New York's Cooperative and Condominium Community

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SHODDY NEW CONSTRUCTION, P.2

Shoddy New Construction, p.2

 

What are co-op or condo board members to do when substandard construction threatens their home, their investment, even their health? Plenty. It takes perseverance and good organization, but apartment owners can apply pressure on three different levels to prod a developer into fixing what's wrong.

Dev Con One

The first step — call it "Dev(eloper) Con(struction) One" — starts with trying to work with the developer directly. If that fails, Dev Con Two involves filing a complaint with the state attorney general's office. And if that fails, it's Dev Con Three: launch a lawsuit.

But note that there are statutes of limitations involved: The Housing Merchant Implied Warranty Law (General Business Law Article 36-B), which applies to buildings five stories or less, has a six-year statute for structural items, such as load-bearing walls; two years for systems, such as electrical, plumbing, and heating; and just one year for everything else. For all buildings, however, contracts, including offering plans, have a six-year statute, and issues of fraud have six years or, alternately, two years from the date of discovery.

In any case, the first thing you have to do is organize. If you don't already have a board, form one — if you can. "I have a very high-end new building where the sponsor can control the board for five years even though he owns no units in the building," says Reich. At another condo, 44-story The Link at 310 West 52nd Street, the offering plan states that developer Elad Properties will control the board until either 90 percent of the building has been sold or two years elapse from the date of first closing. That was in January 2007 — and severe, documented problems have been plaguing the unfortunate residents ever since.

What do you do in such cases? Form a de facto homeowners association. In Reich's client building, the unit-owners got together after finding shoddy construction and "as a group of individuals hired us and an engineer," says Reich. Condo owners at The Link did likewise, starting last March.

Not being a board-in-fact creates obstacles: you won't have any records nor will you have ability to collect common charges to fund your efforts. The Link Residents Group started with 15 unit-owners each agreeing to pony up $500 personally to split the cost of retaining an attorney; that figure went down to below $350 as more residents joined.

But whatever the obstacles, "organize, organize, organize — and organize early!" advises Brian McGrath, who spearheaded the formation of The Link Residents Group. "Owners have to get together and compare notes," he says. "From the very first meeting we had, it was amazing the commonality and universality of the stories. The sooner you organize, the sooner you can deconstruct what's going on in the building and if you're getting the straight story or not [from the developer]." In addition, "once we organized, I got the ear of the managing agent [Cooper Square Realty]. We now have a weekly call. It was something they did not do prior to our organizing."

'Net Results

McGrath's group organized using the internet, creating a Yahoo! Groups message board at http://groups.yahoo.com/group/linkresidents/. Residents could read and post notices, keep abreast of organizing developments, and share experiences regarding the building. This tack was not only easier and less cumbersome than collecting addresses and sending e-mails but fostered a sense of community.

Ironically, so did Elad's attempts at quashing its buyers' complaints. "[T]here is a fine line between seeking to have punch-list items addressed in your apartment by the sponsor … and engaging in activities that could be construed as commercial defamation," Elad outside counsel George Tzimopoulos of D'Agostino, Levine & Landesman warned in a March 27 letter to McGrath, sidestepping the fact that a trio of floods, lack of heat in the winter, "habitable" floors with ongoing construction, and much more went far beyond "punch-list items." "They shot themselves in the foot every time they shot a missile at me," says McGrath. "And every time they refused to respond, they further galvanized people to collectively act."

The first step after organizing is to hire a forensic engineer. A group or a board can do this on its own or retain an attorney who will take that and other steps. Either way, this engineer reviews the engineering report in the offering plan, the architectural drawings supplied to the DOB, and a questionnaire filled out by unit-owners describing specific issues. The engineer then physically examines the building from roof to basement and writes a report.

"The engineer will look for things that are not code-compliant, not compliant with good construction practices or with the offering plan, and non-consonant with the drawings from the Department of Buildings," says Braverman. "I usually don't have them do probes, which are very expensive."

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