Condo Co-Op Help Line: New Construction Issues

By: Carol A. Sigmond

My parents would only buy new construction; I prefer not to do so, at least in New York City condominium buildings. New buildings are fraught with issues, mostly in the nature of construction defects.

Buyers of units in new buildings in New York City take a risk, if they do not conduct a careful inspection, not only of the unit but of the common area mechanical systems, the façade and the roof, then under caveat emptor (let the buyer beware), the newly ensconced unit owner has bought a major set of repair obligations. There is little point in spending time bemoaning the loss of craftsmanship and pride in a job well done from the construction industry or in lamenting that tight margins cause developers to cut corners. These are the facts of life.

Better to spend time looking at how to protect yourself, if you are looking to buy a unit in a new building. The best place to begin is with the offering plan. Compare the features listed in the plan with what is actually in the apartment unit, such as the dimension from the finished floor to the finished ceiling, the appliances, and the size and number of HVAC units. Also, if the building is “high end” check the finishes such as flooring, tile, countertops, and cabinets to ensure that all are neatly installed, fit properly and are of the materials set forth in the offering plan. Count the doors and closets. Open and close every door to make sure it opens and closes fully and smoothly. Do the same with all cabinetry in bathrooms, closets, and kitchens. Test electric outlets with an outlet tester available on the internet or at a hardware store. Look at all the ceilings to be certain there are no signs of water leaks. Open and close each window and look around the frame for signs of water intrusion. Do the same for balcony doors.

But construction defects are not limited to the interior of units. Defects may be in the hallways. So, carefully inspect the hallway wallpaper, paint, carpeting, and lighting. Inspect the trash compactor and compactor room.

Some inspections should be conducted by a construction or design professional. These include boilers, hot water heaters, and roofs. If you are considering spending hundreds of thousands of dollars or more on an apartment, having an architect or engineer spend time checking the mechanical systems is money well spent.

Obviously, if defects are found, you will have to decide whether to complete the sale. Walking away from a defective building may be the best decision. Who wants to buy headaches? The alternative is to close with reservations that compel the developer to make the

However, if defects are discovered after you have purchased of the unit, then most of the options involve lawyers. Defect management is a 4 part program: identify and document the defect; plan repairs; perform repairs; and seek recovery from the developer. The last two steps are not necessarily in order. The key to success is to plan and manage the repair program so as to spread out the cost over reasonable time, so as not to adversely impact unit owners with special assessments. Some defects can be patched successfully for a few years to allow for phased repairs. Other defects might be repaired in the course of maintenance, with an accelerative cycle in the first few years.

Always give immediate notice of the defects to the developer. Some defects may be covered by insurance, and timely notice is essential. The New York State Attorney General’s Office offers some assistance to new condominiums with defective construction, but in general, to recover costs, you will need to seek legal assistance.

There is basically only one avenue of attack – breach of contract against the developer. Other points of attack such as fraud or breach of limited warranty are difficult to prove. Sadly, you may have an excellent case against a developer, but find that the developer has no assets. This is often an issue, but under certain circumstances, the corporate veil may be pierced to allow condominiums to reach assets.

This column presents a general discussion. This column is not intended to provide legal advice. You should consult your attorney for specific legal advice.