The Oro saga continues - please share your thoughts...

You should look into the 110 Livingston lawsuit over misrepresented square footage and see if a precedent has been set. I remember a lot of coverage on Curbed, including a post w/ a photo of the claim. Good luck.

The 110 Livingston case is still active.

Yulik, are you saying that the dimensions of the rooms as-built are smaller than specified in the offering plan?

What's odd about the Oro plans is how tiny many of the rooms are. E.g., in the C line the living-dining room is only 9' and 10' wide, wrapping around the kitchen. Note how one arm of the L is labelled "alcove" rather then the "dining area" you'd expect, maybe because the space is too small to be legally called a dining area. I guess this is another example of the risks entailed in buying from plans.

If you sue, your going to be in court for the next 5 + years. Be forewarned.

My only advice is to try to make the place half decent and sell it.

Hi Yulik,

Did your floorplan include usable square footage, or just the gross square footage? It makes a big difference if you were expecting the usable square footage to be the gross square footage number. I had a friend that bought his apartment based on the gross number on the floorplan, and I warned him to ask the developer what the usable number would be- he didn't and was upset that the apartment was so much smaller than what he expected. I warned him in advance, and he realized he had no one to blame but himself. Now that's not to say you did the same, because there are many instances where the developers have short changed the buyers. In this case, there are more buyer protections under the current NY State Attorney General than the last one- The Real Deal did a feature on this probably about 6 months back. I will see if I can dig up that article.

The Real Deal - July 2008
Cracking down on shoddy condos
New building codes, mediation by attorney general's office are new approaches

By Barbara Thau

Developers beware: In a city that has been awash in an unprecedented building boom, a pair of government agencies is starting to wake up to the neglected problem of slipshod condo construction.

The attorney general's office and the Department of Buildings have vowed to crack down on shoddy developers.

Condo developers who flout the rules — with everything from leaky roofs to unheated buildings — could come under increased scrutiny by the attorney general's office, which has ramped up its Real Estate Finance Bureau.

The division, long considered inert, has been working more closely with attorneys, representing both aggrieved buyers and their developers, to address complaints and prosecute condo building violations, attorneys said.

At the same time, new construction codes issued by the city's Department of Buildings were scheduled to go into effect on July 1.

The modernized codes replace antiquated rules from 1968, introducing stiffer penalties for building violations and the promise of tougher enforcement.

Currently, the frontline in the fight against shoddy condo construction runs through the attorney general's office. Attorney General Andrew Cuomo, elected in 2006, has pumped up the Real Estate Finance Bureau with four new appointees.

Critics contend that the previous attorney general, Eliot Spitzer, shifted too many resources and personnel to his fights with Wall Street.

"The few Spitzer left behind [in the Real Estate Finance Bureau] were doing all they could just to review plans so development could continue," said Douglas Heller, head of the co-op and condo practice at law firm Herrick Feinstein, which represents condo developers. "That left nobody to mediate construction disputes, litigate, prosecute or investigate."

As a result, the office had not filed a case in years — until last fall.

Presently, the biggest case the department is handling is that of Mendel Brach, a developer accused of numerous safety violations by 72 families who live in five of his buildings on Bedford Street in Brooklyn.

Adding insult to injury, the families said they couldn't sell the faulty apartments due to the violations, as the city would not grant them certificates of occupancy.

Now, the AG's office is "putting a lot of pressure on the developer to make good, to fix the building and to buy tenants out. There's nothing better than getting the AG's office in a battle against a developer," said Adam Leitman Bailey, a lawyer who represents condo owners.

In theory, the attorney general's office has enormous investigative powers, and by law, can prosecute with wide discretion.

But right now, the office is also taking on shoddy developers by restoring the mediation process. During mediations, the developer, condo owner and their attorneys convene at the AG's office to hash out disputes.

"The payoff for developers is speedier review of their condo plans, and the benefit to unit buyers is enhanced scrutiny of habitability issues and mediation of construction disputes," Heller said. He noted that to the extent that the AG's office gets involved and mediates more, "there will be fewer lawsuits that allege shoddy construction of condos."

While the AG's office is still backlogged with condo construction/fraud complaints, the agency is starting to process them at a faster clip, lawyers said.

Part of the blame for poorly built condos also resides with the Department of Buildings. The agency, whose job it is to make sure buildings are habitable, has often been asleep at the wheel and has also green-lighted bad projects, sources said.

But it's the recent, high-profile accidents in the city, including the deadly crane collapses in March and May, that have shone a harsh spotlight on building safety and the consequences of poor construction.

Now, the buildings department says it's taking big steps to update a system that has come under fire.

"Unfortunately, it took a major accident that was costly and devastating to force the issue into the forefront of everyone's mind," said Robin Abrams, executive vice president of the Lansco Group.

When new building codes go into effect on July 1, developers will face fines that have doubled and tripled for building violations, Bailey said.

As a result, developers will "hopefully think twice before violating the law because they know they'll have to pay heavily for it," he said. "The changes are fantastic for homeowners."

The DOB's codes hadn't been revised in 40 years.

"New York City has experienced an unprecedented construction boom across all five boroughs in the past several years," said Robert LiMandri, acting buildings commissioner. "Already this year, there have been an unacceptable 13 construction-related accidents, one more than all of 2007 combined."

LiMandri replaced Patricia Lancaster, who left in April following some of those accidents.

One significant change to the construction codes is the revision of the current classification of violations. Violations are no longer designated "hazardous" and "non-hazardous," but are now classified as "immediately hazardous," "major" and "lesser."

In addition to the new construction codes, the Department of Buildings has been phasing in six new multidisciplinary enforcement teams created as part of its Special Enforcement Plan.

The department has recently suffered from a dearth of engineering and contracting talent that has been wooed away to better-paying, higher-profile jobs in the private sector, lawyers and brokers said.

The new plan is designed to "raise the bar for construction standards citywide and hold developers accountable when they perform unsafe or non-compliant construction work with the issuance of stop-work orders and violations," LiMandri said.

Everyone, I'm very thankful for your prompt and very informative responses. I really appreciate all of your tremendous help!

When i was presented with the floor plan, there was no mentioning of gross square footage versus usable square footage. If i had known that the usable sqft would be around 250sqft i would NEVER have purchased this unit. I agree with NWT, they did use the word "alcove" as opposed to dining area - very deceiving euphemism indeed. I also agree with Alpine292, that a lawsuit would take years and prove to be very costly unless I can gather other Oro victims under a class action suit. Selling the unit wouldn't be a viable option for me since the value of the property already dropped significantly.

I also wanted to ask you the following question. Why should i pay Oro any of the maintenance fees when they haven't completed the pool/gym and other promised building amenities. My broker told me that i would have to lease out the unit at a discount since none of the amenities are present.

And lastly, do any of you know other Oro owners/victims that suffer from a similar predicament?

Thanks again for everything. Happy holidays and happy New Year to all of you!

Hi yulik,

Before you contemplate thinking of withholding your common charges- speak to a lawyer. Those common charges pay for your heat, water, building electricity, etc. While you are talking to this lawyer, have them look over your prospectus with regard to the gross vs. usable square footage issue.

This forum is a great place to find other owners within your building (at least it has been for some other new buildings). You may not need to sue if you get enough owners together that are having problems and unite against the developer- strength in numbers.

Thanks so much Semerun!

I will definitely check with a lawyer regarding all these points.

I appreciate your help!

Best,

Yoel

Frankly yulik, if you are a victim of anything, you are a victim of your own lack of due diligence. The difference between gross and usable square footage should have been quite obvious from the floor plans included in the offering memorandum. Even a cursory examination of new condo floor plans reveals large differences betwee gross and usable square footage.

From NY Times

UNLIKE much else in this world, standards of measurement are not a subject of dispute. A foot, for example, is 12 inches long. Or to be more precise, it is the distance traversed by a plane of light through a vacuum in just under a billionth of a second, according to the National Bureau of Standards.

A tenant seeking to lease an office in New York City, then, might expect a square foot of floor space to contain the usual 144 square inches - not an unimportant matter, since his rent will be based on the office's square footage. But such a tenant would be mistaken.

''It sounds stupid, annoying, crazy,'' said Alfred S. Remsen, president of Pearce, Urstadt, Mayer and Greer Realty Corporation, a Manhattan brokerage. ''Owners are constantly remeasuring buildings. Our own office at 90 Park Avenue was remeasured. It used to have 14,800 rentable square feet, but we were advised that our space will be 17,000-plus when our lease comes up for renewal in 1987.''

The square foot has been shrinking - and offices have been growing - in New York for many years. But brokers say the shrinkage seems to have accelerated since the Real Estate Board of New York, a trade group, stopped setting voluntary standards two years ago. The current rule of thumb is that a ''rentable'' square foot of office space contains 115 square inches, but it can vary between 95 and 130 square inches, depending on the building, the owner and market conditions.

The ''rentable'' or ''gross'' size of an office is the basis for setting the rent and, in theory, includes a tenant's pro-rata share of the building's public areas and mechanical rooms. Some owners also apportion plazas, loading docks and off-site mechanical facilities. The trend among owners, however, is to use an arbitrary figure - generally making tenants pay for 25 percent more space than they actually occupy. In addition, some owners adjust this arbitrary rentable area to whatever the market can bear.

Tenants seeking to know exactly how many 144- square-inch square feet are available on an office floor may be quoted figures for ''usable square feet'' or ''net square feet.'' But these figures also include service rooms, bathrooms, building columns, heating and cooling convectors and other obstructions. To find out how many desks and people a space can accommodate, a tenant must use other poorly defined terms such as ''occupiable square feet,'' ''carpetable square feet,'' or ''cleanable square feet'' - and then, say owners, brokers and designers, measure it to be sure.

The ''New York rubber ruler,'' as it is known in the industry, is seldom used outside the city, except by New York developers working out-of- town. Throughout the country, owners use clearly defined standards for measuring rentable and usable space, which are set by the Building Owners and Managers Association International, a national trade group. Owners admit the New York practice is confusing, but say that it is fair and competitive.

''It is never easy for anyone to accept an increase in rent or footage,'' said Joseph P. Ritorto, executive vice president for leasing at Silverstein Properties Inc., a Manhattan developer. ''But 20 percent of buildings are usually consumed by common areas. The theory is that if you invest in buildings based on the gross footage - the basements, the roofs, etc. - then you should have a return on the same basis.''

Silverstein Properties owns eight office buildings in Manhattan that enclose 5 million gross square feet of space. To make each square foot generate revenue, the company makes tenants pay for 25 percent more floor space than they actually use. ''We advise tenants exactly what our methods are,'' Mr. Ritorto said.

THIS 25 percent across-the-board added

cost for tenants is widely used by other

large companies including Olympia & York, the Canadian developer of Battery Park City, and the Durst Organization, a major New York developer. Architects say that developers increase usable areas by odd numbers - such as 36.2 percent in one tower on the Avenue of the Americas - as a way to convey an impression that the number has some basis in reality. At another major new office building downtown, the owner has set the rentable figure at the normally lower usable figure to enhance the building's marketability.

Because owners use such different formulas and percentages, some archtectural firms, in exasperation, have given up calculating usable and rentable figures. ''We give owners all the numbers and let them figure out what they want to do with them,'' said Richard Roth Jr., president of Emery Roth & Sons Architects in Manhattan. ''It's looney tunes, what goes on. We have designed buildings where owners make the net usable area larger than the gross of the buildings. No one uses the Real Estate Board's definitions.''

Some owners and brokers avoid talking about how much common space is being added to a tenant's usable space and instead discuss the ''loss factor'' - the difference between rentable and usable area, expressed as a percentage of the rentable area.

This statistical device permits a salesman to say that a space has a loss factor of 20 percent rather than stating its common-sense equivalent: that a tenant will be paying for 25 percent more space than he can use. A loss factor of 25 percent, the highest number generally found in this market, means a tenant is paying for 33 percent more space than he can use.

Historically, commercial tenants have been apportioned a share of the space devoted to such common building elements as elevator shafts, machine rooms, public stairs, central telephone equipment rooms and fire towers. An office floor, then, might have 8,000 ''carpetable'' square feet for desks and people, 10,000 ''usable'' square feet and 11,000 ''rentable'' square feet, which would include that floor's share of the commmon areas and would be the basis for the rent. The rentable measure is especially important because commercial leases often contain escalation clauses that pass along increases for taxes, porter's wages and electricity on the basis of rentable square feet.

In 1968, the Real Estate Board liberalized the formula for calculating common spaces and added central air-conditioning facilities to the list. After that, individual owners elaborated on the board's voluntary standard by including basements, lobbies, public corridors, atriums and other design features.

Developers who have converted loft buildings into offices usually base the rentable space on the lot size, regardless of a bulding's setback, according to Michael T. Cohen, vice president of Williams Real Estate Company, Inc., a Manhattan brokerage.

After some experience with the calculations, Silverstein and many other owners said they routinely apportioned to tenants 20 percent of the gross space in new buildings and in old ones as leases are renewed. In the late 1970's, some owners began responding to market pressures by adjusting their rentable space numbers up and down with space demands, according to owners and brokers.

The lack of a uniform methodology and the ensuing confusion in the marketplace prompted the board to consider setting a new standard in 1982. ''I'm an architect, and I know it's not kosher to call a square foot something else,'' said Richard M. Rosan, president of the board. ''But after a long, arduous discussion within the industry, we couldn't reach any agreement other than on an owner's responsibility to disclose how he calculates rentable area.'' Mr. Rosan said the disclosure policy appeared to be working because tenants were not protesting.

But tenants and their representatives do have complaints. ''It's totally unfair,'' said Joseph A. Costa of the practice of charging tenants for 25 percent more floor area than they use. Mr. Costa is a senior vice president at CPC, Corporate Planners and Coordinators, a national consultant and broker for major corporations in leasing office space. He said the use of any set percentage was unfair because buildings varied greatly in regard to their efficient use of space.

In addition, tenants cannot generally rely on any measurements provided by owners, he said, ''because they add everything but the kitchen sink into them.''

He cited a recent case in which an owner asserted that a midtown office building had 32,500 square feet of usable space. Mr. Costa's architect measured the space and found only 31,000 square feet per floor. The inspection, he said, saved his client $60,000 per floor per year, or a little over $2 million in the first five years of the seven-floor lease. ''You have to measure to keep a building owner honest,'' he said.

''We have found some gross irregularities in owners' numbers,'' said Dennis Johnston, senior vice president of LCP Associates, Inc., an interior planning and design firm in Manhattan. The firm specializes in doing a ''pre- lease analysis'' of office spaces for prospective tenants. The designers determine a client's needs and then draw up sample layouts for the different office spaces under consideration. The company charges about $1 per square foot for small offices, but offers the service as a free sample of its work to clients planning to lease spaces of more than 150,000 square feet.

''If a tenant is not aware of what's happening, it is extraordinarily confusing,'' said Carl E. Sturges, director of commercial real- estate transactions for Young and Rubicam Inc., the advertising agency. ''When we look at a real-estate transaction, we look at the rental stream we're expected to pay and we do not look at what the landlord says the space is - we have our own standards for measurement.''

Condo Owners Settle with Developer
By Elizabeth Stull

WILLIAMSBURG — A group of owners in a Williamsburg condominium complex received $235,000 after settling a lawsuit with its developer, designers and contractors.

The lawsuit cited Shlomo Karpen, developer of The Williamsburg Mews, 98-106 Havemeyer St., for breach of contract, breach of warranty, negligent misrepresentation and negligent construction.

Roofing leaks and the resulting water damage were at the top of the owners' list of complaints. Also named in the lawsuit were the architectural firm Bricolage Designs and two Brooklyn contractors, Superior Construction Consulting Corp. and Roth Roofing, which completed the project.

The 24 units at The Mews were completed in 2001, and in 2002 the Eagle reported that they were being "snapped up" by young couples starting families. A realtor interviewed for that article said the prices ranged from $325,000 to $490,000, and that two-bedroom apartments were selling faster than one-bedroom apartments.

All 31 residents of The Mews joined the lawsuit, filed in Brooklyn Supreme Court in late 2005. Their attorney, Adam Leitman Bailey, told the Eagle then that active roof leaks had caused expensive damage to bulkheads and hardwood floors. The owners' list of complaints also included inadequate flashing over the heads of window lintels; improperly installed and/or inadequately sealed window sills; cement-clogged sewer pipes that caused basement flooding; inadequate heat; and only a single layer of sheetrock between units instead of the code-required two layers.

Under the settlement agreement reached a few months ago, each of the defendants agreed to take some action. The roofing contractor agreed to perform a full inspection of the roof and repair any damage to the satisfaction of the owners' engineer.

The developer, architect and construction manager each made payments to the condominium's board of managers within 30 days of the settlement. Karpen and his company Hope Houses LLC paid $200,000. Bricolage Designs and Pulaski, P.A. paid $25,000, and Superior Construction, $10,000.

The defendants also agreed to cooperate with the unit owners in connection with any required repairs, reconstruction or restorative work, and to provide any relevant information, as well as building plans, permits and drawings related to the property's conversion to condominiums.

The developer's attorney, Martin Kera, said his experience as the owner of a Manhattan management company informs his advice to clients.

"I can look at a job and tell if it's built badly and needs to be redone," he said Friday. In this case, he said, "it's cheaper to repair and go on to the next job. The problem with this is, it's being portrayed in the press as bad developers. I would say it's more inexperienced developers, and they're using bad contractors."

Charles Martin Arnold, an attorney for Superior Construction, said his client agreed to the nominal settlement after its insurance carrier disclaimed the matter. "We'll chalk it up to the cost of doing business, unfortunately," he said.

The architect's attorney, David Montag, declined to comment on the settlement but noted that they did not admit liability. He said, "There are a lot of reasons why people settle, including the cost of litigation." Bailey considered the settlement a victory for the homeowners.

"This is a good example that other developers of badly constructed buildings in Brooklyn should follow, that they should stand up and pay the money it takes to make these buildings the way they were promised when these people bought their homes."

He added that there are laws and procedures to prevent poor construction practices, and that builders "wouldn't be able to get away with it if the government was doing their job."

Are Buyers of New Condos and Co-ops Subject to Caveat Emptor?
Before purchasing a condominium or
cooperative apartment in a newly built
high rise of six or more stories in
New York, a prospective buyer needs
to pay close attention to the warranty
provisions of the sponsor’s offering plan and
purchase agreement.
Unless the agreement contains the sponsor’s
express warranty that the construction of the
building or the apartment will be free from
material defects, if a material defect is later
discovered, the buyer may be confronted with a
disclaimer of liability by the sponsor. Even if
the defect is discovered before the closing, the
sponsor may insist that the buyer proceed
to closing or be deemed in default of the
purchase agreement thereby forfeiting the
down payment.
What, if any, legal rights the buyer has in
such a situation is a question that has not yet
been decided by the courts. Nevertheless, the
issue is a likely subject of future litigation.
Therefore, attorneys representing both
buyers and sellers of new condominiums/
co-ops need to consider the question and be
prepared to address it — preferably in contract
negotiations that seek to preclude the issue
from arising, or in litigation, when that
is unavoidable.
Although Article 36-B of the General
Business Law1 provides that “a housing
merchant implied warranty is implied in the
contract or agreement for the sale of a
new home,”2 the statute narrowly defines the
term “new home” to mean “any single family
house or for sale unit in a multi-unit residential
structure of five stories or less in which title to
the individual units is transferred to owners
under a condominium or cooperative regime.”3
Clear Dichotomy
This statutory scheme creates a clear
dichotomy — between condominium/co-op
structures of five stories or less and those of six
or more stories — raising important questions
concerning what, if any, warranty protections
the law now provides for condominium/co-op
structures in excess of five stories.
Under GBL § 777-a, buyers of condominium/
co-op apartments in a newly built
structure of five stories or less automatically
receive the following protections when
purchasing their “new home”:
• For one year after the date of the passing
of title (the warranty date), an implied
warranty that “the home will be free from
defects due to a failure to have been
constructed in a skillful manner;”4
• For two years after the warranty date,
an implied warranty that “the plumbing,
electrical, heating, cooling and ventilation systems
of the home will be free from defects due
to a failure by the builder to have installed such
systems in a skillful manner;”5 and
• For six years after the warranty date, an
implied warranty that “the home will be free
from material defects.”6
However, Article 36-B also gives the sellers
of condominiums/co-ops in buildings of
five stories or less the option of drafting
written contracts that modify or totally exclude
the housing merchant implied warranty.
Nevertheless, if a seller does modify or exclude
the implied warranty, the seller is then obliged
to offer the buyer an express limited warranty
that must comply with certain minimum
requirements specified in the statute.7
In addition, the express limited warranty
offered by the seller may not specify any
exception, exclusion, or standard “which does
not meet or exceed a relevant specific standard
of the applicable building code”8 or “that
fails to ensure that a home is habitable, by
permitting conditions to exist which render
the home unsafe.”9
Implied Warranty Case Law
Shortly before the enactment of the
statutory housing merchant implied warranty
contained in Article 36-B, the state Court of
Appeals decided Caceci v. Di Canio
Construction Corp.10 In Caceci, the Court
recognized the existence of a common law
housing merchant implied warranty in contracts
between builder-vendors and purchasers
of new houses. In doing so, the Court held that
the doctrine of caveat emptor (“that the buyer
must beware”), which traditionally governs the
sale of personal and real property, would no
longer apply to contracts for the construction
and sale of new homes in New York.
In holding that the caveat emptor doctrine
should no longer apply in such cases, the Court
said that “responsibility and liability in such
cases ... should, as a matter of sound contract
principles, policy, and fairness, be placed on the
party best able to prevent and bear the loss.”
A decade after its decision in Caceci,
the Court was asked to decide whether the
common law housing merchant warranty survived
the enactment of the statutory housing
merchant implied warranty and whether the
two implied warranties could coexist.
‘Fumarelli’
In Fumarelli v. Marsam Development, Inc.,11
the Court framed the issue as “whether the
statutory housing merchant implied warranty,
found in [Article 36-B], is a full substitute for
the antecedent common-law housing merchant
warranty recognized in [Caceci].”12
The Court answered by saying Article 36-B
“eclipses” the holding in Caceci and “effects
a complete substitute for the commonlaw
remedy.”
The Court found that the Legislature had
Adam Leitman Bailey is principal in The
Law Firm of Adam Leitman Bailey. John M.
Desiderio is of counsel at the firm.
Adam Leitman Bailey John M. Desiderio
xxxxxxxxxxxxxx
This statutory scheme creates a
clear dichotomy ... raising
important questions concerning
what, if any, warranty
protections the law now provides
for condominium/co-op
structures in excess of five stories.
------------------------------------------------
“sought to fill the field comprehensively with a
uniform directory framework that would
provide predictability concerning these
matters, as sorted out and agreed to among
contracting parties themselves.”
The Court of Appeals undoubtedly believed
that its Fumarelli decision was definitive and
would serve the interests of judicial economy
and legal clarity. However, the Court failed
to note the narrow statutory definition of the
term “new home.” Fumarelli, therefore, raises
several issues.
Did the Court recognize the possible
dichotomy that the “new home” definition
might cause between new condominium/ cooperative
structures of five stories or less and
those of six stories or more? If so, did the Court
hold that Article 36-B supplants the common
law warranty only as to structures of five stories
or less? If not, did the Court inadvertently
restore the doctrine of caveat emptor to
condominium/co-op sales in structures of six
stories or more? Alternatively, did the Court
hold sub silencio that the Legislature intended
caveat emptor to apply to condominium/
cooperative buildings in excess of five stories?
Given the Court’s repudiation of the caveat
emptor doctrine in Caceci, it is reasonable to
argue the Court did not intend its Fumarelli
holding to strip common law protection from
transactions to which Article 36-B does not
expressly apply. As the Court itself noted, when
Article 36-B was drafted, the Legislature was
aware of the holding in Caceci. Therefore, the
Legislature could be deemed to have intended
to limit the circumstances in which the statute
would supplant the common law.
In addition, since the Fumarelli condominium
townhouse fitted the statutory definition of
a “new home,” the strict holding of the case is
limited to the facts that were before the Court,
and one can infer that the Court did not intend
Fumarelli to apply to situations not covered by
the statute.
Moreover, the legislative history supports
the view that the common law would otherwise
apply to situations not covered by Article 36-B.
The legislative bill jacket contains a letter from
the New York State Builders Association
stating that a building that is not a “new home”
as defined in the bill “is governed by common
law warranty rules, if any.”13
Alternatively, it is also possible to argue that
the Court’s language in Fumarelli is so sweeping
that the Court completely eliminated all common
law implied warranty protections from the
housing field — whether or not it overlooked
the “new home” definition contained in GBL §
777(5). Indeed, because Fumarelli involved a “
new home” within the statutory definition, the
Court could otherwise have easily limited its
holding to the case before it.
Finally, it can be argued that the Court
viewed the narrowly defined “new home”
definition as a conscious decision of the
Legislature to allow contracting parties to sort
out and agree among themselves what, if
any, warranties should apply in transactions
involving buildings of six or more stories. In
this regard, the Court’s failure to address the
full implication of its holding may have been
influenced by the fact that the seller in
Fumarelli had complied with the exclusion
provisions of Article 36-B and that the buyer
had agreed to the seller’s terms.
Indeed, the Court noted that the framework
of Article 36-B encouraged “sorting out”
of the warranty protections even in transactions
that fit the “new home” definition.14
Accordingly, if the Legislature deemed a “s
orting out” process beneficial in situations
covered by the statute, it would not be
unreasonable for a court to conclude that the
Legislature also intended to encourage the
“sorting out” process in transactions discretely
left outside the statute’s coverage.
Nevertheless, such a result would be
problematic for buyers of condominium or
cooperative “new homes.”
Only buyers who are able to bargain for
meaningful express warranties will obtain the
protections that most new homeowners expect
from sellers of high-rise condominium/cooperative
apartments. Moreover, unless sellersponsors
of such apartments voluntarily include
express warranties in their purchase agreements,
buyers will face the situation where
builder-vendors may invariably be shielded
from liability for inadequate work, except in
cases where there have been gross violations of
the applicable building codes.
Conclusion
Until judicial or legislative intervention
codifies the rights and remedies of buyers and
sellers in buildings higher than five stories, the
attorney’s role in negotiating the contract of
sale may determine whether the buyer or seller
has any remedy or liability with respect to
material defects in a new home.
To protect a buyer in a newly constructed
building of five or more stories, the contract of
sale should preserve the common law housing
merchant implied warranty as stated in Caceci.
The contract of sale should also include
additional specific warranties to be conveyed to
buyers of units in such buildings.
Attorneys representing sellers of units in
buildings higher than five stories should strive
to negotiate contracts of sale that expressly
require waiver of all common law warranties,
including the housing merchant implied
warranty. However, to avoid a possible finding
of unconscionability until it is definitely
determined that Fumarelli allows such waivers,
it is advisable that sellers offer the limited
warranties provided in Article 36-B.
This may persuade a court to decide that a
buyer’s remedies against the seller of a defective
home are limited to those provided by the parties’
agreement. While these recommendations
should assist many clients, it is likely that, until
the law is settled in this area, the party with the
stronger negotiating position will prevail.
•••••••••••••••••••••••••••••••
(1) GBL §§ 777, et seq.
(2) GBL § 777-a (1)
(3) GBL § 777(5) (emphasis added). Neither the statutory
language nor the available legislative history offer any
ready explanation for the Legislature’s choosing to limit the
housing merchant implied warranty to new condo/co-op
structures of five stories or less. It appears that the dichotomy
between five and six story condo/co-op buildings was a
compromise between competing interests that facilitated
passage of the final bill.
(4) GBL § 777-a (1)(a).
(5) GBL § 777-a (1)(b).
(6) GBL § 777-a (1)(c).
(7) GBL § 777-b (3).
(8) GBL § 777-b (3)(e)(i).
(9) GBL § 777-b (3)(e)(ii).
(10) 72 NY2d 52, 526 N.E.2d 266 (1988).
(11) 92 NY2d 298, 703 N.E. 251 (1998).
(12) 92 NY2d, at 300-301.
(13) New York State Builders Association, Inc., Letter to
Governor’s Counsel, Bill Jacket, L 1988, ch 709, at 26. See
also Watt v. Irish, 184 Misc2d 413, 708 NYS2d 264 (Sup. Ct.,
Columbia Co., 2000), which held that plaintiffs’ claim for
breach of contract, resulting from the construction of their
home in a negligent manner, survived summary judgment
because the case was governed by the six-year Statute of
Limitations provided by CPLR 213.
(14) See footnote 11, supra.
This article is reprinted with permission from the Friday,
September 6, 2002 edition of the NEW YORK LAW
JOURNAL. © 2002 NLP IP Company. All rights reserved.
Further duplication without permission is prohibited. For
information contact, American Lawyer Media, Reprint
Department at 800-888-8300 x6111. #070-09-02-0009
NEW YORK LAW JOURNAL FRIDAY, SEPTEMBER 6, 2002
------------------------------------------------
[T]he attorney’s role
in negotiating the contract of
sale may determine whether
the buyer or seller has any
remedy or liability with respect to
material defects in a new home.
------------------------------------------------

I live at Spencer Street which most considered the biggest nightmare building ever to hit NYC. We used an attorney by the name of Adam Leitman Bailey. He was able to have the sponsor buy back our apartments a the fair market value as of 2005. Simply, he is an angel from G-d. In fact we did not even have to go to court. Google his name. He is abrasive but get the job done.