Gramercy Square Condo Board Sues Sponsor for $75 Million

There are run-of-the-mill lawsuits over construction defects in condo buildings. And there is the the lawsuit unfolding at the four-tower Gramercy Square Condominiums.

The condo board has filed a lawsuit accusing the condominium’s original developers, Clipper Equity’s David Bistricer and Chetrit Group’s Meyer Chetrit, of creating defective condo units, The Real Deal reports. The board also alleges that Bistricer and Chetrit, along with two other named defendants, misappropriated up to $800,000 in condominium funds. As a result, the board is seeking a staggering settlement of at least $75 million in compensatory and punitive damages.

The board alleges that the “serious and substantial defects” in the building include “widespread and recurring leaks,” improperly installed boilers, inadequate fire stopping, cracked interior window panes and improperly installed wood floorboards. The board also claims that the damage, including flood damage that resulted from the alleged defects, caused a “sizable increase” in the board’s insurance costs, which are tied to a building's claims history in today's hard insurance market. 

Howard L. Zimmerman Architects & Engineers, whom the board hired to inspect the building, found that the work done did not conform with the development’s offering plan or legal and industry standards, according to the board. The complaint stated that the deviations uncovered by HLZAE posed “life safety issues.” 

The board claims that as a result of the defects, the units in the building are now unmarketable and have suffered in value. The development launched sales in 2018 and currently has 15 sponsor units listed for sale on StreetEasy. The projected sellout for the project is $834 million, and has garnered several top sales in the past few years, including a penthouse purchased for $19.5 million — $10 million less than the asking price.

Bistricer has denied the allegations in an email and says he is working with the condominium “in an effort to resolve” any issues raised by the board. The board counters that Bisticer and Chetrit and two former board members named as defendants “continued to flout responsibility.”

Lawsuits against condo developers may be a daily fact of New York City life, but they don't get much less run-of-the-mill than this one.