In 2025, a court ruled that Karp was personally liable for roughly $15 million — the difference between the property’s appraised value and the original $34.5 million loan. This latest decision gives Karp a chance to submit a belated opposition to the lender’s deficiency judgment and present his own experts to dispute the appraised value of the property.
At the center of that fight is a $29.6 million appraisal prepared in 2024 by BBG Real Estate Services. Karp’s camp argues the appraisal sharply contradicts the methodology BBG used in 2019, when the firm gave the property a much higher valuation of $46.2 million that helped underwrite the original mortgage.
Karp is pursuing a separate lawsuit against the Greystone affiliate and BBG, accusing them of orchestrating a “loan-to-own” scheme designed to seize control of the newly built apartment complex.
In that case, Karp alleges Greystone conspired with BBG to dramatically inflate the value of the East Flatbush property during the underwriting process, only to later rely on a sharply reduced valuation after the project fell into distress. As part of his argument, he pointed out that BBG had been placed on Freddie Mac’s list of firms under review, though the appraisal company was later removed from the list.
A lawyer for the lender did not immediately respond to a request for comment.
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