J. Michael Issa of B. Riley Financial is alleging in a lawsuit filed in LA Superior Court last month that the city reneged on its word that permits on the property’s building site were still active.
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The drama continues with Mohamed Hadid’s Beverly Hills spec home — one of the biggest homes to ever be permitted in LA — as the estate is now under threat of losing its building permits.
Now, turnaround specialist J. Michael Issa of B. Riley Financial is alleging in a lawsuit filed in LA Superior Court last month that the city reneged on its word that permits on the property’s building site were still active, The Real Deal reported.
The expansive development at 9650 Cedarbrook Drive, which is located on 27 acres, has had its issues. Hadid’s Treetop Development company originally purchased the property in 2012 and listed it for the enormous sum of $250 million by 2017.
In August 2022, Hadid was forced to file for bankruptcy on the site. In September, it was listed for a mere $68 million.
After Hadid filed for bankruptcy, Issa was appointed by the court to manage Treetop Development. Now the spec home’s woes have fallen into his hands.
One of the crucial factors at play in the lawsuit is an order from former LA Mayor Eric Garcetti pausing deadlines to act on entitlements — an order that went into effect in March 2020 at the start of the COVID-19 pandemic.
According to Issa, the order extended the property’s permit validity to March 1, 2023. The estate took out millions of dollars in debtor-in-possession financing to be able to conduct “meaningful construction” to keep the permits active, with the city’s assurances, the lawsuit alleges.
However, the city then claimed in July that the permits were expired, and had expired just days before the order by Garcetti was issued. Still, the lawsuit alleges, the city gave “repeated assurances” before that time, that if Treetop Development continued to perform construction work, the permits would remain active.
“The city’s about-face on the permits was unexpected,” the lawsuit complaint stated. “If the city is allowed to expire the permits, it will strip the estate of its major asset at the expense of its creditors, primarily lenders and vendors who invested millions of dollars of cash and time based on the belief that the city was acting in good faith in their administration of the permits and the development process.”
The property’s listing description boasts that it will have “unmatched views,” indoor spaces that seamlessly merge with the outdoors, a home theater, Turkish bath, wine cellar and tasting room, a hot yoga room, staff offices and quarters, and much more. The listing also notes that plans were submitted for a total of three structures on the property representing a total of about 100,000 square feet of interior space.
Gene Bush and Jade Mills of Coldwell Banker Realty hold the listing.