New York's Cooperative and Condominium Community

Habitat Magazine Business of Management 2021

HABITAT

LEGAL/FINANCIAL

HOW LEGAL/FINANCIAL PROBLEMS ARE SOLVED BY NYC CO-OPS AND CONDOS

Condo Board Sues 432 Park Ave. Sponsors for $125 Million Over Defects

Upper East Side, Manhattan

Construction defects, condo board, supertall condo tower, 432 Park Ave.
Sept. 27, 2021

There are lawsuits over construction defects, and then there is the lawsuit over construction defects at 432 Park Ave. The condo board at the supertall tower, one of the most expensive addresses in the world, is suing the developers for $125 million in damages, citing multiple floods, faulty elevators, “intolerable” noise caused by building sway, and two electrical explosions that knocked out power to residents, according to a lawsuit filed in State Supreme Court, The New York Times reports.

“This case presents one of the worst examples of sponsor malfeasance in the development of a luxury condominium in the history of New York City,” referring to the developers, CIM Group and Macklowe Properties, according to the complaint. The damages include the estimated cost to repair some 1,500 construction and design defects in common elements of the building that were identified by an engineering firm hired by the condo board; it does not include potential punitive damages, or separate lawsuits that individual residents might file.

The damages could rise, said Jonathan Adelsberg, a partner at the law firm Herrick Feinstein, which is representing the condo board. “It’s almost like peeling an onion,” he said, referring to defects that may yet be uncovered. “This is a work in progress in ascertaining what’s wrong.”

The sponsors have reacted to the lawsuit with defiance or silence. “Each and every commitment and term contained in the 432 Park offering plan and declaration has been honored,” a spokesman for one sponsor, which includes CIM Group, said in a statement, adding that some of the remaining “maintenance and close-out items” have been obstructed by the condo board. Macklowe Properties, the other developer, did not return requests for comment.

The 1,400-foot-tall, 125-unit building is nearly sold out, but since reports of defects at the building emerged in February, resales have been slow, according to Donna Olshan, the president of Olshan Realty. There are 11 units listed for sale, she said, ranging from about $7 million for a low-floor two-bedroom up to $169 million for the penthouse. Since January, only one sale has closed.

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