Nitya Capital Lawsuit: Co-Founder Feud, Fraud, and Foreclosures

The Nitya Capital lawsuit landscape is not one case but several running in parallel: a co-founder’s arbitration win that has turned into active federal litigation, a Texas city suing over conditions at a Nitya-managed apartment complex, an older crowdfunding platform dispute that settled, and a wave of loan defaults and foreclosure notices that sit behind much of the courtroom activity. Houston-based Nitya Capital, founded in 2013 by Swapnil Agarwal, built a Sun Belt multifamily and student housing portfolio that reached roughly 15,000 units before rising interest rates exposed how much of its 2020–2021 acquisition debt carried floating rates. The legal fallout has since arrived on multiple fronts.

Shah v. Agarwal: The Co-Founder Fight

The most consequential current dispute is between Agarwal and co-founder Vivek Shah, whose role the firm’s public materials had at times omitted.¹

Shah initiated arbitration through JAMS in Dallas in October 2023. After a final hearing in April 2025, the arbitrator issued a final award in June 2025 that granted Shah 40 percent ownership of Nitya Capital, 27 percent of KPM Property Management and its global affiliate, 33.33 percent of the firm’s office building at 8901 Gaylord, and veto power over major business decisions as an equal governing partner with the right to review company records.²

According to Shah, Agarwal defied the award almost immediately, refusing to share information about a $700 million Citibank refinancing that closed the same month and other business transactions. Shah accused Agarwal of “hiding the books.”³ Shah then filed a petition in the U.S. District Court for the Northern District of Texas to confirm the arbitration award and compel compliance. A federal judgment and memorandum opinion were issued on August 7, 2025.⁴

In February 2026, Shah filed a separate breach-of-contract lawsuit against Agarwal in the U.S. District Court for the Southern District of Texas. That case remained active as of mid-2026.⁵

Mesquite’s Lawsuit Over Tradewind Apartments

In late August 2024, the City of Mesquite, Texas, filed a 47-page lawsuit in Dallas County against the owner and manager of the Tradewind Apartments, a 308-unit complex at 2136 Tradewind Drive overseen by Nitya Capital and KPM Property Management. The named defendants were Texas Workforce Housing Foundation, the property’s owner, and Residences at Tradewind Apartments LLC, the management entity.⁶

The city alleged more than 750 code citations at the complex, documenting extended periods without air conditioning, hot water outages, partial water service shutdowns, and potential foundation problems caused by erosion. It sought a court order compelling code compliance and fines of $1,000 per day for each day of noncompliance. An attorney for the complex responded that Nitya had spent over $850,000 on maintenance between October 2021 and April 2023 and that the property had been in poor condition before the firm acquired it.⁶ A hearing was scheduled for October 3, 2024.⁷

CrowdStreet Inc. v. Nitya Capital LLC

In November 2020, real estate crowdfunding platform CrowdStreet sued Nitya Capital in Multnomah County Circuit Court in Oregon, alleging breach of contract. Nitya removed the case to the U.S. District Court for the District of Oregon, where it was assigned to Judge Karin Immergut as case number 3:20-cv-02051.⁸

In December 2020, Nitya filed motions to compel arbitration and dismiss the claims. CrowdStreet countered with a motion for a preliminary injunction. In January 2021, the court entered a compromise order barring Nitya from soliciting or communicating with certain CrowdStreet users about investment opportunities unless those users affirmatively opted in, and it stayed the case pending arbitration.⁹ In July 2021, the parties filed a joint stipulated dismissal with prejudice and without costs or attorney’s fees to either side, dissolving the preliminary injunction.⁸

The Fountains at the Bayou Fraud Case

In March 2020, Nitya Capital filed a fraud lawsuit in Harris County District Court against Jack Eldon Franco and his entity, 11810 Algonquin Partners LLC. The dispute centered on the sale of an apartment complex known as Fountains at the Bayou in Houston and involved claims of fraud, breach of a real estate contract, and a bridge loan secured by Franco’s personal guaranty.¹⁰ Franco and his entities filed cross-claims against Nitya Capital, its affiliate Fountains at the Bayou LLC, KPM Property Management, and Agarwal personally.

The parties reached a settlement in late May 2024, and the case was dismissed with prejudice in July 2024, with each side bearing its own legal costs.¹¹

The Debt Trouble Behind the Litigation

Several of Nitya’s legal fights sit on top of a broader financing problem. The firm acquired roughly $2 billion in debt in 2021, much of it at floating rates. By March 2023, annual interest payments had jumped by $60 million, and reports surfaced that the firm was considering selling 40 percent of its portfolio.¹²

In March 2024, Nitya failed to pay off a $356 million CMBS loan at maturity. The debt, originally provided by Barclays and UBS and later securitized, was backed by 2,746 apartment units across 12 properties in Indiana, North Carolina, Texas, Tennessee, Nevada, and California. The loan moved to special servicing.¹³ Separately, a $42.5 million CMBS loan on One Westchase Center, a 466,000-square-foot Houston office building, was transferred to special servicing in 2023 after reaching maturity; Nitya secured a two-year extension in October 2023.¹⁴

In June 2025, Nitya secured a $700 million fixed-rate CMBS refinancing from Citibank covering 18 properties across Dallas, Indianapolis, the Carolinas, Nashville, Phoenix, and Las Vegas, using it in part to pay down the defaulted $356 million debt.¹⁵¹⁶ That same refinancing became the trigger for Shah’s information demands.

In October 2025, a $66 million CMBS loan tied to two Nitya properties, The Muse in Dallas and Eden Pointe in Houston, was transferred to special servicing. Morningstar Credit reported “life safety issues” at The Muse, and a receiver was appointed for the properties. The loan went delinquent in October and December 2025 and January and February 2026.¹⁷¹⁸ Agarwal called the violations “standard property conditions related to typical for a class B property” and said the firm was working with servicer Rialto. As of June 2026, he told Multifamily Dive the loan was current and he was “close to resolution.”¹⁹

North Texas Foreclosure Notices

In May 2026, Nitya received foreclosure notices for three North Texas apartment properties financed by New York-based One William Street Capital Management:

The Interlace Apartments in Dallas, 432 units, $31.4 million loan.
The Palace Apartments in Arlington, 280 units, $28.2 million loan.
Chaparral Apartments in Fort Worth, 135 units, $10.7 million loan.

The combined 847-unit portfolio was scheduled for foreclosure auction on June 2, 2026.¹⁸ On June 1, Agarwal paid One William Street $1 million to halt the auction until at least June 30 under a forbearance agreement that allowed monthly extensions for up to three additional months at $1 million each, a potential $5 million total. Foreclosure listing records confirmed the three properties were not sold at the June 2 auction. Agarwal said he was in the final stages of placing long-term debt through Morgan Stanley to pay off One William Street, with the refinance expected to close in June 2026.¹⁹

Two additional Nitya properties, Domain at Waco and NTX Denton, entered special servicing in May 2026 after losing property tax exemptions when Texas changed the law on public facility corporations. Agarwal began paying lender Argentic Real Estate Finance in $1.5 million installments to meet a debt yield hurdle of 10.33 percent. He said Denton County had since approved the exemption and Waco was expected to follow, though the chief appraiser for the McLennan Central Appraisal District said there was no exemption in place for the Domain at Waco and could not confirm any pending agreement.¹⁹

Where Things Stand

As of mid-2026, Nitya Capital holds about 52 properties totaling roughly 15,000 units, including 10,000 conventional apartments and 5,000 student housing beds. Agarwal has said he invested $100 million of personal capital into the portfolio over the prior three and a half years, including $70 million in loans and deferred fees, and has not surrendered any property to a lender.¹⁹

The co-founder dispute remains unresolved, with Shah’s breach-of-contract suit against Agarwal ongoing in federal court in Houston.⁵ Multiple loans remain in special servicing, the Morgan Stanley refinance has not been confirmed as closed, and the forbearance window on the North Texas foreclosure properties extends only through September 2026.

1
Nitya Capital. Swapnil Agarwal
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The Real Deal. Nitya Capital Co-Founders Feud Over Arbitration Award
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The Real Deal. Nitya Capital
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Jus Mundi. Vivek Shah v Swapnil Agarwal, Final Award
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CourtListener. Shah v Agarwal
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Dallas Morning News. Mesquite Sues Apartment Operators That Racked Up 750 Violations
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The Real Deal. Mesquite Sues Nitya Capital Over Apartment Conditions
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PACER Monitor. CrowdStreet Inc v Nitya Capital LLC
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GovInfo. CrowdStreet Inc v Nitya Capital LLC, Order
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Trellis Law. Buyers Joint Hybrid Motion for Partial Summary Judgment on Attorneys Fees Claims
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UniCourt. Nitya Capital LLC vs Franco Jack Eldon
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Multifamily Dive. Multifamily Sales Apartment Finance Floating Rate Loans
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The Real Deal. Multifamily Owner Nitya Fails To Pay 356M Loan
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The Real Deal. Nitya Capital Extends After 42M Default on Houston Office Building
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Multi Housing News. Nitya Capital Lands 700M Refi
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Student Housing Daily. Nitya Capital Lands 700M CMBS Refinance
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The Real Deal. Nitya Capital Multifamily Loan Heads to Special Servicing
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The Real Deal. Nitya Capital Faces DFW Apartment Foreclosures
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Multifamily Dive. Nitya Capital Special Servicing Multifamily Debt