City Hall Intervenes in Reserve Square Property Foreclosure Lawsuit

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Mayor Justin Bibb’s administration filed a legal action this week in federal court to intervene in a foreclosure lawsuit involving the Reserve Square property in Downtown Cleveland. City Law Director Mark Griffin said the intervention was necessary to protect downtown and to make sure that Reserve Square’s residents have safe accommodations.

Reserve Square, 1701 E. 12th St., is the subject of a foreclosure action filed in July 2025 by lender Fannie Mae after Willoughby-based owner K&D Group defaulted on a $78 million mortgage. U.S. District Court Judge Bridget Meehan Brennan appointed Andrew Hayman of the Haymen Co. of Southfield, MI as receiver to manage the property.

But Griffin expressed concern that the parties involved in the case weren’t moving fast enough to sell the property, weren’t acting responsibly enough and weren’t working sufficiently to maintain and secure the property. The property is to be sold at a sheriff’s auction, the date for which has not been set after more than a year of court oversight.

“Downtown Cleveland’s future is too important to leave to a foreclosure process focused solely on financial recovery,” Griffin said in a written statement. “Reserve Square sits in the heart of our city. It is home to Cleveland residents and businesses, and its condition affects the safety, vitality, and reputation of our entire city. What happens there matters far beyond the property line.”

Residential occupancy at the 996-unit, 1-million-square-foot mixed-use property quickly fell from 93 percent to 50 percent due to fewer foreign students able to get visas in the last two years to attend nearby Cleveland State University. Reserve Square features two 23-story towers built in the early 1970s.

“For too long, serious problems at Reserve Square have remained unresolved,” Griffin added. “The City has identified 19 outstanding violation notices encompassing 52 alleged code violations. They include concerns involving elevators, water intrusion, and the parking garage. Residents and businesses deserve functioning systems, safe conditions, and a credible plan with deadlines for fixing what is wrong.”

He said the City will press for prompt action, clear deadlines, and lasting solutions at Reserve Square. Griffin pledged to keep working with residents, community advocates, and downtown partners, and will use “every lawful tool available” to protect Clevelanders and the future of downtown.

“That is why the City filed a motion today to intervene in the federal foreclosure and receivership case,” Griffin said. “We are asking the court to give Cleveland a direct voice, address the conditions at the property, and ensure that decisions about a potential sale do not sideline the City’s safety concerns.

The requested order directs the receiver to comply with code enforcement orders, the legal filing stated. I noted that, more than a year into the receivership, the outstanding violations still lack a definite schedule for full resolution.

City officials also said they are challenging a request to dispense with federal appraisal procedures for a potential private sale. They said that passing unresolved problems to the next owner without a credible path to correction is unacceptable.

“A change in ownership may be part of Reserve Square’s future, but the City will press for a process that confronts the property’s condition openly and protects the public interest,” Griffin said. “We will take every legal action available to protect our city.”

Hayman did not respond to a NEOtrans inquiry posted via its Web site contact page. K&D Vice President Doug Price IV also did not respond prior to publication of this article. This article will be updated with any response.

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