There’s Less Time Than You Think

Every building has problems: people complain and contractors are brought in to fix them. If the work isn’t done properly and things don’t get squared, boards go after the contractor, but to do so successfully there’s a deadline that has to be met, and that’s the statute of limitations. 

Correct. And it’s essentially a ticking clock, because if you don’t bring your claim in time, you can be barred from filing it, no matter how right you are. A typical breach of contract claim has a six-year statute of limitations. It sounds like a very long time, and it is. But it can be shortened by the contract itself. Oftentimes you’ll see that in offering plans, which may include a shorter statute of limitations for breach of contract claims. Then again, whether you have a longer or shorter time to file, problems don’t always pop up immediately. But when they do, you should speak to your attorney as soon as possible so that he or she can analyze the potential recourse the building may have. 

Sponsors and contractors aside, how else can the statute come into play? You were recently involved in a very different case in which the statute turned out to be the board’s friend. 

We were consulted by shareholders of a co-op in Queens where the board had decided to take out a significant construction loan. Previously, this action had required shareholder approval, but the board had amended the bylaws so that it only required board approval. The shareholders wanted to challenge the board, but actions taken by corporations, including co-ops, are subject to a four-month statute of limitations. The shareholders didn’t consult with us and didn’t file in court in time. 

It seems the takeaway is that depending on the circumstance, the statute of limitations can be a shield or a sword for boards. So it’s important to position yourself properly either way. 

Absolutely. And again, the underlying point would be to have an experienced attorney who has dealt with the various issues that arise in co-ops and condos, who can speak to the statute of limitations and potential claims. These things can be controlled, not just by law or by the contract that you may have signed. There may be warranties in play and insurance in play. There are obviously a lot of moving parts, and you have to figure out how to best position yourself to either avoid a claim if you’re on that side of it, or to assert the claim in a timely manner so that you aren’t barred from pursuing it. 

FROM THE COURTS January 27, 2021

Board of Managers of the 15 Union Square West Condominium v. BCRE 15 Union Square West LLC, et. al.

A condominium board sued the developer-sponsor for breach of contract, unjust enrichment, negligence, and fraud. The developer asked the court to dismiss the board’s breach of contract claim because the action was commenced more than six years after the sale of the first condominium unit, and to dismiss the unjust enrichment claim as being duplicative of the statute of limitations breach of contract claim. The developer also sought to dismiss the negligence claim on the ground that there was no separate legal duty owed to the board apart from the contractual obligations and dismiss the claim of fraud because the board didn’t allege a breach of obligation separate and apart from those governed by the offering plan.