New York Condo Owners Turn to Developer for Construction Defects

For many buyers, a new-development condo is the epitome of New York living. But if construction defects arise, the situation with the sponsor can quickly become litigious. At an 80-unit condo in downtown Manhattan with several mechanical issues, the board managed to avoid that fate by working with the developer as each problem arose. 

Act Sooner, Not Later

It’s important to mediate with developers before they hand over control to the board. “The goal is for unit-owners to get what they were promised without lengthy lawsuits,” says Kristopher Cotaj, a senior vice president and managing director at Halstead Management. The most common problems are related to the mechanical systems, including HVAC and water pumps. “What we see is the building works great until people start moving in,” he says. “All of a sudden, somebody bought the penthouse and then discovers there’s no water pressure.” 

Identifying Responsibility

Management has a role in navigating these one-off issues as well as figuring out who is ultimately responsible for the defects. If, for example, a penthouse has a glass curtain wall with sunlight constantly beating on it and can’t maintain a reasonable indoor temperature, is the unit-owner responsible for adding a reflective film or any other solution, or is it the sponsor’s responsibility? The answer: It comes down to what the governing documents and offering plans say.

At the Manhattan condo, a booster pump wasn’t working effectively, which resulted in very low water pressure for some apartments. “We worked with the sponsors to get the plumber who originally installed the pump to come out and replace it,” Cotaj says. In other situations, the issue comes down to the life span of a system component. “If a piece of equipment is expected to last 20 years and after the first two or three we are having issues, this is where we start reviewing whether it is defective or if there is something wrong with the way the system is operating,” he explains. Acting quickly while parts are still under warranty, he adds, “makes it easier to work out the kinks and resolve the problem.” 

A Lesson in Limitations

Another important aspect when dealing with defects is to ensure that residents understand how the mechanical systems are designed — and what they can and cannot do. “This involves setting expectations,” Cotaj says. If a building has a two-pipe system with the same pipes used for heating and cooling, residents won’t be able to control the cooling whenever they want. Some unit-owners may want their apartments cooled to 60 degrees, but very often the HVAC simply isn’t capable of doing that. “That’s not a sponsor defect because in some cases, these systems just aren’t designed to go that low,” he says.