Adam Leitman Bailey, P.C. (ALBPC) took a ferry to our third annual meeting for a condominium development. Consisting of hundreds of newly constructed two-family homes built for moderate income persons to revitalize a formerly blighted area of Queens, ALBPC thought about the first tour of the development asking how a developer could receive so many millions of dollars in governmental subsidies, but not have to provide a home free of defects, some of which simply could not be fixed.
As soon as Adam Leitman Bailey, P.C was hired, our attorneys attended many meetings free of charge to educate the residents on their rights. Most of these first-time home buyers had previously been renters and no longer were handy and available free of charge. At the same time, the property was not built well and persons buying moderate homes in certain price ranges rarely hire engineers to inspect homes before purchasing.
The last thing our attorneys wanted to do was sue because they knew that once our firm sued there would be no winner. Legal fees are expensive and many of the repairs needed to be fixed immediately and could not wait for the long court process.
Our firm hired an engineer who found systematic problems with many of the homes.
The report stated:
“The roofs are in poor condition and will require extensive refurbishment in the immediate future. There are significant leaks through improper flashing and signs of bubbles from trapped water under the membrane.
The gutters are installed without any slope and contain large quantities of standing water. They also overflow during rain events. There are clear signs of water penetration at many doors and windows, which is consistent with improper flashing and sealing around the window and door openings. This is also likely exacerbated by the impact of overflowing gutters.
The main electric circuit boxes for both levels of the duplex homes are located in the garage, which belongs exclusively to the upper floor homes, and thus such placement is contrary to the electrical code, which requires each resident to have ready access to the circuit box controlling his or her unit.”
Although ALBPC never told the group of owners, our attorneys truly believed this would be one of the easier cases to resolve. First, our firm had dealt with this developer before and although he was not anxious to provide working homes, something in ALBPC’s previous matters got him to write a check and do the work without litigation.
Second, the government subsidies were so large and wealthy that our attorneys could not see them simply walking away and allowing a developer to take its money while allowing him or her to make the home more expensive because of the repairs needed.
Doing everything we could to avoid litigation, our attorneys contacted all of the resident’s city, state and federal representatives, all of which were receptive and allowed our firm to meet with them at their offices.
The City Councilman also brought the owners of the development company to his office for meetings—first without our presence and then with our attorneys. Our firm even hammered out a settlement in Councilman Donovan Richard’s office that was ripped up within 24 hours of walking out. Our attorneys know that Councilman Richard did all he could to get results, but in the end he was powerless to motivate the developer who may have already been finished developing in the councilman’s district.
The most shocking event was the way the agency that handed the subsidy money shunned the developer. Housing Preservation and Development would not even entertain a meeting writing Councilman Richards that:
“Given that these are post-construction issues, HPD cannot force the builder to be responsive to claims with respect to the warranties that the developer provided.”
Our firm has been a part of over 700 matters similar to this one and none of this made sense. Yes, the developer put on the usual band-aids and patch work to temporarily stop some of the problems occurring and the developers themselves, not their employees, came to many of the meetings, and every developer would sign a tolling agreement extending the time for the home owners to sue in all cases except for this one. Our firm had never seen this before. Because of the internet, when a case is filed, the press has the ability to pick it up and this developer hated the press, especially negative press. Maybe he thought that no newspaper would be interested in a poorer area of the City?
The condominium was forced to sue for the amount of money needed to do the repairs. The developer’s response was that the owners knew about most of the defects before buying and still purchased, but this developer had something our firm had never seen before in a straight new construction case—insurance. Their insurance company provided a free attorney and agreed to pay for all damages. Insurance companies do not cover defect claims because any coverage usually stops when the construction job is finished.
In the end this was good and bad for our client. The insurance company was willing to write a decent size check, but only after a good amount of litigation took place. In the end the case was settled and most the problems have been resolved or our client received enough money to resolve them. However, the main electric circuit boxes still remain on one owner’s property and our only counsel was how important it was for this group of neighbors to get along. All punch list items and leaks had been resolved as well as the most of the individual repair complaints.
On the ferry heading to the meeting, assessing the end of the case and our first meeting where the matter did not consume most of the meeting, our attorneys could not find our usual victory smile. ALBPC pondered how our attorneys could have done it differently or better. Rachel Sigmund completely disagreed, mentioning the amount of sweat and toil our firm put into this development and how our legal fees were only a fraction of the settlement. She also noted how our clients sang praises, but she knew that our firm never judged a victory based on what the client felt. Our attorneys had their own level of success that our firm strove for and the ferry slowly headed toward our stop, our attorneys were looking forward to giving our clients a big hug and seeing how their families were doing—while pondering if there was anything else our firm could have done to squeeze out more money or had more repairs completed.
Adam Leitman Bailey and Rachel Sigmund represented the condominium and its board as general counsel and for the negotiations, litigation and settlement.