By Bill Morris
May 17, 2012
By the end of his first year in the building, Yousif was on the eight-member condo board that consisted of five unit-owners, with three seats for the sponsor. The unit-owners’ initial approach was to tread softly. Members had regular lunch meetings with the sponsor — without any lawyers present. They probed the sponsor, they pushed him. Then they met with their lawyer, Adam Leitman Bailey, founder of his eponymous firm, and reported the results of these conversations.
After regular board meetings ended and the sponsor had left, the unit-owners would huddle again. “We were developing a strategy for going after him,” says Yousif. “Some board members wanted to sue; others, like me, wanted to settle. Meanwhile, the money we were spending kept going up.”
The board then realized it was holding what Yousif calls a “bargaining chip.” Under the original offering plan, the board was obliged to purchase the super’s apartment from the sponsor, [redacted], no later than two years after the building reached 50 percent occupancy. Although the apartment was listed at about $250,000, the sponsor was demanding $650,000 for the apartment and a late-payment penalty. “We figured very quickly that giving up that apartment was an easier pill for him to swallow than giving us a lot of cash,” Yousif says.
And so in the summer of 2011, the sponsor, the board, and all the lawyers got together in a room. The board spelled out exactly what it wanted. That was when the members realized that the strategy of settling instead of suing had paid off. The sponsor agreed to make repairs to balconies and exterior stone and masonry; to pay $150,000 cash for plumbing repairs and $100,000 to cover legal and engineering fees; and, best of all, the sponsor handed over the deed to the super’s apartment for free.
The Layer Before Lawyers
Yousif sums up the board’s strategy: “Once you’ve lawyered up, I would tell boards to sit down with the sponsor without attorneys present. The minute the lawyers start going after each other, it’s going to cost you money and it’s going to get personal. It’s a sport to them. Once everybody knows you have good representation, it’s time to take a step back and be reasonable. Once they realize you’re serious, that’s a good time to have a human conversation.”
He adds, “You can’t afford to hire a mediocre attorney, because you’ll lose. You definitely need to document any physical defects in the building, and you’re going to need professional engineers to do it. If you can afford it, do it now. The earlier, the better.”