HVAC Defects in New Brooklyn Condo: Who Pays for the Fix?

Five years ago, a man bought an apartment in a newly construction Brooklyln condominium. From the beginning there were problems with the heating, ventilation and air-conditioning system. The problems persist, and the repair cost is now $90,000. The sponsor has taken repair funds out of the building’s operating budget, leaving the budget in the red and the reserve fund gutted. Who is responsible for the cost of the repair: the sponsor or the residents?

Typically, condominium unit-owners are responsible for funding repairs to building systems, replies the Ask Real Estate column in The New York Times. But in this situation, where there appears to be a construction defect, it could be the responsibility of the sponsor, the entity that offered the new condominiums for sale.

“If the HVAC system was defectively designed or installed, this should ultimately be the responsibility of the sponsor, with the cost borne by the sponsor, not the condominium,” says William Geller, counsel at the law firm Braverman Greenspun. The unit-owners, acting through the condominium board, would likely have a claim against the sponsor to recover the cost to repair it, he adds.

But there's a twist. The building's offering plan and contract of sale will spell out who's responsible for fixing construction defects — and if there are limits to this responsibility. “The offering plan may even provide that the sponsor is not obligated to correct, repair or replace any defects,” says Michael Ciarlo, a partner at the law firm Nadel & Ciarlo.

In a new building, the condominium’s board seats are typically controlled by the sponsor for a finite period of time. Nevertheless, the board still has a duty to act in the best interests of the unit-owners, not the sponsor. But a legal claim against board members for breaching their duties could be long and difficult.

Unit-owners as a group — or through the condo board, if it is no longer controlled by the sponsor — should get an engineering report on all defects and who may be responsible for repairing them. Try to negotiate a resolution with the sponsor before filing a lawsuit. If you engage a lawyer, ask him or her to look at all of the building’s defects and, where possible, hold the sponsor responsible under the terms of the building’s documents.

Choose legal counsel wisely. “You want an attorney who understands offering plans and can handle cases that involve construction defects,” advises Marc Schneider, managing partner at the law firm Schneider Buchel.