New condominium, cooperatives and HOA’s must be mindful about time and rights against the sponsor. Statutes of limitations are the time that an association must bring a lawsuit to assert claims, before the claims become time-barred. It is often the easiest defense for a sponsor to end a lawsuit.
The 23-23 Condominium found this out the hard way by having almost all its action against the sponsor for construction defects, dismissed on a summary judgment motion. The Second Department explained that a “claim for damages arising from defective construction accrues on the date of completion of the work”. If the time limit for bringing the claim has expired, then the plaintiff is out of luck. Here is the decision in that case.
Lawsuits against sponsors can be complicated if not handled properly and some of them become newsworthy which can concern some owners. On the other hand, sponsors often do not want the publicity, especially if they are continuing to develop. For example, the media picked up on the “Hyde Midtown condo association alleges construction defects galore”, reporting that “Suit targets Related Group development entity and firms that built 32-story high-rise in 2018”. That’s not a typo. The condo was constructed back in 2018. It took over 5 years for the owners to organize and sue. The suit alleges 163 construction defects including “improper installation of materials on the roof is causing water to seep down several levels” and “balcony railings for some condo units were improperly installed”. Here is an article reporting more.
With proper guidance, owners can take control of their situation against a sponsor developer and its members and investors, and make sure that they meet their contractual and other obligations. Sponsors keep control of the association boards during the early years of the development in order to keep owners disorganized without central financial resources to make sure obligations are satisfied before sponsor profits from sales are dissipated. The time to bring claims, statutes of limitations, also must be closely monitored to make sure they don’t expire. Once expired, claims can be lost forever, and the responsible parties insulated from liability. Suing is not necessary in many instances. Amicable negotiation can lead to a resolution without litigation, provided that a sponsor is being reasonable. Sometimes litigation is the only course of action to achieve the condo and its owners’ goals. For the Hyde Midtown condo association, it took over 5 years to come to that realization. Organizing early with experienced representation is the key to success.
