The five-story Pop Denver building at 655 Santa Fe Drive in Denver while under construction in 2022. (BusinessDen file)
A developer’s change in strategy has prompted a lawsuit from a broker.
Leonard Taub’s First Stone Development was sued Tuesday over his 2022 mid-construction decision to change the Pop Denver building at 655 Santa Fe Drive in Lincoln Park from condominiums to apartments.
The lawsuit was filed by Clem Rinehart of TreeHouse Real Estate, who expected to get a 5.5 percent commission for selling the condos — but says he instead ended up spending six figures without reimbursement.
Lenny Taub
Taub broke ground on the five-story Pop Denver building intending to sell its 123 residential units to individual buyers. He hired TreeHouse, which began marketing efforts in 2022.
By that fall, however, Taub had decided condos wouldn’t work, and that Pop Denver’s units should be rented instead. He told BusinessDen in October 2022 that about 30 units had gone under contract within a few months. But in the most recent three months, he said at the time, just one additional unit had found a prospective buyer.
Taub cited interest rates, which had climbed from sub-5 to nearly 7 percent over the six months. The problem was that buyers expected the rates to keep going up, and didn’t know what their rate would be when their purchase closed upon the building’s completion.
“I attribute it to the uncertainty of the rates going forward,” Taub said at the time.
In his Monday lawsuit, Rinehart — the sole owner of TreeHouse — said his firm found buyers for 32 units before Taub’s decision, which Rinehart learned about on Sept. 23, 2022.
Rinehart said TreeHouse had spent $150,000 on marketing Pop Denver by that point, and hired additional employees. His deal with Taub called for TreeHouse to be paid a 5.5 percent commission on all sales, according to the lawsuit. If the buyer had a broker, TreeHouse would pay them 2.8 percentage points. If the buyer didn’t, TreeHouse would keep the whole amount.
Rinehart filed the lawsuit against Santa Fe Drive Development LLC, the specific entity that Taub set up to develop the project.
Clem Rinehart
Rinehart said in the filing that he’s an investor in the LLC, and that he was given the opportunity to be the project’s agent in part to “induce” him to invest.
Rinehart said Taub has not paid TreeHouse any of the commissions the firm would have earned if the condo sales closed, nor reimbursed TreeHouse for expenses. He said TreeHouse “ultimately would have sold all or most of the units” had the decision to switch to apartments not been made.
Taub and Rinehart declined to comment when reached by BusinessDen.
Attorney Mike Lazar of Robinson, Waters & O’Dorisio is representing Rinehart in the litigation.
A few developers switched from condos to apartments after the pandemic hit. Golden-based Confluence Development nixed the for-sale component of its Zia Sunnyside project in late 2020, citing slow sales. And the 12-story Flora project in RiNo shifted from condos to apartments before breaking ground in 2021.
As of last week, the website of Boutique Apartments showed 35 units currently available in Pop Denver, ranging from studios for $1,465 a month up to a two-bedroom penthouse unit for $4,850. It advertised tenants could get six weeks free rent on an 18-month lease.
The five-story Pop Denver building at 655 Santa Fe Drive in Denver while under construction in 2022. (BusinessDen file)
A developer’s change in strategy has prompted a lawsuit from a broker.
Leonard Taub’s First Stone Development was sued Tuesday over his 2022 mid-construction decision to change the Pop Denver building at 655 Santa Fe Drive in Lincoln Park from condominiums to apartments.
The lawsuit was filed by Clem Rinehart of TreeHouse Real Estate, who expected to get a 5.5 percent commission for selling the condos — but says he instead ended up spending six figures without reimbursement.
Lenny Taub
Taub broke ground on the five-story Pop Denver building intending to sell its 123 residential units to individual buyers. He hired TreeHouse, which began marketing efforts in 2022.
By that fall, however, Taub had decided condos wouldn’t work, and that Pop Denver’s units should be rented instead. He told BusinessDen in October 2022 that about 30 units had gone under contract within a few months. But in the most recent three months, he said at the time, just one additional unit had found a prospective buyer.
Taub cited interest rates, which had climbed from sub-5 to nearly 7 percent over the six months. The problem was that buyers expected the rates to keep going up, and didn’t know what their rate would be when their purchase closed upon the building’s completion.
“I attribute it to the uncertainty of the rates going forward,” Taub said at the time.
In his Monday lawsuit, Rinehart — the sole owner of TreeHouse — said his firm found buyers for 32 units before Taub’s decision, which Rinehart learned about on Sept. 23, 2022.
Rinehart said TreeHouse had spent $150,000 on marketing Pop Denver by that point, and hired additional employees. His deal with Taub called for TreeHouse to be paid a 5.5 percent commission on all sales, according to the lawsuit. If the buyer had a broker, TreeHouse would pay them 2.8 percentage points. If the buyer didn’t, TreeHouse would keep the whole amount.
Rinehart filed the lawsuit against Santa Fe Drive Development LLC, the specific entity that Taub set up to develop the project.
Clem Rinehart
Rinehart said in the filing that he’s an investor in the LLC, and that he was given the opportunity to be the project’s agent in part to “induce” him to invest.
Rinehart said Taub has not paid TreeHouse any of the commissions the firm would have earned if the condo sales closed, nor reimbursed TreeHouse for expenses. He said TreeHouse “ultimately would have sold all or most of the units” had the decision to switch to apartments not been made.
Taub and Rinehart declined to comment when reached by BusinessDen.
Attorney Mike Lazar of Robinson, Waters & O’Dorisio is representing Rinehart in the litigation.
A few developers switched from condos to apartments after the pandemic hit. Golden-based Confluence Development nixed the for-sale component of its Zia Sunnyside project in late 2020, citing slow sales. And the 12-story Flora project in RiNo shifted from condos to apartments before breaking ground in 2021.
As of last week, the website of Boutique Apartments showed 35 units currently available in Pop Denver, ranging from studios for $1,465 a month up to a two-bedroom penthouse unit for $4,850. It advertised tenants could get six weeks free rent on an 18-month lease.
