A 2021 report allegedly flagged the garage as dangerous — well before the deal closed
A CMBS trust is suing Starwood Mortgage Capital over a $54.5 million loan allegedly backed by a crumbling parking garage.
The complaint, filed on March 2, 2026, in the United States District Court for the Southern District of New York, accuses Starwood of selling a commercial mortgage loan while representing that the underlying collateral was free of material damage. That representation, the trust now alleges, was false.
Computershare Trust Company, National Association, as trustee for BBCMS Mortgage Trust 2023-C19, brought the action through K-Star Asset Management LLC, the trust's special servicer. The case is docketed as No. 26-1695.
Here is what the complaint lays out.
Starwood originated the loan on or about March 8, 2023, lending $54.5 million to Fort Lee Office LLC. The collateral included a nine-story mixed-use building at 2 Executive Drive in Fort Lee, New Jersey, and a separate eight-story parking garage next door. Starwood then sold the loan to Barclays Commercial Mortgage Securities LLC, which deposited it into the CMBS trust under a Pooling and Servicing Agreement dated April 1, 2023.
As part of the sale, executed through a Mortgage Loan Purchase Agreement on April 27, 2023, Starwood made what the complaint calls a "No Material Damage" representation and warranty, essentially assuring the trust that the collateral was free of material damage.
The trust alleges it was not.
According to the complaint, problems with the parking garage were documented well before the loan changed hands. A September 2021 report from an affiliate of the borrower allegedly warned that the garage surface was "very dangerous and ready to collapse." More striking still, the complaint alleges that the Fort Lee Building Department inspected the garage on April 27, 2023 — the very day the loan sale closed — and issued a "Notice of Unsafe Structure" the next day, ordering the garage vacated by May 27, 2023. That condition, the complaint states, was never corrected.
The trust also alleges that the property condition assessment prepared during loan origination excluded the parking garage entirely, even though the parcel had not been released from the collateral.
By April 18, 2024, the Borough of Fort Lee shut the garage down after inspectors found numerous areas with holes and cracks, according to the complaint. An engineering report delivered to a court-appointed receiver on or about December 9, 2024, allegedly estimated that fully replacing the garage would cost more than the outstanding loan balance.
The trust says it formally asked Starwood to repurchase the loan on September 26, 2025. Starwood refused, according to the complaint, arguing the parking garage was always intended to be carved out of the collateral and held no value at origination. The trust counters that the parcel was never actually released, meaning it remained part of the mortgaged property and squarely within the scope of the seller's repurchase obligations.
For mortgage professionals watching this space, the case puts a sharp spotlight on how seller representations and warranties hold up in securitized loan transactions — particularly when a collateral parcel is earmarked for future release but never actually let go. How courts draw that line could shape how originators and servicers approach these provisions going forward.
