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Achieving Success for a Developer Despite the Lack of Repairs Needed

By Adam Leitman Bailey


Developers had turned a commercial building into residential condominium units in one of Manhattan’ most expensive areas with prices reaching up to $20 million. With the latest technology, heated floors, high ceilings, private balconies, and elevators the building had been built well. Most of the complaints coming from residents were minor, standard, and quickly fixed by the developer. Other complaints came from a lack of education on how to the appliances or advanced technology inside the unit worked, even though they included instructions on how to use each feature. However, it appeared that none of the residents had read the manuals or instruction.

Because not all of the units were sold and the developer’s sensitivity in keeping its reputation intact, it put up with punishing demands and the building ran more like a hotel or rental building than a condominium. Without any justification, a small group of unit owners demanded that they have control over the board of directors three years before the offering plan permitted the transition.

Adam Leitman Bailey, P.C. hired an architectural and engineering report to do a complete physical of the building. The report found very few defects and the one’s mentioned were immediately repaired except for one. One of the problems mentioned in the report that could not be fixed was the noise problems in the hallway and parts of some units due to the fact that this building was a former factory and was constructed using certain materials that propelled noise. Interestingly, only one-unit owner complained of noise due to the sound proofing installed in the building. However, the noise issue was a real issue and was mentioned in the risk section of the offering plan.

The group of owners made a list of demands. Very few of them included repairing the units. The list started with a large check to individual unit owners. However, internal discord must have occurred as the unit’s owners could not agree how much each unit owner demanded when they did not match bids from repair items. So the building included a new gym and additional amenities instead of a large check.

These negotiations went on for two years and eventually the units owners hired a law firm after first trying to hire our law firm which obviously conflicted from the case.

Because the building was small, our attorneys counseled our client to spend whatever time it took educating the residents on how to use the amenities. Any and all repair, even when caused by the owner, was responded to and fixed. Because some of the owners were high profile and had notorious reputations our attorneys expected that eventually the owners would not be able to remain as a working group.

Our firm knew that some of the high-profile owners did not want to file a lawsuit with their names on it especially since most of the claims had been resolved and anything filed would be petty. Our attorneys counseled correctly. Our attorneys asked them to order their own engineer’s report and the report was intelligible as it mentioned almost no repair items and focused on the how the building was made, and the materials used. Our firm then demanded for a list of items that needed to be resolved so our attorneys could work towards settling the matter.

Instead of a list they came back asking for extra amenities and an improved gym as well as board control. The benefit for our client was the low-price tag to build what they wanted since the staff had many workers on staff that could get the job done.

Secondly, despite the lack of merits of their case, this developer was in negotiations to build one of the largest developments in the entire City and could not let this small building have any press or a lawsuit as it could impede the other project. Our attorneys also had one until left to sell in the building.

The final issue was that our attorneys required every unit owner in the entire building to sign on to the settlement. Our firm knew this would be difficult as some of the owners were no longer getting along and two others had listed their units for sale and did not want to bind a future owner.

It took another 9 months to get every unit owner to sign on without using any effort on our part and our attorneys began construction.

No lawsuit was every filed or leaked to the press. The final unit sold and the deal was closed for the large development consisting of over 700 units and retail space.

Adam Leitman Bailey and John Desiderio counsel the developer in this matter.

Adam Leitman Bailey, P.C.

NEW YORK REAL ESTATE ATTORNEYS