Condo boards and unit-owners have several options when they
move into a new building with shoddy construction. To avoid litigation, they
can hire an engineer to document construction defects, then negotiate with the
sponsor to correct them. If the unit-owners are unhappy with the repairs, both
sides can agree to name a so-called “designated neutral” to arbitrate their
disputes. If all else fails, there’s always the last resort: litigation.
But last resorts don’t always lead to happy endings – or
cheap ones. Case in point: a Brooklyn judge has ruled that Fortis Property
Group is not liable for $2 million in alleged construction defects at the
62-unit Bayard Views condominium in Williamsburg, Brooklyn, the Real Deal
reports.
The reason is that Fortis bought 37 unsold units in the
building in 2011 from the original developer, Isaac Hager, when his company
went into bankruptcy. Even though Fortis became the sponsor on the offering
plan, the court ruled, the company is not liable for any construction because it
didn’t build the building.
Unable to sue Hager because of bankruptcy protection, the
condo board filed a complaint against Fortis in 2014, claiming the building
suffered from $2 million worth of damages from leaks and flooding, an
inadequate HVAC system, cracks in the facade, and a faulty electrical system.
In his ruling, Judge Lawrence Knipel did offer a consolation
to the board and unit-owners at the Bayard Views: they can continue trying to
sue Fortis Property Group’s principals, Joel Kestenbaum and Jonathan Landau.
Fortis’s attorney, Adam Leitman Bailey, tells Habitat, “This
is an extremely important case. It takes on an issue – when you buy or take
over a building from a previous sponsor, are you liable for defects caused by
the person you bought it from? According to this court, the answer is no.”
Kelly Ringston, a partner at Braverman Greenspun, attorney
for the condo board, says: "Fortis inspected the building, then turned a
blind eye to construction defects when they sold their 37 units. Each purchase
agreement contained false representations about the condition of the building.
The law doesn't give you a free pass to disregard your contractual obligations
simply because you acquired them in bankruptcy. We will be appealing."
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