New York Court Renders Decision on Pivotal Manhattan Condominium Association Case Involving Construction Defects

In 2015, the New York Supreme Court ruled against a construction company seeking to escape liability for building-wide defects, premising its argument on the existence of a catch-all release form signed by the company, the property management outfit, and the building’s condominium association.

 As a bit of background, the defendant construction company was hired in 2011 to transform a department store – located on the Avenue of the Americas in Manhattan – to a residential apartment building (with a retail area on the ground floor). According to the court records, the condominium association was not tasked with overseeing the safety of the property until after the renovations were completed – presumably due to the timing of the developer’s transition of leadership to the association. At this point, the association compiled a list of issues plaguing the building, some of which amounted to major construction defects including a Christmas Day collapse of several second-floor apartments into the ground-floor retail space.

After a winding journey, the parties eventually arrived before the New York County Supreme Court. At this point, the construction company produced a release – signed by the condominium association itself – stating as follows:

 The O’Neill Condominium, and all of its unit owners and each of their past or present, direct, or indirect, successors, heirs, executors, administrators, assigns, members, owners, grantees and representatives do hereby release and discharge [the construction company]…from any and all claims…for, arising out of, or in connection with the Premises, other than the (mechanics lien issues). The foregoing includes, but is not limited to…any existing or potential claims, controversies, warranties or issues relating to the construction, improvement, installation and/or design of the subject building, the common areas and/or the individual units.

 By producing this document, the court was forced to shift the burden away from the construction company defendants and onto the condominium association to prove that the release should not be honored – which it was able to successfully argue, at least past the summary judgment stage. In the end, the court opined that there were several outstanding issues to discuss in this matter, namely whether the condominium association had the authority to sign such a release on behalf of its residents, who would be effectively shut out from redressing major construction defects should the release be upheld indefinitely.

If you are experiencing a difficult situation with your condominium association, please do not hesitate to contact an experienced Real Estate attorney today!