{"url_path":"/sec/oz/10-q/2026/item-1","section_key":"item-1","section_title":"Item 1 Legal Proceedings**","topic":"sec","document":{"doc_type":"10-Q","doc_date":"2026-05-13","source_url":"https://www.sec.gov/Archives/edgar/data/1807046/0001493152-26-022556-index.html","accession_number":"0001493152-26-022556","cik":"0001807046","ticker":"OZ","issuer_name":"Belpointe PREP, LLC","edgar_url":"https://www.sec.gov/Archives/edgar/data/1807046/0001493152-26-022556-index.html","primary_entity_key":"0001807046","primary_entity_name":"Belpointe PREP, LLC"},"word_count":716,"has_tables":true,"body_markdown":"** **\n\n**Item\n1. Legal Proceedings**\n\n \n\nFrom\ntime to time we may be involved in various claims and legal actions arising in the ordinary course of business.\n\n** **\n\nWe\nrecord loss contingencies for legal matters when it is both probable that liability will be incurred, and the amount of loss can be reasonably\nestimated. Where the reasonable estimate of a probable loss is a range, we record the most likely estimate of loss within that range.\n\n \n\nFor\nthe litigation described below, we do not believe liability is probable and therefore have not accrued loss contingencies for the matter.\nHowever, litigation and other disputes are inherently unpredictable and subject to substantial uncertainties. We will reassess our accruals\non an ongoing basis taking into account the procedural stage and developments in the litigation.\n\n \n\nAs\nof March 31, 2026, we have assessed the litigation described below and concluded that is it neither material nor is any resolution likely\nto have a material adverse effect on our business, financial condition or results of operation. In addition, as of March 31, 2026, neither\nwe nor any of our subsidiaries were subject to any legal proceedings nor were we aware of any legal proceedings threatened against us\nor any of our subsidiaries that could be deemed material.\n\n \n\n*The\nGalinn Fund LLC*\n\n* *\n\nOn\nDecember 5, 2024, the Galinn Fund LLC, a New York limited liability company (“Galinn”), filed a complaint in Connecticut\nState Superior Court naming CMC Storrs SPV, LLC (“CMC”), the holding company for our investment property located at 497-501\nMiddle Turnpike, Storrs, Connecticut (“497-501 Middle”), as a defendant, alongside Chen Ji, an individual (“Chen”),\nand two additional entities (the “Guarantors”). For additional details regarding 497-501 Middle, see “[Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations](#an_001)[—Our Investments—497-501 Middle Turnpike and Cedar Swamp Road – Storrs, Connecticut.](#an_013)”\n\n \n\nIn\nthe complaint Galinn alleges, among other things, that on May 24, 2024, Chen, on behalf of CMC, executed a mortgage note (the “Note”)\nin the principal amount of $3.0 million (the “Loan”), which was secured in part by a mortgage against 497-501 Middle (the\n“Mortgage”). Galinn further alleges that CMC is in default under both the Note and Mortgage for failure to make payments\nwhen due. Galinn is seeking to foreclose on the Mortgage and damages against CMC and the Guarantors.\n\n \n\nIn\nMarch 2020, when we first acquired an equity interest in CMC, Chen was an affiliate of the entity, however, he thereafter exited the\ninvestment and is no longer in any way affiliated with or authorized to act on behalf of CMC. We maintain that the Loan was obtained\nas a result of Chen’s fraud and Galinn’s negligence, and had Galinn done adequate due diligence, or reviewed the publicly\navailable filings on the State of Connecticut’s Business Records website, or even a basic Google search, Chen’s lack of authority\nwould have been readily apparent prior to Galinn having made the Loan.\n\n \n\nOn\nSeptember 15, 2025, CMC filed an amended counterclaim and cross complaint against Chen and Galinn alleging, among other things, fraud,\nwrongful conduct, theft, conversion, forgery, slander and violations of the Connecticut Unfair Trade Practices Act, and seeking certain\ndeclaratory relief as well as damages, attorneys’ fees, and costs and expenses related thereto.\n\n \n\nWe\ndispute any liability in the Galinn litigation, believe we have substantial defenses to Galinn’s claims, and are vigorously defending\nthe matter.\n\n \n\n*JZ\nInvestments, Inc.*\n\n \n\nOn April 24, 2026,\nJZ Investments, Inc., a Connecticut corporation (“JZ Investments”), individually and derivatively as an equity holder of\nCMC QOF I, LLC, a Delaware limited liability company, filed a complaint in Connecticut State Superior Court naming us, one of our Operating\nCompanies, BPOZ Storrs Holding, LLC, and CMC as defendants alongside Chen. In the complaint JZ Investments alleges, among other things,\nthat Chen acted fraudulently and we acted negligently, in violation of the Connecticut Unfair Trade Practices Act, and in breach of the\nimplied covenant of good faith and fair dealing, fraudulent transfer and unjust enrichment when entering into a settlement agreement\nwith JZ Investments. JZ Investments is seeking, among other things, restoration of its preferred equity interest in CMC, certain declaratory\nrelief as well as damages, attorneys’ fees, and costs and expenses related thereto.\n\n \n\nWe dispute any liability in the JZ Investments litigation and intend to vigorously defend the matter."}